Microsoft CEO Steve Ballmer has no problem identifying his chief regret when it comes to business (although my guess is critics could come up with others): “Really understanding the power of advertising as an Internet business model we came to later than I wish we had. That’s the No. 1 thing I regret. We underinvested in some opportunities for a while.” The remark came during an on-stage interview with David Lieberman in Seattle; the edited transcript is in today’s USAT.

On DoubleClick: “If the regulators decide there’s an issue there, they’ll take a look at it, and if they decide there’s not, so be it. I do think that it would be worth the regulators taking the time to understand this market, much the way they took the time to understand other parts of the technology business, because the whole future of media and advertising will move to the Internet.” He wouldn’t confirm that Google outbid Microsoft.

On MSN: “Well, we’ve been profitable. We decided to take the business to be less than zero profit because (we’re) making the R&D investments and the sales and marketing investments that we think are necessary for the long term. Above all, I would say one of the things I believe in that has made Microsoft a great company is we take a long-term view. It took a long time for Windows to reach critical mass. It took a long time for music players — not the iPod, but for music players — to reach critical mass. The guys at Google were at it, what, eight or nine years before they really reached critical mass. And so one of the keys in our business is not to be impatient in the wrong way. I’ve seen that kill a lot of other companies in our business.”

On iPhone and Windows Mobile: “There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60 percent or 70 percent or 80 percent of them, than I would to have 2 percent or 3 percent, which is what Apple might get.”

No Zune phone: “It’s not a concept you’ll ever get from us. We’re in the Windows Mobile business. We wouldn’t define our phone experience just by music.”

On DRM: “Every recording artist, in my opinion, is entitled to make their own decision. And I don’t think Apple or Microsoft should be imposing its will on folks, because people will have different economic interests, different things to think about.”