Google CEO backs independent Yahoo

Google is backing Yahoo in its effort to stave off an unsolicited takeover by Microsoft because an independent Yahoo will increase competition in the internet search and advertising markets, an Associated Press report said.

The Associated Press report also quoted Google's CEO Eric Schmidt sayiing that Google 'absolutely supports the decision that Yahoo made' in rejecting the Microsoft overture.

He made the comments during an hourlong interview with reporters. Google co-founders Larry Page and Sergey Brin were also present, the report said.

'There is no question in our view that an independent Yahoo is better,' Schmidt It 'will provide more competition in search and other advertising markets, in particular in display advertising,' he said.

Google is the leading seller of internet ads, but most of its revenue comes from paid search ads, which appear next to the results of an internet search using Google.

Yahoo, which is stronger in display ads, rejected in May a €29.8 billion (US$47.5 billion) offer from the world's largest software maker. Schmidt would not say whether the informal offer fairly valued Yahoo, but said there is no way to know what the actual bid would ultimately be.

'Microsoft has a long history of having deals that look quite good and end up looking not so good when you read the fine print,' he said.

Microsoft co-founder Bill Gates is also in Sun Valley, but has so far ducked reporters' questions. A Microsoft spokesman did not immediately return calls seeing comment.