A Conversation With Sergey Brin And Eric Schmidt

Google co-founder Sergey Brin and CEO Eric Schmidt are holding an audience this morning with a roomful of journalists in New York City. They talk about the Google Books settlement, antitrust scrutiny, Android, Chrome, innovations in search and the “evil room.” Below are my live notes (I’ve bolded parts for emphasis).

Sergey Brin: We have had a number of interesting activities. A bunch of you saw the verizon announcement, android, software platform, more enhancements in terms of faster software, better software. A number of devices are coming out as a trickle, many more we expect. Google Books, a hearing today, but generally that is something I am very proud of, to make the world’s books accessible. Have written a little piece I hope comes out as an op-ed.

Eric Schmidt: It seems like Sergey has jumped the gun. We should focus mostly on search, and some of the ideas Sergey has. We are having our global sales meeting here, we brought senior sales executives. The mood was very, very positive. We told them that the worst is behind us and we are clearly seeing aspects of recovery, what is notable is we are seeing aspects of recovery not just in the US but in Europe. I thought it was going to be US first, Europe second, Asia we never saw a hit. We are increasing our hiring rate and investment rate in anticipation of a recovery.

Sergey: There are a bunch of things that have come out recently, you can now get more commercial results or less commercial results. There are other controls that are coming down the pike. I will highlight now, today you can restrict things by date, but that is based on dates mentioned in the text, cannot restrict based on the date the text was authored.

Steven Levy: You have more activity from your competitor in Redmond, rolled out a branded search engine. Historically when one competitor steps up it opens up innovation. Do you feel this increased competition will ramp up your innovation, or is it just business usual?

Sergey: I think it is healthy for the industry to have many competitors. You’ve seen search engines such as Cuil and Powerset that MSFt acquired. MSFT has made its contributions. We are working as hard as we can, but I do think having all of those competitors out there generally helps the health of that industry.

Q: Do you think Bing is something different or a rebranding?

Sergey: I don’t want to speak about our competitors

Schmidt: Better for you to judge. We like to focus on our customers. We have been criticized

Ed Baig; where do you stand with Android?

Sergey Brin: At the outset, we started to focus on Android because phones basically lacked powerful browsers and phones also lacked the ability to easily run applications. I think Android has really addressed that really well, but it has also pushed the rest of the market. I am pretty excited for the future of mobile phones because they are increasingly getting quite capable. You can write an application across five phones, we plan to push the state of the art with Android. I might be overstating it a bit, but having the software platform has freed the hardware makers from software platforms, now they are reinvigorating hardware design

Q: Enterprise market?

Sergey: definitely a market I am very excited about, born from an internal need, being able to handle many hundreds of thousands of emails. At the time that we started and launched in 04, Webmail offerings at the time [were limited] we wanted something that would work in an enterprise, and made it available to consumers, pushed things further [than our competitors].

We feel we are further ahead, for you to judge, in email capability and collaborative document editing. Sites All of those would be available to enterprises and consumers. And I think ultimately the cloud model is a better model.I think this install-less system of the cloud is better.

Stephanie Mehta: can you characterize future investments Google needs to make for medium to larger enterprise?

Ken Auletta: If the judge says why should I not be concerned about your concentration of power, what would you say to him?

Schmidt: It is an error to answer hypothetical questions from a journalist. The question you posed is not actually a question that will occur.. Book search, we thought we were doing something appropriate. We were sued by a bunch of publishers, and now it has come before a judge. We don’t want to change it unless we need to. The hearing is going on right now. My guess is in this hearing there will be a date for another hearing. Does putting the books in the hands of someone like Google who has other strategic resources a problem? It is possible for another company to do what we are doing. And the rights registry, which we would administer is something we would do for the orphan works. The scenario that is in front of us is probably the best outcome for someone who is looking for information that is not otherwise available.

Sergey: regardless of the settlement we want to make more books available online.

Q: You keep adding to Chrome and nobody seems to be paying attention. If that is one of the places where the battle is fought you seem pretty far behind.

