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Live From D: It’s Google No-Longer-The-CEO Eric Schmidt
I’m at the D Conference in here beautiful Rancho Palos Verdes, California. Google executive chairman Eric Schmidt is to be interviewed by our fearless host Walt Mossberg and Kara Swisher. Let’s see what he has to say.
Postscript: See The Top 10 Things Eric Schmidt Revealed At D9 if you want the less stream-of-consciousness view of his talk from me.
Somewhere on the cliffs below is the wreck of the Dominator, a Greek cargo ship that went aground decades ago. I’ve been to it in person, and I share this Palos Verdes trivia with you. Local knowledge. Let’s hope no further crashes happen, even of the verbal kind.
Though really, let’s face it, we’re kind of secretly hoping Schmidt gives us one of those famous quotes that gets everyone scratching their heads and thinking, “What did he say? What did he mean?” What did he mean by “creepy line!”
Part of Eric (I’m being casual here, roll with it) stepping away (not down, never down) from the CEO position in April to the executive chairman role was so that he’d be out of the public spotlight. Right? I mean, that’s what some thought. It’s sure what I thought. After 10 years of having everything you say being dissected, hey Larry, how about you get back up on that stage?
But so far, Larry’s not been on ANY stage that I know of, not even at his own Google I/O conference earlier this month. And Eric this is Eric’s first big event, to my knowledge, in the US and perhaps anywhere, in his new role.
So anticipation is high. Oh, and we have the new Google +1 button that’s coming out tomorrow. He’ll talk about that, of course. But will he say more? How about the whole Facebook-Google war.
Live blogging begins around 6:15pm. Stay tuned. Or tune in yourself. The talk is being live streamed here.
Here we go. Up is Robert Thomson, managing editor of the Wall Street Journal. He once patted me kindly on the shoulder when we were on a panel together. Seriously. It was very nice, actually, especially since well, I’d said some not-very-nice things about the WSJ poking at Google indexing.
But I digress. That’s because there’s no Eric yet, and I just wanted to share that story while we wait and hear Robert talking. Print is profitable, Robert reminds us. But apps are cool, too. And he welcomes now acting CEO of News Corp, Jane Lynch. Yes, it’s Jane coming out on stage. May I call her Jane?
Change saying she’s making some changes. The Daily, “Never heard of it. Never seen it. Clearly I’m shutting that down.” Also decided to add comics into the WSJ. Family Circus and Cathy. You know, it would be kind of nice.
Fox News will be investigating the cast of Glee, she doesn’t believe a one of them are a real Americans. And speaking of real Americans, Glenn Beck is being convinced to stay on as a dying patient on House. And hopes that Sarah Palin will be singing on Glee singing “Look at me, I’m bat shit crazy.”
Here come Kara and Walt now. Kalt. Wara. Woohoo. Telling us about the growth of the conference, the growth of their AllThingsD site.
And here comes Eric, welcomed on stage. Congrats them for being the place where all tech gets discussed. Walt says thank for sucking up right away. Laughter :)
Kara, is your principle job to avoid a government investigation into Google…
Eric, since there’s one already in Europe. Says there’s a threesome. Sergey is focused on security and new stuff. Larry on internal matters. He’s focused on external, and that means government stuff falls to him. We should expect Google to be constantly questioned given role it has.
Walt: So this year or next?
Eric: We’ve been through four full investigations with FTC already. We expect constant review of acquisitions, policies.
Kara: What’s the mood in DC about Google.
Eric: We’re still a strong consumer brand. In Washington, it’s mixed. Google’s making jobs, good, but regulatory bodies unsure.
Walt: Has feeling there’s a new platform war underway. And you have an idea of a “Gang Of Four…”
Eric: Four companies exploding well, Google, Amazon, Facebook and Apple. Hey, we did a Borg thing on that! Each does something unique. Facebook friends, Amazon shopping, Google information, Apple beautiful products. They now have reach that 10 or 20 years ago only one company would have.
Then, worried about one company having dominance. Now, you’ve got platforms that have other companies and success linked to them.
It’s difficult to understand how other companies will come in, but they will.
Kara: You left out Microsoft
Eric: Microsoft is not driving consumer evolution.
Eric: It’s not a platform at the computational level. It’s a gaming platform. [Hey Eric, watch how many people play Call of Duty at any one time. It’s a big deal].
Walt: Will we get down to two in years from now?
Eric: Not likely, more that one will miss the mark and a successor will come along. Question is, can each of the companies named keep the product excellence.
