The two companies called off the deal, worth US $71.2 million, after US anti-competition authorities indicated they would contest the decision.
Both companies offer panel-based measurement services, counting site visitors and providing research and analysis.
Jupiter now faces an uncertain future, with losses of roughly US $22 million a quarter, and is looking for another merger partner.
The company has hired investment firm Robertson Stephens as an advisor and issued a statement saying it had formed a special committee to "immediately begin exploring strategic options to strengthen its position in the marketplace".
David Toth, chief executive officer of NetRatings, and Robert Becker, chief executive officer of Jupiter Media Metrix, released statements saying they disagreed with the FTC's decision to contest the acquisition.
Jupiter had extensive discussions with the FTC to defend the agreement, but to no avail.
The FTC thoroughly probed Jupiter, taking several depositions of employees and speaking to clients, competitors and former employees, and recommended the deal be called off.
It threatened to seek a preliminary injunction to stop the merger if necessary.
With the deal off, Jupiter is going ahead with a patent lawsuit that had been put on hold during acquisition discussions. In March 2001, prior to the agreement, Jupiter had sued NetRatings over a patent used for collecting data from the internet.
When the acquisition deal was struck in late October, however, both companies said they would defer settlement of the complaint pending completion of the merger.
In another announcement, NetRatings is continuing with plans to buy the remaining 80.1 per cent of ACNielsen eRatings.com, a company that measures internet audiences, for around US $16.4 million.
ACNielsen eRatings.com was a joint-venture 80.1 per cent owned by ACNielsen and 19.9 per cent owned by NetRatings.
