SPEAKER: Enter.
It's now a great pleasure and
on honor to introduce the next
thing that's going to happen,
which is a fireside chat.
And we have Eric Schmidt, the
CEO of Google here, who is
going to be in conversation
with John Micklethwait, who is
the editor of The Economist,
which I think that most people
would regard as the leading
financial source of information
in the world today, and
mandatory reading for just
about every board member of
every multinational institution
in the whole world.
So would you like to welcome
our two next guests
to the panel.
Thank you very much.
JOHN MICKLETHWAIT:
OK, thank you.
Thank you very much.
I'm John Micklethwait, I
suppose rather obviously.
in This is a difficult
assignment for two reasons.
The first is, I think that my
main job here is just to fire a
couple of questions at Eric and
then open it up to the floor.
And the second reason why it's
difficult is because
essentially Eric is the host
here, and my role, for better
or for worse, is to be kind of
an awkward dinner party guest,
who comes along and
ask questions.
ERIC SCHMIDT: I had some
questions about my subscription
to the Economist.
JOHN MICKLETHWAIT: Strangely,
that's not in the script.
But I thought I'd ask one,
hopefully, awkward question
about google, and then one
slightly pretentious one about
the more general wider world.
On Google, I wondered what
keeps you awake at night.
What you regard as
the biggest threat.
And in order to push you a bit
further on that, do you think
of it in terms of a new
competitor, a change in the
landscape, google looking for
more revenue outside just
search advertising, or do you
see it as a change in the
medium, with maybe things like
content changing, maybe the
legal environment for content
changing, or do you see it as
that old chestnut about
reputation, and Google as the
new Microsoft, or whatever.
ERIC SCHMIDT: I think the
answer's sort of yes.
First I want to thank
everybody for coming.
Your time is very valuable.
i think this is the finest
assemblage of leaders that
we have ever had at Google.
And I think it's a credit to
both yourselves and the
partnerships in many cases
you've been able to do within
the internet that you're here.
To answer your question,
the things I worry about
are mostly internal.
They're mostly about
growth, and scale, and
globalizing the company.
We're beginning to see
significant issues about
our role in the world.
So for example, concerns
by governments about our
policies and so forth.
And many of these are things
which, you assume that
information is very important,
and the right information at
the right time is even more
important, means that people
have significant stake
in the outcome.
So we've modified our policies,
we've tried to be more
transparent, we're trying to
be clear as to how we
sort all those out.
Looking forward, I think the
great challenges at Google
have to do as much with how
information is used, what
information is available,
because we're getting very,
very good at getting
information to people
right now, on the device
that they care about.
JOHN MICKLETHWAIT: Do you see
any big change in terms of the
move-away from search
as a revenue source?
ERIC SCHMIDT: Well, we're
certainly not moving
away from search.
In fact, one of the key
messages in the last month or
two for the company, has been
that we want people to get
excited about all the new
things that we're doing, but we
want people to be very focused
on the core business of the
company, which is around
targeted textual advertising,
Now targeted textual
advertising business, the core
business of Google, has
tremendous runway, if you will.
Lots and lots of expansion.
Many, many industries have not
yet fully taken advantage of
the benefits of targeted
advertising, people
doing search online.
And there's a lot of
growth coming there.
We were always, of course,
inventing new things.
Indeed, just to confuse things,
last week we introduced a
general new phrase for the
company called search
ads and apps.
Because we have enough
interesting online applications
that people are beginning to
consume that we wanted to give
them a proper place
at the table.
And of course, this past week
we announced a redesign of
Google homepage which
integrated search in a more
fundamental way across multiple
types, including video and
other kinds of media.
JOHN MICKLETHWAIT: My bigger
pretentious question is about
privacy and the law, something
we were thinking about last
week at The Economist.
I wanted to know what you
thought were the areas where
you think the government can
go into Google and ask
about information.
What rights you think the
government should have in this
area, and what rights you think
us as individuals should have.
ERIC SCHMIDT: Google is subject
to the laws in the countries
that it operates in.
Unfortunately from a Google
perspective, the laws
are not all the same.
It would be a lot easier
if everybody had exactly
the same policies.
And we can debate whether that
would be a good thing for
society as a whole, but from
our perspective it makes
our operating structure
very, very complicated.
