Google keeps talking on Yahoo deal

LAKE WORTH, Florida (Reuters) - Google Inc Chief Executive Eric Schmidt said on Tuesday the company had agreed to keep talking with the U.S. Justice Department about its proposed online advertising deal with Yahoo Inc.

Under the deal announced in June, Yahoo would turn over some of its online advertising space for Google to sell.

Schmidt had said in August the company would move forward with the Yahoo search partnership in October, with or without approval from antitrust reviewers at the Justice Department.

"We agreed to extend our discussions ... with the DOJ," Schmidt said when asked for an update on the Yahoo deal after he participated in an economic summit in Florida with Democratic presidential candidate Barack Obama.

Schmidt was repeating a decision first announced on October 3 that it would not begin sharing advertising immediately in order to give the Justice Department time to assess it, said Google spokesman Adam Kovacevich in Washington.

"He was reiterating what we announced several weeks ago," he said.

The advertising deal is unpopular with some advertisers because Google and Yahoo dominate the U.S. Web search market. They fear their rates could go up.

Google's market share widened to 63 percent in August, while Yahoo's dropped to 19.6 percent and Microsoft Corp's slipped to 8.3 percent, according to comScore Inc.

The deal to share advertising has been widely seen as an effort to help Yahoo fend off Microsoft by bringing Yahoo an additional $800 million in annual revenue.

(Reporting by Deborah Charles, writing by Tim Dobbyn, editing by Leslie Gevirtz, Richard Chang)