Kara: How about Google’s relationship with them. Testy with Apple…
Eric: Started off well, but success with Android, but we have a partnership with Apple and now we compete with them to. “We have a very very good search partnership” and map relationship with Apple. Doesn’t see either in threat, says just renewed both of those. Big news folks — nothing public said about this before.
On Facebook, they’re about entertainment, identity, fundamentally different from Google.
Kara: But you seem to be having “chase ups” against Facebook.
Eric: They’ve done a number of things he admires. said for years that “we’ve missed identity.” and it’s the first way of disambiguating identity. Useful to have friends data to make product better, and Google will use this type of info to make its products better.
Walt: It’s not that people find things through their friends now rather than search…
Eric: It’s an important feature of online services. There are multiple ways of doing it. Apple does different ways. From Google’s perspective, it would be useful to have the information; it would make our products better.
Kara: I’m unclear on your job on a day-to-day level
Eric: It seems to be living on airplanes. You have to go where the customers are.
Kara: Was that not your job before?
Eric: I did about half of that, and it was untenable.
Kara: What’s the difference with you and Larry.
Eric: Larry’s a product genius. It was our consensus to get to individual lines of ownership, organized seven different lines or product, tighter product execution. Buzzword, buzzword. We all agreed this would be a simpler model. Larry now spends every day with those people.
Kara: He have more autonomy?
Eric: We have agreement important things will be discussed with the trio, but he can push ahead on resources for important things without consulting.
Walt: Why be in music, and why couldn’t you get a deal with the music companies.
Eric: I wouldn’t describe Google as just search and ads. We’re a cloud companies. Huge maps business. Mobile. We try to start from premise that things should be free. But enterprise business is growing very very quickly.
The reality is that music is fundamental now on all of these devices, and our competitor Apple has had a long-standing success with iTunes and long-standing deals. We’ve been attempting to convince the music industry to come to a subscription model. “The reason we would do this is that consumers would like this service on top of Android.”
Walt: Will Apple get this deal as rumored?
Eric: Could see that Apple will extend its deals already.
Kara: What’s your problem with the entertainment industry?
Eric: Hard for companies going from scarcity model to ubiquity model. I don’t think we as a society have really understood the implications of that. When things go digital and can be shared. The sum of those are why these deals are hard to do. In the US, perfectly legal for you to take music you own and make a backup. If they get deals, they can add on that like buying.
Kara: What a Google look like in five years?
Eric: How do you fight against the idea of a big rise, lots of people get rich, then drop. You talk about it. You build new businesses. You avoid the S curve of where people want to leave, you continue to add new businesses. Harder because adds to bottom line. But you can create a billion dollar business quickly. Google’s not number on in display ads, but with better algo, can offer better product.
Walt: Don’t you know too much about us. Is that too much for a private company?
Eric: “Google will remain a place where you can do anonymous searches … and we’re very committed to you having control over the information we have about you.” If you wish to use our services as a logged in user, you can see what we have and tell us to forget it. So transparency and control. The rub here has to be about how long we keep this information. 12-18 months is what Google things it needs to have for internal improvements and for external regulators.
Walt: Easy to take a shot at the government having too much info, but why shouldn’t we have a comprehensive law that finally sets the rules of the road in terms of privacy. Maybe we need debate.
Eric: We’re generally in favor of such a thing. From our perspective, privacy is a compromise between the interests of the government and the people.
Kara: Steve Jobs said she should write more about privacy and Google. He called Android a probe in your pocket. Apple could do it too, he said, but doesn’t have a search engine to suck it back.
Eric: We don’t do that. We don’t suck the mobile information into search. There’s an opt-in to use mobile information if products do social things, you have to explicitly choose. Some anonymous informaiton goes back. Never used against search. Except, you know, Google will link your mobile location to your search results. And the fact you’re on a mobile device.
Walt: What about thing that pull information back, why not curate apps.
Eric: Apple model is beautiful, but it’s highly controlled by Apple. The Google model is the inverse.
Kara: Were you offered the Commerce Secretary model.
Eric: Not talking about that. Happy at Google.
Kara: For how long, Until you die?
Eric: I think he joked even longer if they developed that technology. But yea, not going anywhere he says any time soon.
Walt: Question on foreign policy, didn’t catch all.
Eric: Been working on a book with a co-author, trying to understand 5-10 year from now what the world looks like. What’s new? People will be empowered in enormously new ways. Smart phones in pockets, information in there. Will be used for good and evil. Come to the view that the more modern view is consumers and internet and adoption of technologies rather than state-against-state. Talking how an evil dictator might use facial recognition for bad.