And it's going to get more
complicated as online video
takes on, because online
video is a very, very
powerful medium.
And the tremendous success of
YouTube that I think Chad was
talking about, and everybody
sees every day, will bring
many challenges right to
the to the forefront.
The way we have approached
this, is we've taken the
position of, one we are
absolutely subject to the
law, and two, people can
disagree over some of
the details of the law.
And in a properly functioning
democracy, the way these
disagreements are played out,
you know, there's a charge,
and a counter-charge, and a
lawsuit, and so forth, and a
subpoena, and you
can fight those.
And here in the United States,
an over-aggressive prosecutor
actually gave us a subpoena
that would, in our opinion,
have violated the rights of
many of our searchers for
an unrelated reason.
So we indeed did fight that,
and one of the great things
about the American judicial
system, is that a judge
agreed with us, and order a
limitation in that search.
Excuse the pun.
And so the effect of that,
was that we ended up with a
perfectly reasonable outcome.
We've recently, in YouTube's
case, had a couple of
governments decide that content
that was on YouTube was
illegal under their law.
And we have our own lawyers,
and we agreed, and those
particular videos, which were
very small, handful, were
in fact removed from the
standpoint of that audience.
So that's an example where we
are dealing with the law.
With respect to privacy,
each country will have a
different cultural answer.
In the United States, there's a
law called the Patriot Act,
which many people, including
myself, are not in support of.
But it is however the law
of the country, and so
we are subject to that.
If we do get a subpoena,
we have to follow it.
JOHN MICKLETHWAIT: Do you think
of yourself as needing a
standard beyond the law?
Do you have a the internal
standard which goes all the way
across the organization, or do
you just have to follow the
local laws where they are?
I saw you changed your
standards about privacy
a bit last week.
ERIC SCHMIDT: Privacy
in which case?
JOHN MICKLETHWAIT: In terms
of the information that
you can keep about people.
ERIC SCHMIDT: Another thing
that we've done, is we've
historically kept logs of
all our users' search.
Which would be difficult,
but at least theoretically
possible, to track down
to that individual.
And after a lot of discussion,
we decided that this is
not such a great idea.
Especially from a
professional perspective.
So we announced a policy that,
log data retention as it's
called, essentially the logs
that we keep would be
automatically expiring, unless
the user asks them to be
maintained, which most
users would not, somewhere
between 18 and 24 months.
And there are different
laws that apply, whether
it's 18 or 24 months.
But the some of that, we think,
is a proper balance of interest
in our judgment between the
government's right to know what
people are doing, versus
the right of people's
individual privacy.
And it seems like democracies
are ultimately coming
to the same conclusion.
But it's a very interesting
question, that new technologies
create new legal problems.
And computers can know
everything, they can track you,
they can invade your privacy.
Where is that line?
Google is one of the companies
facing these challenges.
This is a good example of how
we came up with a good, and I
think clear, answer on that.
JOHN MICKLETHWAIT: And I can
throw it out into the audience.
Any questions?
You're all much
politer-- There's one.
You could stand up and ask.
Sorry, there you are.
AUDIENCE: Google's
success [INAUDIBLE]
whereas now [INAUDIBLE]
communities, et cetera.
[INAUDIBLE]
What do you think about your
development, where you
see Google [INAUDIBLE]
going forward?
ERIC SCHMIDT: So to repeat the
question for people who could
not hear, the question to do
with non-algorithmic search,
and whether some of these new
social communities that have
search embedded will become
an important component.
A couple of comments about
the new social communities.
They really are happening.
And it's worth saying that to
an audience of people who do
not look like they're
twenty years old.
There's this enormous explosion
of people who are spending
their lives online.
In Europe there's a leading
company, in the United States
there are a couple leading
companies, in various other
countries, there's no single
global standard for
various reasons.
It's a very real phenomenon,
there's a tremendous amount
of traffic associated
with these communities.
And in those communities,
people do search.
Our approach is to offer Google
search to those communities.
Because we think people who are
embedded in those communities
will need the kind of
algorithmic search
that Google offers.
We in no way believe that
search at the scale we do it
can be done with anything less
than the best algorithms, the
best computing approaches and
the best databases, which
indeed Google, we think, has.
So that's the, affect of this
is people will spend more and
more time in these communities,
but we believe that they will
use Google search to do so.
