Google: Microsoft remains a strong competitor, even without Yahoo

Google CEO Eric Schmidt said yesterday that he still sees Microsoft as a potent competitor, even though its concerted and often acrimonious campaign to buy Yahoo now looks like it will pass into history.

"Microsoft has been a significant competitor with Google for a very long time," Schmidt declared, in a talk with reporters just before Google's annual meeting in the Silicon Valley.

"Microsoft is a very large competitor across all facets of Google for many reasons. Applications. Search. Advertising. Display. Microsoft is well funded, clever [and] smart -- and they have a lot of advantages nobody else has," said Schmidt, according to a "live blog" transcript from the press Q&A in California, posted by Rob Hof of BusinessWeek.

Schmidt told journalists Google was as surprised as anyone that Microsoft reacted to Yahoo's repeated rebuffs by just walking away. "Everybody was surprised," said the Google CEO.

He then admitted he was pleased about the outcome of Microsoft's bid, saying, "Obviously we're very happy it didn't happen."

"It would be bad for the Internet," he later predicted, citing a blog post on the Google site about the "extreme market share in some areas" that would be created through a Microsoft buyout of Yahoo. Schmidt also said Google can never be certain that the prospect of Microsoft/Yahoo merger won't happen, at some point. "You never say never in this business," he noted.

The CEO also stopped short of agreeing with one questioner that Google emerged "the big winner" out of the failure of Microsoft's attempt. "This is not about winning, at least in the short term," he replied. "It's a good lesson for businesses that it's very easy to go off the rails if you get distracted."