“We absolutely support the decision that Yahoo made” in rejecting the Microsoft overture, Schmidt said at the annual Allen & Co. media summit at this Idaho resort. He made the comments during an hourlong interview with reporters. Google co-founders Larry Page and Sergey Brin were also present.

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

Yahoo, which is stronger in display ads, rejected in May a US$47.5 billion offer from the world’s largest software maker. Schmidt would not say whether the informal offer — originally made in January for US$31 per share, but later increased to US$33 per share — fairly valued Yahoo, but said there is no way to know what the actual bid would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 Corp. 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.

The software company has indicated recently it would like to reopen talks, but Yahoo Inc. Chief Executive Jerry Yang told reporters he didn’t expect to meet with anyone from Microsoft at the summit. Yang is trying to fend off activist investor Carl Icahn’s attempts to replace the Yahoo board and sell the company.

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.

The Google executives said their company had long considered making a deal with Yahoo, and the Microsoft bid spurred them to act. Google swooped in and inked a deal with Yahoo that will see the leading search companies share some ad revenue. Critics have said the deal was intended to block Microsoft, but Schmidt said the deal didn’t prevent Yahoo from forging other partnerships, even with Microsoft.

“When Microsoft made the offer in January, we called (Yahoo) and said let’s consider a business deal,” Schmidt said. “We saw the Microsoft offer as anticompetitive for the market.”

Schmidt said Microsoft has a history of gobbling up smaller companies and consolidating them in its Windows product, essentially choking off the market.

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