JOHN MICKLETHWAIT: The
gentleman at the mike there.
If other people want to ask
questions, maybe they could
fall in behind the mike.
AUDIENCE: Hi, I'm Martin
Varsavsky of FON.
I had a question about not life
online in terms of communities,
but computing online, meaning
Gmail, documents, spreadsheets,
and more and more doing
your computing online.
Would you say that's a minor
project at Google, or it's
a major project at Google?
ERIC SCHMIDT: It's a very
significant, and hi, Martin,
it's a major project
at Google But it goes
something like this.
My guess is, everyone here
in the audience has a
mobile phone with them.
And my guess, if I reached
over and grabbed it from
you, you'd be very upset.
You probably carry it with you
most of the hours that you're
awake, and you'd be very
upset if you can't find it.
This new device will be the
primary way in which people
will use the internet over
some number of years.
So now we have a device which
is incredibly personal,
incredibly powerful, and
incredibly attached to you.
You really use that device, and
the reason I use mobile is that
I think it illustrates
my point.
The same is true of personal
computers and Macs.
This new lifestyle is a
lifestyle where you're on the
go, and you're mobile, and
you're doing it all the time.
You don't just wait, and then
go home at night, or go
to your office and do it.
It's always with you.
The architecture that Google is
based on, which is this
cloud-computing model, where we
have very powerful servers that
are managed by professionals,
and you have this powerful
browser that allows you to get
access to these applications,
is a transformative one.
It is the new model of
computer architecture.
It's funny that we've been
talking about this in the
industry for 15 or 20 years,
and 15 or 20 years ago we said
pretty much the same things.
The difference is, we did
not have the networks.
We did not have the mobile
phones, we did not have the
computing power, we did not
have all the services.
So it used to be that you'd
have to put all this on your
personal computer, and when
you dropped your personal
computer, you'd lose
all your information.
Now you can keep all the
information in a
cloud-computing model on Google
and others, and then you can
sort of find it when you drop
the computer, and
everything is fine.
It's such a better model.
The applications that you're
referring to are really
just the beginning.
And if you think about most of
the common applications,
they're going to work better
when they're managed by a
company like Google, and you
can access them from any
device, whether it's at your
mobile phone, your PC, your
Mac, or the many other
computing devices that you'll
be having over the
next few years.
JOHN MICKLETHWAIT: I saw the
other day you were quoted as
saying on the future, you
said, mobile, mobile, mobile.
I wonder what you saw
as the biggest barrier
to stopping that.
ERIC SCHMIDT: Well, the math on
mobile is very interesting.
With a European audience,
I don't need to tell you,
because the European mobile
penetration is so very high.
There are roughly 2.1
billion mobile phones.
There are around somewhere,
2.4, 2.2 billion.
The growth rate for mobile
phones is faster than
that of the PC industry.
So not only are there a
larger number, but it's
also growing more quickly.
There will be more than a
billion new mobile phone users
in the next three to four years
created, a billion people
coming into this world, and for
the majority of those people
it'll be their first
computing experience.
It will not be a personal
computer going into a mobile
phone like most of us.
Historically the basic problem
with mobile phones is that our
fingers haven't changed in
10,000 years, and people are
sort of struggling with the
problem of finger size.
And the conclusion is, these
complicated devices that are
really remarkable, which have
keyboards, other kinds
of input, and very
powerful screens.
There are a number of such
devices coming, and I think in
the next year, we'll have
forgotten what it was like not
to have one of these devices
with us, certainly among the
professional class, globally.
The issues on those devices,
then, aside from the form
factor, have to do with getting
applications to them, getting
the right applications
architecture, and so forth.
And we've done that.
We and other companies
are doing that.
So, this year is the year
where that really happens.
AUDIENCE: Hi, [INAUDIBLE]
ERIC SCHMIDT: Google
has an unusual way of
recruiting people.
They searched for a CEO for
16 months, Larry and Sergey.
And each candidate had
to spend a weekend with
them doing something.
One had to go skiing with them.
I, of course, refused.
And that notion of recruiting
is such a personal thing.
People think of it as
systematic, but in fact it's
really about exceptional
people and the exceptional
things that they do.
A suggestion here is that when
you think about hiring
somebody, try to hire somebody
who is very interesting,
somebody, we call this the LAX
airport test, which is
the Los Angeles airport.
