(Adds quotes from Schmidt, background)
By Kenneth Li
SUN VALLEY, IDAHO, July 10 An independent Yahoo
Inc (YHOO.O) is better for business, Google Inc (GOOG.O) Chief
Executive told reporters on Thursday, saying a combination with
Microsoft Corp (MSFT.O) would be anti-competitive.
"The world is better off with an independent Yahoo," Google
CEO Eric Schmidt told reporters. There's "more competition ...
in search, and more competition in the other advertising
markets where Yahoo is a leader."
Microsoft made an unsolicited offer to buy Yahoo for an
estimated $47.5 billion earlier this year, but after Yahoo
sought a higher price, Microsoft walked away from the
"The moment we saw the offer from Microsoft, we saw it as
anti-competitive," Schmidt said. "It's easy to understand. Look
at Microsoft's history."
Yahoo later signed a search advertising deal with Google
that is now being reviewed by U.S. regulators. Schmidt said the
company is expected to face hearings next week with regulators
reviewing whether its search advertising deal with Yahoo is
Schmidt spoke with reporters at the annual Allen & Co
gathering of media and technology moguls, where discussions of
the high-profile Yahoo-Microsoft-Google situation theoretically
could be taking place since people from the companies are
However, Yahoo CEO Jerry Yang told Reuters on Thursday that
he was not likely to meet with representatives of Microsoft at
Critics have said Google's pact with Yahoo was designed to
thwart Microsoft's advances, but Schmidt has long argued that
its advertising deal was nonexclusive and would allow Yahoo to
pursue other advertising partnerships, including with
Since May, Yahoo has said it is open to reignite buyout
talks with Microsoft.
Yahoo is facing pressure to reopen the talks from
billionaire investor Carl Icahn, who is seeking to replace
Yahoo's board at the company's Aug. 1 shareholders meeting.
In recent weeks, Microsoft has said it would be willing to
consider making another offer to either buy the entirety of
Yahoo or just its search business -- but only if Yahoo's board
Criticizing Microsoft's advances on Yahoo, Schmidt said,
"Microsoft has a long history of having deals that look quite
good and end up looking not so good when you read the fine
Schmidt said most media executives now understand that
their businesses are undergoing massive transformations as
consumers spend more time on the Internet. "There's no denial,"
he said, pointing to how the volume of presentations dealing
with digital issues had risen at this year's conference.
Even though Google still faces a copyright infringement
suit filed by by MTV Networks owners Viacom Inc VIAb.N,
Schmidt said his company's relationship with the media industry
had improved over the last year.
But that sentiment is not shared by all media executives
attending the conference. One attendee, who requested anonymity
for fear or reprisal from Google, said ahead of Schmidt's talk
with reporters that media executives were growing more wary
that Google's business was sapping profits from traditional
media sectors such as television and publishing.
Indeed, advertising agency WPP Group Plc (WPP.L) Chief
Executive Martin Sorrell -- who coined the term "frenemy," or a
partner that competes and helps your business to describe
Google -- said in May at a conference in Cannes, France, that
Google is now seen as a "froe," an apparently more adversarial
term reflecting the media industry's more cautious view.
One media company attending this conference would
wholeheartedly agree: Viacom.
A U.S. judge recently ordered Google to turn over Google's
YouTube user data to Viacom, sparking an outcry from privacy
advocates. The two sides have been in discussions on delivering
the data while protecting the anonymity of YouTube viewers.
In response to questions about the episode and in a rare
moment of intensity, Schmidt called Viacom's recent demands
that the user viewership data be handed over a "mistake" and
added that the entire lawsuit should be "retracted."
(Editing by Gary Hill)