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Google CEO Eric Schmidt discussed a variety of topics during an appearance on Fox Business Network this morning, including the company's rivalry with Microsoft and a possible Google-Yahoo partnership. Here's an excerpt, as provided by the network.

FOX Business Network anchor Liz Claman: In the Yahoo!/Microsoft proxy battle fight, who does Google thinks is its biggest competitor in this battle?

Google CEO Eric Schmidt: Microsoft is a well run and smart company and they understand the value of end users. We've always felt that Microsoft could use the tremendous position that they have in the personal computer market to affect the way people used information, either in a hostile way or a creative way depending on what they chose to do. So in essence they compete for end users. We compete today with Yahoo!, Microsoft and others and we have a number of other smaller competitors that are emerging, ad networks and so forth. So it is a highly competitive market. But in the long run we have always believed that the focus on the end user would take us up against Microsoft.

Claman: Do you talk to Bill Gates?

Schmidt: We have known each other for years. We do talk.

Claman: Have you talked to Carl Icahn because Icahn has said if not Yahoo! and Microsoft, then we want to see a deal with Yahoo! and Google.

Schmidt: As I said we have not been involved in that fight. It is an important issue, but not one that Google has a particularly strong role in. We do believe an independent Yahoo! is a better outcome.

Claman: What about antitrust issues, you're done this two-week deal, how would you get around the antitrust issue of the giant Google and the smaller but still giant Yahoo??

Schmidt: Well you are presuming that there's an issue there.

If there were an issue, it's perfectly possible that you can do commercial deals that look like outsourcing deals which are not exclusive and where industry structures allow everybody to win. If you look in the automobile industry and lots and lots of industries like that, you have suppliers who supply other people. So if there were a deal, it would be based on those sorts of principles.

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