Sergey: Perhaps that is true in media . . .

Schmidt: let me, some of your assumptions about Chrome adoption are wrong. The adoption rate of Chrome is [very strong]. We are going to do a better job of getting that message out.

Schonfeld: Steve Ballmer calls it a rounding error, is it?

Schmidt: I don’t respond to Steve Ballmer questions. Next question?

The fundamental aspect of Chrome is speed. People who go to Chrome have a hard time moving back. Two months ago we announced Chrome OS. Everything is linked together, Chrome, Chrome OS, the cloud

Sergey: There is also the security aspect. In a recent hacker competition, Chrome was the only one to escape unscathed in terms of security vulnerabilities. And more stable.

Tom Post, Forbes: Lately there seems to be a revisiting of settlements with core media where you seem to be taking a new approach. Leading question is not is Google too big and mean, rather is Google being nice? Do you have a new product out called Google Remorse?

Schmidt: In many ways we always wanted to be this Google, rather than the one we were perceived of last year. I am really proud about relationship with advertising agencies. In the media industry, the success of YouTube. We have always wanted to have these partnerships. We are learning how to do it in a way that they win too.

Sergey: People have always equated Google with the Internet, which is disrupting businesses.

Schmidt: Google is an innovator, the innovations in the internet are causing collisions. Innovation plus collisions equal opportunity. The fact that Verizon has adopted the open principles we articulated five years ago is shocking. This is Verizon. It happened over time.

AP: AP’s president said that big news sites might be willing to pay for news if they get it as an exclusive for 20 or 30 minutes. How does that sound to you?

Schmidt: We have a contract with the AP. I don’t want to talk about a proposed services where we pay more. We have to be very careful not to favor one publisher over another. We are not trying to get into the content business.

Q: What are the most attractive areas for acquisitions?

Schmidt: we turned off M&A down, we didn’t want an additional expense streams without [additional revenues] We’ve turned it back on again. One day Larry and Sergey bought what became Android, and I didn’t even know about this. They said this is really interesting. I didn’t think about that, but now think about the strategic opportunities that created.

Schonfeld: Would you make a YouTube-sized acquisition again?

The problem at buying at those levels. With a little one you can afford [to make mistakes]. Youtube and Doubleclick those will prove the best spending of money. They are harder. Any large acquisition we do will have a second review. We deal with a different world now than we did a few years ago. We bought that then MSFT has largely got out of that after their acquisition of aQuantive didn’t work out, so there.


Schmidt: I just met with the chairman, this broadband plan is what they are really focused on. We are incredibly sensitive to roll out of broadband, the number of searches we get, the revenue, without broadband there is no cloud computing.

Q: So what policy suggestions did you give him?

Schmidt: More broadband. I think we are on our way to getting a national broadband plan for America. It is one of the best things the government can be doing.

Q: Do you ever worry Google is growing too fast?

Schmidt: No.

Q: how do you manage the growth?

Schmidt [jokes}: As you can see, not very well. In technology markets, you either grow or die.

Sergey: hardware is getting incredibly capable. It used to be that most of your money in a computer went to the display. Your costs now are dominated by broadband connection. I think that is an interesting trend. Wide broadband availability, when you think about your phone, you are probably paying $40 to $50 a month for it. Your device cost is negligible compared to your access cost. I think certainly there are changes on the horizon.

Schmidt: we provide the infrastructure below what you are talking about. Think about a Kindle two to three years from now, what will it look like? Better screens, more features, and there will be many Kindles. The iPhone has proven that you can sell a phone with a subscription. The contract cost is greater than the cost of the phone. So what do you think, do those prices remain higher from AT&T and those guys, does the hardware become free?

Sergey: From a consumer point of view, I think it will be better if you end up with devices that are not locked down to a service, like Kindle is locked down to Amazon or iPhone to AT&T. I think it is better if the consumer can pick the devices and services they want.

