According to a report in the New York Times, Microsoft made its approach before Google began holding meetings with banks ahead of its planned IPO.
According to the paper, Microsoft executives approached Google within the last two months to discuss options, including the possibility of a takeover.
Google knocked back the advances of the software giant, which is controlled by Bill Gates, saying that it was intent on an IPO. However, despite the setback, the paper reported that Microsoft may still be interested in pursuing Google at a later date, according to an executive briefed on the discussions.
The Google IPO is the biggest news on the web for several years. Not just because it is Google, but also because it is being seen in a wider context as possibly representing the start of what could be a second smaller boom in Silicon Valley.
Google's founders, Sergey Brin and Larry Page, are considering selling a 10%-15% stake of the company, which would raise around $2bn (£1.18bn), with Morgan Stanley viewed as the favourite among the bankers to handle the IPO.
Microsoft's interest in Google is understandable. The search engine has become one of the most popular tools on the web and its search engine is quickly replacing rivals, including Microsoft.
Google has so far taken only small steps to expand its business beyond its core search engine operation, which has generated revenues of around $1bn, with profits of $100m earned largely through technology deals with other internet firms.
Out of its search business has come the profits from keyword advertising, where the Yahoo!-owned Overture is also a competitor.
There have been acquistions as well. In February, Google acquired technology firm Pyra Labs, which helped to jumpstart the internet "blogging" phenomenon and is behind the site Blogger.com. And, in April, Google made its second acquisition this year with the purchase of online advertising software firm Applied Semantics.
Although snubbed, Microsoft is likely to be back. Having initially been slow to join the internet bandwagon, once started Microsoft has proved unstoppable, snapping up email firm Hotmail, a company that in earlier times held a similar place on the web to that now held by Google.
Microsoft also easily dispatched web pioneer Netscape, which helped launched the dotcom boom and which, at one time, was a more widely used browser than Microsoft's Explorer.
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