Kara: But you’re working on that…
Eric: But not for evil…. We built that technology and withheld it. “As far as I know, it’s the only technology that Google built and stopped.” Or withheld. Didn’t want it abused I think he said.
Walt: But you’ll let a facial recognition app from others on Android, so what’s the difference?
Eric: There are lots of apps I don’t like, but they aren’t illegal
Walt: Didn’t catch it, sorry…
Eric: I’ve argued you’re seeing the death of IT as we know it. These historic IT system will endure a bit, but next gen will be built using web-based systems. HTML 5 is able to do whatever we need. Entire industry is moving to this model. Lots of implications for the IT industry. You don’t need so much specialization.
Kara: Who are the victims of this?
Eric: Historically it’s hard to go from big revenue stream in old to new [IE, sorry, Microsoft]. Huffington Post for example can do well because doesn’t have to have legacy structure.
Kara: How do you assess where Microsoft is at?
Eric: In enterprise, very strong. Very good job with specialized solution and flywheel that will power Microsoft for decades. But consumer products, email, bring more “fungial” things to the enterprise.
Walt: If you were a developer and had to decide to make an app in a small shop, if you go iOS or Android, what’s your third choice?
Eric: Many don’t have a third choice because of the closed architecture of Apple, you can’t bring your browser over. So the developer has to build an iOS app and then an Android / HTML 5 app.
Kara: If you had to pick a third, Nokia / Microsoft?
Eric: You have to look at marketshare. RIM interesting, not sure what to say for Nokia. Since they’re selling Symbian off.
Kara: What do you wish you hadn’t done as CEO at Google.
Eric: Four years ago I wrote memos on identity and did nothing. I clearly knew I had to do something, and I failed to do it
Eric: “I think I was busy.” “CEOs should take responsibility. I screwed up.
Kara: What’s your best thing?
Eric: You all can write that up.
Walt: I find my Google search results more and more polluted. I know you did an algo reset. But I still feel like I’m not getting the most direct links useful to me. Is your algorithm still the right way to go or can someone do to you what you did to AltaVista.
Eric: Always a threat from others. But in case of recent changes, we actually effected 12% of the answers [which isn’t the same as improving them, but toss out a stat]. We make hundreds of improvements per quarter that you don’t see. The other thing we’re doing that’s more strategic is from answers that are more link based to those that are computed? based. Direct answers. “If we can come up with the right answers, just give it to you.
Kara: Can you do that without the cooperation of Facebook and the information people are putting out?
Eric: We can. If we had more information about who your friends are, and with your permission … we can compute a better example for you. We know a lot about where you live… he cuts short quickly … your location.
Kara: Is it good enough without the social info.
Walt: Bing seems to do more to give direct answers than you do.
Eric: There’s that in some narrow cases. [People at Bing cheer. Search engineers at Google say WTF].
Kara: Will Larry every come out of his cage or is there just you?
Eric: Larry will decide what he wants to do. Also says he’s concerned the internet will be balkanized, broken by country. China is an example of what might come.
Now it’s demo time, and Stephanie Tilenius that PayPal is suing over Google Wallet is going to show us Google Wallet. Which I can’t apparently use despite having both a Google Nexus S phone on Sprint and a Citi MasterCard because because because, because Google hasn’t explained to me why.
Now we’re talking about the awesomeness of NFC. Stephanie is showing how you can tap things with your phone to get offers, you can save it, c’mon, you saw all this at the Google Wallet demo last week. I’ll just link to our coverage:
- With Google Wallet Mobile Payments Era Is Finally Here
- Live Blogging The Google Wallet Launch Press Conference
Eric says merchants will upgrade because fraud rate is so much lower with NFC. Because no one has it and uses it, perhaps :) Too much snark?
Kara: Why get in this space?
Stephanie: We think this is the next generation of commerce. 80% of commerce is done locally.
Walt: But all these offers, was this cheaper than buying Groupon?
Eric: How much do you want to sell it for? Tell them Stephanie what we’re announcing tomorrow.
Stephanie: Showing us an offer from a coffee shop in Portland?
Kara: So you did a deal with them?
Stephanie: No we did this with lots of people [wasn’t this already announced? I guess it’s finally going live, Google Offers, in Portland tomorrow].
Walt: Assuming consumers think wow, it’s so hard to take this heavy credit card out of my wallet [get all that sarcasm?], the merchants have to have new machines.