Danny Sullivan: I can go through and fund really bad results. You seem to be rewarding a site’s authority and a site’s age. Also something Eric has said about signals, like intent to purchase from Google CheckOut. You seem to have data other people cannot get because you give away free tools. other people can tap into Google Analytics to see conversion

Schmidt: every one of these has a competitor. Google is an advertising company, we don’t have cross-subsidization

Danny: There is a closed loop in . . .

Schmidt: Well there is no closed loop, there are competitors and we make it possible for you to get out

Sergey: In analytics, we just noticed that when advertising partners start using analytics they spend more on our site because all of these stats become apparent to them. If I spend $1,000 a month more on Google, I will make X more profit. So we realized that we should make analytics

Q: When the phone companies had to deal with this, maybe the solution is that when a competitor comes into the market they have to lease Checkout data at a reasonable rate?

Schmidt: It is a false analogy. One, antitrust law does not cover it, two?, three the information we make available to consumers.

Segey: You could argue that Paypal and Amazon data is more valuable, so they should make it available first.

Q: coming back to Google book settlement,

Schmidt: In the book settlement, everyone has raised a lot of issues. The question is not whether they are interesting, but whether they have legal standing in the settlement.

Sergey: the companies that are making objections about out of print books are doing nothing for out of print books, MSFT and Amazon. I guess they scanned 15 books. These objections that Google will be the only one.

Schmidt: make an alternative proposal that solves the problem

Schonfeld: Would it be possible to extend the terms of the settlement for orphan works to other companies?

Sergey: It would be legally impossible. You are looking at this as an either/or. Does not preclude other settlements, will make legislation more likely. The companies complaining now, if they were engaged in the digitization process we were doing, digitizing 10 million books, there would be nothing stopping them from achieving the same thing.

Schmidt: the goal is to get all the books available and make sure the authors are compensated. The settlement was not a total solution, it was the best we could do.

Q: How do you plan to promote this in places that don’t have libraries?

Sergey: In respect to the settlement, it can apply to all books in all languages, but unfortunately it only affects U.S. readers which is a really sad thing. One of the great things about the U.S. is the fair use aspect. Which other countries don’t have.

Q: Why is there not a danger you will be bringing consumers into closed loop in the future?

Schmidt: there are many reasons why we will not be like MSFT. The first has to do with the culture and the founders. The other is the ease of moving out of these online services. Having taken such a strong position a a company. If we went into a room and were exposed to evil light and came out and announced evil strategies, we would be destroyed. The trust would be destroyed. Fourth, none of us want to go through the legal proceedings.

We have not yet found the evil room in our campus.

Sergey: Chrome OS, if you want to use it on your Mac, every change is available, all the source code is available.

Schmidt: Today we have zero market share in Chrome OS because it is not shipping. Imagine a scenario where we got to 80% market share with a free product, which I think is unlikely. Let’s say we go into the evil room and decide to start charging. A competitor would be able to take the code that we had and continue to offer our business model, while our new business model runs us into the ground. That is why open source provides a protection.

Peter Kafka: Will you make another stab at moving into other platforms (TV,radio)

Sergey: We are still optimistic on the TV front. Radio and print did not work out as we had hoped,. Television has a lot of similarity to Internet advertising in the sense of its much better measurability via settop boxes. You can see immediately how [many people are watching].

Schonfeld: Is PageRank long in the tooth, are links the still the best metric?

Sergey: No they are not and we decided that in 1999. We use various link algorithms, including what pagerank has evolved to, links are 1%, 100 other factors we look at. Yes,there is spam, and the web changes. We are able to do better and better, can do a much better job ranking than we could a decade ago, if we had rested on our laurels and just stayed with what was in our paper we published in 1998 we would be in pretty bad shape right now.

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Inspired By Google, Microsoft Adds Voice Command Feature To Bing Search

It’s been almost a year since Google introduced a feature that allows iPhone owners to search the Web using voice commands, and now Microsoft is getting into the game, too. As announced on the Bing Search blog, Sprint Wireless’ brand new Samsung Intrepid phone now comes equipped with a fresh voice user interface from Tellme, a speech-recognition company that was acquired by MS in early 2007.