If you were stuck in the
airport for six hours
with these people, would
you actually survive.
And the kind of person who
passes the LAX airport test,
sorry about this, Los Angelinos
here, the solution to that are
finding people who have a broad
range of interests, and
who are accomplished.
So we hired a rocket scientist,
who had gotten bored with
trying to launch rockets and
wanted to work at Google.
We hired a neuroscientist who
decided that it was too
dangerous to operate, wanted
to work on computers.
Our VP of engineering, who was
an astrophysicist, who in his
spare time, and has since
retired to go pursue it full
time, was a brilliant person.
Hiring is really about finding
people who have a broad range
of interests, and who can
really deal with the
unexpected challenges ahead.
One way to think about risk is
that the best way to manage
risk is to have the smartest
people working on the problem.
The smartest people are going
to be the ones who are the most
creative and the ones who have
the most interesting
new insights.
So operationally, the question
is how do you operationalize
that, and of course it started
with the founders and the first
management team, and, you know,
sort of with the
group dynamics.
And another group that I know,
a venture capital firm, had a
rule that, they would only hire
somebody who, when you walk
down the hall and you looked in
their office, you would want to
smile at them every day
for the next ten years.
So that was another test.
So these things are very
important in terms of building
a acceptable culture and a
sense of accomplishment.
You want to find people who
have a great sense of what
the world could be like.
Then you want to get them in
roles where they can do that.
And they themselves will
help you find other people.
Another insight.
As we've grown, and the company
of course is now a larger
company, we were concerned that
we were hiring the wrong
people, especially in some
groups where we didn't have a
lot of oversight, because we
were growing very quickly.
So Larry one day suggested,
why we just review all the
hiring in the company?
And I said, you can't do this!
And Larry said, sure we can.
So today, the senior executives
of the company review every
hire in the company every
week, just to make sure.
Hiring turns out to be where a
lot of the mistakes I made, not
just on the people, but in fact
in expanding the wrong
organization or investing in
the wrong area, and it's
where you catch them.
AUDIENCE: For an outsider, the
competitive landscape seems to
be heating up over the
past couple of weeks.
So I'd love you to comment on
that with what's going on with
the WPP buying 24-7 and
specifically address Microsoft,
both in terms of
[? quantive, ?]
but also what they did with
their mobile acquisition
in the form of Tellme.
ERIC SCHMIDT: In what
context of competition?
AUDIENCE: Just your sense of
the competitive landscape, and
whether it's accelerating,
or not really, and how
concerned you are about it.
ERIC SCHMIDT: Since our IPO,
and since the business success
of the company, I think any
questions as to the value of
targeted text advertising, and
sort of the economic value of
this return-based businesses,
has been eliminated
in people's minds.
I think everyone now
understands that advertising
that's done in a more
targeted way, is going
to be more valuable.
So many of the companies that
you named are much more
valuable today than they were
three or four years ago, simply
because people now understand
that the model they've been
pursuing for many years in
fact was the right one.
In DoubleClick's case
DoubleClick actually was a
pioneer in this, they did
this for five or six years.
So that's again partly why
we were attracted to them.
Google has not been very
focused on our competitors.
We've preferred to focus on
our strategy in solving
end-user problems.
So we've not particularly
analyzed the question
that you asked.
My own view is that the
consolidation that you're
describing is a natural
next step in the
evolution of the market.
That when you see a market like
this exploding, first you have
a 100 different choices, and
then they always end up
consolidating down to a
few leaders, of which we
want Google to be one.
I don't agree that there's
any particular change
in competition.
I think the market has always
been competitive and I think
that this is the next stage
in that competitiveness.
Microsoft has always wanted to
enter the search business, has
always wanted to enter this
targeted advertising business.
This is the next step in their
evolution of trying to do that.
JOHN MICKLETHWAIT: Do you
think they're finally
getting it right?
ERIC SCHMIDT: Well,
they haven't done
the acquisition yet.
They've just announced it.
AUDIENCE: I'm Brian McBride,
I'm with Amazon here
locally in the U.K.
And we've got a good
relationship with Nikesh
and [? Dennis ?]
and your teams here.
But how would you address the
concerns that some people might
have about the number of places
that you've got to choose to
play in the internet in the
e-commerce food chain.