Stephanie: Blah it’s all coming, it’s all good, terminals coming out everywhere.
Eric: Reason will work is first company to integrate offers and payments on a phone.
Kara: How much of offers do you get?
Stephanie: Similar to what others gets.
Kara: How many merchants do you have?
Walt: What is the appeal to consumers over credit cards?
Eric: That you can get everything in one place, that it is cloud based is directionally something. Directionally, really? Basically, lose your phone, they can get all your info back. Except, you know, your phone.
Walt: Privacy issues?
Eric: We have encryption and regular credit card security applies.
Eric: Advertisers are happier, consumers are happier, we make our money through advertisers.
Walt: Stores don’t need servers to make this work.
Kara: How would you describe the Eric-Google era?
Eric: I’m proud of the rapid growth and turning Google into a force in business. Larry will bring in much more product rigor.
Kara: Still adult supervision from you?
Eric: No, Larry and Sergey have seen everything you can imagine and are perfectly capable of running things.
Open Q&A time.
Privacy question that didn’t quite get.
Eric: Devices generate this type of data. You want to regulate the use of your data, which I think is your point. You can imagine over time laws and regulations will emerge. But argument to do it too quickly is that market discipline is very tough, misuse the data, consumers get really upset [except you know privacy spill after spill from companies, and yet consumers keep going back to them].
Question: Have thought of opening Google Voice and Translate to other products.
Eric: Yes, but it’s complicated, because not sure if apps do for other product might get approved. Translate is amazing, demos where they can do two-way voice translation. Thinking about it but complicated by rules of other platforms.
Question: YouTube, media company, tech company? What’s it going to be when it grows up.
Eric: It’s an amazing company. Could take genius of founders and make it the repository of all things digital. Starting to see success in monetizing it. Started to fund made for internet only content. Where it is today, huge success for consumer, emerging success as business.
Kara: Are you a content company there then?
Eric: We’re a hosting company. Oh, and we have this new system that finds copyright infringement that has virtually eliminated the friction with major rights holders.
Question: Didn’t catch.
Eric: That was a joke, of whether we could predict the stock market. But we have built predictive market software for non-regulating things.
Question: What’s process to decide ethically what Google won’t do.
Eric: We have thorough process of legal rep and policy rep get involved with teams early. So sensitive with privacy now that there are people with those teams almost from the beginning. Educating young engineers where everything tends to be open, can’t always be that way with info.
Question: Consumers are more free to click through EULA but at corporations and university, hard to negotiation with our users there that Google is a safe thing to use. Will there be a more generic agreement for enterprises. I think. It was hard to follow.
Eric: It’s hard to answer. Let’s talk later on this issue.
Question: Be specific about data retention on Wallet. Keep it for 12-18 months? How will you use it?
Eric: Covered under same rules as existing credit card policies. We would also not use it for anything other than express purpose we were given. Strong sense that we don’t datamine that type of information.
Question: Is there a danger of balkanization through personalization?
Eric: The differences are pretty small. The personalization aspects are a small component of the rankings. I think that’s a little bit of an overstatement to make a point.
Kara: Reaction to talks in Europe last year about internet regulation?
Eric: Premature regulation [insert laughter over premature anything here]before technology is invented that can solve the problems can really harm the internet.
Question: Is Android temporary if HTML 5 is so wonderful?
Eric: More than 400,000 Android phones activated per day. Emerging standard is HTML 5. Android apps are different, organized around touch (except, you know, on Google TV — but Google always forgets that). Reasonable to assume many years from now, HTML 5 might take over. Many years.
Walt: What about Chrome OS versus Android. From consumer point of view if there’s a merge point down the line, how does the consumer, you call programs apps on both Chrome and Android, how does the consumer understand.
Eric: The consumer doesn’t understand anything other than they download apps for different devices.
Walt: So it’s really defined by devices.
Eric: Yes, and think about it as touch versus keyboard based.
Kara: Innovation, what’s the one way to stay sharp?
Eric: I think the last few years have shown Google ability to enter new markets and be successful, incredible successes of Chrome and Android, plus YouTube. Intersection of mobile local social is the most interesting area now.
Kara: But what about ideas. Do you have to buy things? Do you have to buy Twitter to be social?
Eric: Our social strategy does not acquire the acquisition of any company, because we can get people to give us that information.
And that’s it.
Postscript: See The Top 10 Things Eric Schmidt Revealed At D9 for a more organized look at his interview.