As the video below demonstrates, you can use the new interface to search the Web by speaking your search query, compose a text message or dial a contact by simply talking instead of typing. The company cites a study from Sanderson Studio that found 40% of smartphone usage occurs in multitasking scenarios where the user cannot offer their undivided attention to their phone, and claims the new voice command feature should simplify their lives.

Despite what the title suggests, I think it’s perfectly fine for Microsoft to add features that plenty of people will find useful, whether Google came out with them ages ago or not. Competing companies copy stuff from each other all the time, so it’s hardly something to get overly worked up about.

Of course, the feature is restricted to just one phone on one carrier only for the moment, so in the meantime you can check out services like Dial2Do, although that application is more suited for action commands than searching the Web.

I hope in time Microsoft comes out with apps for the most popular platforms rather than keeping this type of feature phone-specific.

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Four short links: 7 October 2009

  1. Followup to jwz's Palm App Store Fiasco -- redux: still nothing concrete from Palm, but they're saying they'll create a second-rate app store into which open source apps will go (along with apps that Palm hasn't reviewed).
  2. Schmidt on YouTube -- the interesting bit for me was Every minute, more than 10 hours of video is uploaded to the site.
  3. Company that won $585M from Microsoft sues Apple, Google - The infamous '906 patent granted to Eolas and the University of California was one of the first patents to get the young online tech scene going in 1998. The patent addresses third-party browser plug-ins to run various forms of media as an "embedded program object"—essentially a program that runs within another program. Eolas promptly sued Microsoft for its implementation of ActiveX in Internet Explorer, which set in motion a years-long legal battle between the two companies. and won $585M, now they're suing many large Internet companies. (via Hacker News)
  4. IBM Uses Mussels as Sensor Network -- Concerned with the environmental and revenue impacts of leaks during oil drilling, StatOil sought an innovative and automated way to detect leaks. They wanted to replace a manual process that included deep sea drivers. StatOil’s innovation, they attached RFID tags to the shells of blue mussels. When the blue mussels sense an oil leak, they close which prompts the RFID tags to emit closure events. In response to the events, the drilling line is automatically stopped. And, in case you are wondering, this is of no harm to the blue mussels. (via monkchips on Twitter)

New Google Logo Celebrates The Barcode

Google’s new logo is a barcode which, as far as we can tell, says “Google.” Today is the 57th anniversary of the first patent on the bar code. Inventors Norman Woodland and Bernard Silver filed the patent on October 1949, and it was granted, No. 2,612,994 (pdf), on October 7, 1952. The original patent was for a system that would encode data in circles (a bulls eye pattern), so that it could be scanned in any direction.

The barcode on the Google homepage is Code 128 encoded, which is a standard way of encoding ASCII character strings (ie. A-Z, a-z, 0-9, etc.) into a barcode. It would be safe to assume that Google used their own open source barcode project, ZXing, to generate the barcode. The same library is used in Android for barcode recognition.

The barcode is a technical innovation that has become an often unnoticed, yet essential, part of modern day life. The format is a global standard, where a scanner from any manufacturer can interpret almost any conforming barcode from anywhere (assuming it can interpret the encoding format – which is UPC in the case of products, and Code128 or something else for other applications, depending). The barcode is a great example of why uniform protocols and standards serve a greater good for everybody, and the same lesson certainly applies to the web.

We had to double check that the barcode in this instance was correct (some of the geeks here insist the barcode isn’t 100% correct), since Google have previously messed things up a little when they try and talk geek dirty.

Google regularly changes its logo for holidays and other special events. Here’s their 10th birthday logo from last year, for example. More recently they celebrated Gandhi’s birthday. Google hosts some of their holiday logos here, and fan created logos here.

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Mobile Advertising Is Shaping Up To Be All Search

WIth the rise of Web phones like the iPhone, Android, Blackberry, and Palm (Verizon’s CEO says that 40% of its new phone sales are such smartphones), mobile advertising promises to be a huge growth area. The Kelsey Group, a market research firm, projects that the mobile advertising market will balloon from $160 million in 2008 to $3.1 billion in 2013.