Your revenues in the UK are
approaching that, with the
national print market, you've
bought DoubleClick, you've got
a payments instrument, you've
got a shopping portal, and is
there a danger that you'll be
seen as the Microsoft of this
industry, where you perhaps
threaten to control a number of
the entry, and the key
points in the chain?
ERIC SCHMIDT: I worry about the
perception, because I think
it's a perception I'm
beginning to hear.
And we've talked a lot about
how this is in fact different
from the last movie.
The the next movie is different
from the last movie.
One has to do with the fact
that the company is run
on a different platform.
It's run on an open-source
platform, it's much, much more
partner-focused, for example,
than Microsoft ever was, and
we share in revenue in ways
that Microsoft never did.
Another is that we're very end
user focused, and that our
success comes from end user
growth, and then our
advertising partnerships and
other revenue comes along.
It's analogous, using The
Economist, as an example
The Economist has
great circulation.
Advertisers advertise in
The Economist because
it has a circulation.
If it had no circulation,
the advertisers would
go somewhere else.
It's obvious when you think
about in that context.
From the standpoint of growth
and impact, we believe that the
policies that we put in place,
which are focusing on end
users, protecting people's
privacy, we have another
commitment we make for end
users which is not to
track their data.
We'll, if you become
dissatisfied with a Google
product, we won't prevent you
from moving your information.
We believe that some of that is
a very different story, and
it's a good story from the
end user perspective.
End users can always
choose another solution.
And in that case I think we're
proud of that strategy, and we
think that whatever the outcome
there, is a good outcome.
We're not very focused on the
size and the revenue numbers
that you described, because in
fact although the numbers you
quoted are large numbers,
they're a drop in the bucket
compared to the total size
of, for example, the
advertising industry.
Advertising agencies will
become an increasingly larger
portion of that, because we'll
need the agencies as our
partners to offer this complex,
variegated set of services all
those different communities.
So I think one of the key
messages here, is that to the
degree that we're the innovator
and advertising solutions for
these end users that are so
precious for us, we
need partners who can
extend that reach.
We don't have the people, we
don't have the knowledge,
we don't have the tools.
And it's very real, we really
do need those partnerships.
And again, many of those
partners are here in the
room, and have spoken
today and tomorrow.
AUDIENCE: Mr. Schmidt, it's
Marco Argenti from Dada.
It's an Italian company.
Hi.
Just going to ask you to bear
with me for a few seconds
while I go through
my language barrier.
And when I was installing the
latest version of the Google
desktop search, I noticed while
searching my email, you can now
actually view the entire email
by clicking the plus button,
and you know, something pops
out, and basically, I now find
that 90% of my searches for
emails, in terms of reading the
content, doesn't require me to
go to the actual email client,
which, you know was
probably the result you
wanted to achieve.
So what I thought, if you
translate that to web search, I
thought, if one day you decide,
maybe, to put the little plus
button, which allows you in the
same way to actually see your
cache result of the webpage
within the search itself, there
might be a scenario in which
maybe most people would
actually conclude their search,
right there, without ever
touching the destination site.
Which, of course, if someone
wants to take this scenario to
the extreme, it might be that
only traffic we ever get as a
publisher is the
Google Crawler.
So I just wanted you to comment
on that, and if you think that
that could be a tool in your
hand to control the traffic
that goes directly
to all sides.
ERIC SCHMIDT: I understand the
scenario that you're painting.
I think there's a number
of assumptions there.
One, that that particular user
interface will become popular,
two, that we would somehow mask
the traffic, that people would
in fact not come, and therefore
you wouldn't see the traffic.
There's a relatively simple
solution, which is for us to
simply send you through some
new protocol, all the
information that you need to
understand how your content
and advertising and so
forth is being used.
We have no reason to withhold
that information from you.
So if the scenario you
described occurred, which I
think is probably unlikely, we
would want to make sure that
you got the measurement tools,
you knew what was going on, and
you were not being robbed in
any way of access to
the information.
AUDIENCE: I was just saying
that it might be even user
useful, for the end user, to
terminate the search they were
looking for without physically
having to go to the site.
ERIC SCHMIDT: I understand.
And we have to be very careful,
because we do not ourselves
host the content.
We think of ourselves
as the fastest way to
get to the content.
