Google, the parent company of the video sharing site, has blocked access to "Innocence of Muslims" in a number of nations, including India, Egypt and Saudi Arabia, where it is deemed illegal.
But Schmidt stressed that the low budget video met YouTube's basic criteria for material that can be posted, which is why it remains accessible in many countries.
"Google has a very clear view on this, which is that we believe the answer to bad speech is more speech," he told reporters in the South Korean capital Seoul.
Violence triggered by the film, which mocks the Prophet Mohammed, has claimed around 50 lives, including that of the US ambassador to Libya.
"We obviously do not endorse the use of the video or these ideas hatred or violence or anything, but we openly believe that the best answer to it is more speech, not the other way around," Schmidt said.
"Some countries disagree. There are some places where we had to actually block access to that video," he added.
Other countries, including Pakistan and Sudan, blocked the access themselves.
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