Of course, that is just an educated guess which will turn out wrong. But there is no doubt that mobile advertising will be much bigger in four years, perhaps even ten to 20 times bigger than it is today. Where will all of that mobile ad money go to? Here I think the Kelsey group is more on target. It projects that mobile search will go from 24 percent of the total mobile ad market last year to 73 percent of the much larger pie in 2013, according to a recent research note put out by Citi analyst Mark Mahaney, which is where I’m getting all of these numbers.

Display ads are projected to go from 13 percent of the total to 18 percent, while SMS ads will decline as a percentage from 63 percent to 9 percent (see charts). So once again it looks like search is going to be the big winner. No wonder Google is so focused on mobile search as one of its major sources of growth.

Think about it. Display ads take up precious real estate on your phone screen and tend to just get in the way and be an annoyance. That’s why most people don’t like them. But when you are doing a search on your phone, you are often looking for something nearby—a store, a restaurant, a dry cleaner. You are more open to ads, especially if they are relevant to your search.

Mobile search is particularly tuned for local search ads. Mahaney writes:

Given the nature of mobile devices, local queries on mobile should, over time, be greater than local queries on the desktop.

Indeed, the Kelsey Group predicts that local searches will rise from 28 percent of all mobile searches in 2008 to over 35 percent by 2013. And as a percentage of mobile search ad revenues, local search is already half. So that is a $1.27 billion market opportunity in four years just for local mobile search.

So who would you rather be: Google or some random mobile ad network shoving display ads into apps and mobile browsers?

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Google Experiments with a Single-Word, Fading Homepage [Google]

Google is reportedly experimenting with a new fading homepage design in an effort to create a cleaner, simpler interface.

The experimental design does away with every detail except for the Google logo and the search box, revealing the other navigation links only when a user mouses over the screen (one version of the page removes the "Google Search" and "I'm Feeling Lucky" buttons entirely).

Check out the above video demo to see the fading homepage in action, then let us know if you think this would be a welcome feature in the comments.

Google: A Web Browser Is Not A Computer, Not A Search Engine, And Not A Ham Sandwich

482608166_8657a3616fGoogle has spent a significant amount of time over the past couple of years building a very impressive web browser, Chrome. By most accounts, it’s the fastest around, and isn’t system resource heavy, and those who use it seem to love it. But there’s a tiny little problem: Being the best product doesn’t matter when general users have no idea what the product even is. And I’m not talking about just your specific product, I’m talking about the product category in general. And I’m not talking about some crazy new tech, I’m talking about a web browser.

We’ve actually known since Google’s hilarious video this summer that plenty of normal people have absolutely no idea what a web browser really is, even though most use one on a daily basis. But today, Google has put together what can only be described as an extremely dumbed-down one minute video (below) and rudimentary website to attempt to explain to everyone once again exactly what a web browser is. And make no mistake, the undertone is clear: You should be using Chrome.

The web site consists of five parts: An area telling you what browser you are currently using, a place to show you the one-minute video, an area to show you a bit more about browsers and their performance benchmarks, an area to let you pick a new browser to try, and an area with tips and tricks for using a browser.

The video is much more subversive. While the first part is spent explaining what a web browser is not (not a computer, etc), by the end, Google throws out there that “the web browser is the most important piece of software on your computer.” And they continue, “so a faster web browser means that you’ll save time on every web page you open.” The hope there is that of course, people will look into what web browser is the fastest, and figure out its Chrome, and install it, since it is free to do so.

Of course, Google doesn’t bother to say that if you look up the fastest browser, find it to be Chrome, then try to install it on a Mac, you’ll be out of luck. Good luck trying to explain what Chromium builds are to these people, Google.

I all of a sudden don’t feel so bad having difficulty trying to explain to people what Google Wave is. And maybe now we know why Google actually is making Chrome OS: To stop having to explain to people what a damn browser is.

Screen shot 2009-10-06 at 12.30.27 PM

[photo: flickr/marshall astor]

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