So if we can make that
connection faster, that's
great, but we don't want to
somehow prevent that traffic
coming from the internet.
So I think again, it's an
unlikely scenario, but in that
scenario, we would want to make
sure that you had the necessary
tools to understand
what had happened.
AUDIENCE: Do you see
auction-based models as being
the future standard of how to
sell space, and other media?
ERIC SCHMIDT: Second-price
auctions, which is what we use,
which is known as a Vickrey
auction, are the most
efficient pricing mechanisms
for dynamic markets.
There are advertising markets
where it's not obvious how you
would do the auction, but
we will try to apply an
auction as much as we can.
So we use two
techniques at Google.
One is we use targeting.
And there are some
models that are more
targetable than others.
For example, radio is hard to
target to the car, because
we cannot address each
radio independently.
However, we can address small
areas, which are a collection
of cars driving around.
Or houses that have radios on.
So that's an example where
there's a limit to the
technology, but we'll take the
technology as far we can.
With respect to auction-based
advertising pricing, it
does produce the most
efficient prices.
So we'll try as best we can for
the inventory, for example,
that we're purchasing,
television ads and so forth,
we'll see if it works.
A story for you all is that
today we have a multibillion
dollar business called
Adsense for Content.
And today the partners sharing
revenue for the content, we
show ads on their content.
So it's the inverse of
what we normally do.
Essentially they produce the
content, we show ads on it.
In order to get the deal
started, we had to
have some inventory.
So Sergey walks in and says,
I need a million dollars,
I'm going to go buy
all this contest.
And I said, no.
And so two weeks later, he
comes in and said, well I
bought a million and a half.
And I said, how does
that equate to no?
He said, well, you'll
be happy with us.
And the reason I tell you the
story is that million and a
half dollars of inventory then
allowed us to build the
measurement system and the
auction system that is now
producing this multibillion
dollar business.
The majority of which goes
to the content partners,
not to Google.
JOHN MICKLETHWAIT: I wonder
if I can ask you a selfish
question about my own industry.
What future do you
see for newspapers?
You're often cited as one
of the people taking
away their business.
What happens in the long-term
to the old media, as I believe
we're sometimes named?
ERIC SCHMIDT: Well, there many
different kinds of quote,
older or traditional, media.
And their fates are different,
based-- and they're also
in the hands of the people
running them, of course.
Newspapers, which is the one
you asked about, are in many
ways in the most difficult
situation, simply because of
the rough economics, in the
United States, I don't know the
European numbers, there's been
a roughly 16% drop in
circulation in the
last 15 years.
So their user base, if you
will, is declining on
a circulation basis.
And while they have built very
successful digital websites,
the digital websites' traffic
and the monetization of those
has not made up for the
loss in circulation.
Especially when you add
in the yellow pages.
And the yellow pages turned
out to be a very significant
component of advertising
revenue for these newspapers.
So this is leading to a set of
consolidation, and we should
expect more consolidation.
Unfortunately, we're trying
to do a number of things.
The most important thing we're
trying to do is that we've
built a product called Google
Print, which is an advertising
product that takes, I think the
numbers are 70 advertisers in
100 newspapers, or maybe it's
the other way around, and we
basically have created an
auction-based market collecting
ads and then shipping them out,
to try to get more revenue
to the newspapers.
And because we have such large
advertiser reach, we believe
advertisers will also want to
do targeted ads inside
the newspapers.
That's an area where
maybe we could help.
The long-term restructuring
of the newspaper industry
is probably a bad thing.
It probably reduces voices, it
probably affects economics.
And I think it's
very unwelcome.
And I think anything that
Google and companies can do to
increase their monetization,
better ad tools, better
monetization of digital sites
is a good thing for the world.
JOHN MICKLETHWAIT: One of the
problems for the media industry
is that digital advertising
comes at so much cheaper
than the print version.
Do you see that
ever evening out?
ERIC SCHMIDT: It could.
You're exactly right that the
ads you get in the digital
format do not, today, monetize
on a view basis at the same
level as the ads that they're
replacing from the
lost circulation.
However, we have seen, over the
years, improvements in ad
technology and algorithms that
give us much better
monetization.
So there's every reason to
believe that that will improve,
and anything that we can do to
increase the slope of that with
either more choices, better
targeting, more advertising,
expanding the market is a win.
JOHN MICKLETHWAIT:
Pre-consulting, say,
for the Economist.
AUDIENCE: Hi, I have a question
with regards to Adsense,
as you mentioned earlier.
Steve Balmer called you, called
Google, a one-trick pony
a couple of weeks
or a month back.
And yet, the last figures
I saw was 46% percent of
your ad revenue actually
comes from AdSense.
So the blogosphere is growing,
communities are growing, and
you built a money-making
machine that's actually
growing with the web.
Now why don't you have any
competition from that?
I mean, you do, but not from
your biggest competitors.
Why don't they get it?
ERIC SCHMIDT: I'm not sure
that I want to tell them!
AUDIENCE: Can you tell us?
ERIC SCHMIDT: Adsense for
Content has been hugely
successful, and the model has
been out long enough that I am
surprised that others have not
been able to enter the market.
We use particularly good
targeting algorithms, Adsense
for Content, the Adsense
product itself, reads the
page, the content, and using
artificial intelligence
techniques, actually figures
out what the page is about.
This is a very important
innovation at Google,
that I don't think
has been replicated.
And my guess is,
it's the targeting.
There's literally just
better technology to
do the ad targeting.
Which is of course a core
component of what Google does.
JOHN MICKLETHWAIT: Thank you.
Well, we're just about running
out of time, if there's one
more question, we
could allow that.
AUDIENCE: Google in five years.
What will be the same,
what will be different?
I'd be interested in
your big picture.
ERIC SCHMIDT: Yes, so the
question was, Google in five
years, what will be the same,
what will be different.
From an end user perspective,
we are very early in the
amount of information that
we'll have in Google.
I know it seems like Google has
a lot of information, but
compared to the total amount of
available information,
especially information that has
been very difficult to get in
proprietary databases, behind
firewalls and so forth, we
don't have all of
that information.
Furthermore, the rate at which
information is being produced
is now accelerating, because of
the advent of all of
these new devices.
Video and so forth.
So Google in five years
will be much bigger in
terms of information.
The algorithms will
continue to be better.
One of the things that that's
happening is, we're getting
better at personalization.
We have a product called
iGoogle, which people
use, where you can
personalize google.
And one of the things it
does, is it also gives you
personalized search results.
It actually gives you better
answers because of who you are.
Now if you don't want to have
personalized my search results,
you can just turn it off.
So again, user control
is very important here.
But the basic idea here is that
by having more information
that's more personal, we can
eventually get to our goal.
And our goal is that you Google
a question, and it gives you
exactly one answer, which is
always the right answer.
And furthermore, that Google be
able to answer questions that
we cannot answer today, like,
what should I do tomorrow?
Pretty reasonable question!
A lot of people
out the question.
Where should I go?
What job should I take?
What do you foresee
as my future?
And we can have a lot of fun
with that, but the important
thing is that we cannot even
ask the most basic hypothetical
questions, because we don't
know enough about you.
We don't know enough about who
you are, what you care about,
and what your place
is in the world.
That's perhaps the most
important expansion.
Another component of Google's
expansion will be the
impact that we're going
to have on advertising.
As our advertising business
grows, and as the partnerships
that we're talking about here
globalize, we'll see many more
partnerships, and much
more targeted advertising
in places where there
historically was not.
We have a major radio project
which has been well-discussed,
we have online video
advertising, display ads, which
have been very widely
discussed, and we're entering
the television advertising
market with a set of trials and
different technologies.
Some of those are going
to be hugely successful.
When Google operates, we don't
necessarily know which ones,
but we know how to measure it.
So we know it will be the same.
And in many ways, I think
Google will remain the same, in
that Google represents, at
least to me, in addition to a
great company, a fun place to
work, and a place where an
awful lot of innovation
will continue to occur.
I think that the core
innovation that we have, the
way we run the company, the
kind of people we attract, the
partners we attract, the fact
that you all were willing to
spend so much time here,
indicates that we can be a part
of your future, that we can be
a part of solving some of the
interesting world problems.
And I think the most important
thing about Google's mission is
that information is important.
Getting the right information
to the right person, globally,
is an important calling for
all of us to participate in.
JOHN MICKLETHWAIT: Thank
you all very much for
the questions, and thank
Eric particularly.
Thank you.
