Does Google always do good?

Google CEO Eric Schmidt looks on during a conversation with U.S. Speaker of the House Nancy Pelosi October 27, 2008 at Google headquarters in Mountain View, Calif.

EXECUTIVE SNAPSHOT

Who: Google Chairman and CEO Eric Schmidt.

Education: Schmidt earned a bachelor's degree in electrical engineering from Princeton, a master's degree and doctorate in electrical engineering and computer science from the University of California, Berkeley.

Personal: Schmidt and his wife, Wendy, live in Atherton, Calif.

What you may not know: Schmidt is a trained pilot and often flies himself on company business.


Kai Ryssdal: Eric Schmidt, good to have you with us.

Eric Schmidt: Thank you for having me on.

Ryssdal: Does it ever give you pause that you run a company with the reach that Google has?

Schmidt: I guess for me it's always a surprise that Google is as successful as it is and I would always now want to be in something that touched consumers. It's just so much more fun to have real people using your products every day.

Ryssdal: Which is funny coming from an engineering guy who helped develop Java and chief technology officer and all of this and that. You were never a consumer facing person.

Schmidt: No and I would never argue that I understood consumers but what I have learned at Google is that consumers care a lot about information and with simple tools, consumers can do amazing things. And the future of computing is really about what consumers can do with information and all of the new things that we can do for them.

Ryssdal: And also to some degree, what you as a company can do with the information that you get from those consumers.

Schmidt: Right. One of the things to say is that in our lifetime something extraordinary will occur. We're going to go from people having almost no access to information to everyone having access to information and having everyone access to everyone else's information. And this will occur in one lifetime. And the benefit to that, I believe from the standpoint of peace, prosperity, knowledge, health, things that people really care about should be fantastic.

Ryssdal: And what about those people who say, "I don't want my cell phone targeting advertising at me when I walk by a restaurant that it thinks I will like. And I don't want the company knowing all this stuff about me."

Schmidt: Turns out that about ten percent of the people feel that way and those are people who will get their products in other ways. So they'll pay for subscription for information rather than having advertising and they'll be careful not to let other people use their information. Most people are happy to have personal information used in ways that provide value for advertising because advertising by the way, is value in and of itself especially when it's targeted.

Ryssdal: Happy if we can be sure that our privacy is being respected.

Schmidt: Absolutely. And there are clearly regulations on the books today globally that reflect this and I suspect there will be more in the future. And our company makes a commitment to people to respect people's privacy and their personal information because it's central to the trust that we have with end users.

Ryssdal: We had a guy on this segment a couple of years ago, Scott McNealy from Sun Microsystems, who very famously has been quoted as saying and said it to us, "You have no privacy. Get over it."

Schmidt: Yeah, the actual quote was, "You have no privacy, get over it."

Ryssdal: Right. What do you think about that?

Schmidt: If that's true, then I think it's a real loss because we benefit as individuals from some privacy. I don't think anyone wants everything revealed. That's why we have doors and shades and so forth. When you talk however about the way society works, we benefit from open access and transparency. So when we talk about privacy, I'm very strongly in favor of an individuals right of privacy but I'm very suspicious about Governments for example, that assert a right of privacy. You're better off with a Government that is more transparent about what it's doing and what it's up to.

Ryssdal: So in some way, we're just going to have to get used to that . . . this issue that this information is out there.

Schmidt: Well partly people will adapt. The most interesting question to me is you have a generation now that is growing up on Facebook where they're putting up information about themselves that they might regret twenty years from now.

Ryssdal: Might, probably will. Wait till these guys start running for political office, right?

Schmidt: I have a specific suggestion that it should be common and legal to change your name at twenty-one and say, "That wasn't me. It was a different person. Kind of looks like me but I've changed a lot." So we're going to have to do something to deal with the fact that the behavior of people on line when they are teenagers is not the sort of thing that they want to know when they are mature adults in leadership positions; or maybe society will grow up such that it doesn't care. But right now we are in a situation where if a politician for example, makes a single error and by the way, not even politicians are perfect so they make mistakes and God knows everybody else makes mistakes. If you're judged by every mistake you make and you live a perfect life and you make one mistake and everything is recorded and that becomes your defining outcome, that doesn't seem very fair.

Ryssdal: Seems to argue a little bit that maybe there's just too much computing and connectedness out there.

Schmidt: Well if that's true, it's because consumers want it. From our perspective, the appetite from being on-line to knowing what other people are doing, to communicating, to sharing ideas, to be optimistic, to being entertained, to figuring out what Brittney Spears is doing . . . this demand is insatiable.

Ryssdal: Now that your company has become as omnipresent as it has and as interwoven in our lives as it has, what do you do to keep it there, to keep us as dependant on you as we are?

Schmidt: Hopefully, it's not dependant upon you. Hopefully, it's because you come to Google because we do amazing things. Normally in the valley, in Silicon Valley, companies have one great product idea that, as the company gets older, it gets slow and it gets complicated and then a new upstart idea comes along that outpaces them. So that's the story about Silicon Valley. So we designed Google so that we would be innovative inside of ourselves at any size and scale. Now let's hope that this continues. We're organized around something that's called 20 percent time which means that engineers can spend roughly one day a week, or 20 percent of their working time, which is a lot, to work on things that they find interesting. Most of our new ideas come from that 20 percent time. What will happen is an engineer will come up to me and say, "I have to show you a demo. You have to see it and you have to see it right now!"

Ryssdal: Right now.

Schmidt: And I know by the way that that's their idea and not their bosses' idea. And we encourage those kinds of demos and not all of them make it, but somebody will say, "Hey I have an idea" and then they'll talk to somebody else and they'll put a following together and then a great product is born.

Ryssdal: How do you harness that innovation though? What if you have two equally bright people working on sort of the same thing and they both come to you, I mean how do you . . .

Schmidt: Well in fact that happened and we often will find ourselves with two scenarios; we'll let them proceed and find out which one really works, because often small demonstration projects don't really scale. They have defects that aren't immediately apparent. You know it's a great idea but you didn't get the architecture right. Another thing that we'll do is we'll ask people to merge and we'll say, "Can you guys just get along and try to work together because you'll never get enough people unless you put your forces together to try to solve this new interesting problem?" That often works very well.

Ryssdal: One of the things you have said is that innovation is going to be key to starting this economic recovery going.

Schmidt: I agree with that.

Ryssdal: How's that going to work?

Schmidt: Well innovation is how America works. The characteristic of America that is different from other countries is that we have more jobs lost and more jobs created per year than anybody else. Literally the creative destruction, this constant process of layoffs and new jobs and new companies and so forth is key to America's competitiveness. We don't want to lose that. We don't want the Government to make it harder, we want it to make it easier. We want a whole generation of new companies to be formed out of the crucible of this very, very tough recession. It's interesting that many, many of the brands that we use came in tough times. We forget that innovation occurs everywhere and often when things are tough, you actually do better because you have few resources so you are required to focus even harder on the excellent thing that you are trying to get done.

Ryssdal: But in this recession where so many people are worried about their jobs and companies -- they can't get credit a lot of them, they're having to lay people off -- how do you engender that spirit of innovation? I mean, it's one thing for a company like Google to give its engineers 20 percent time. It's another thing for a guy who's having a tough time making payroll.

Schmidt: Well in the first place a lot of the innovations are going to occur unfortunately, out of people who are in desperation and because people get laid off and so they look around and say, "Well maybe I need to go into business for myself or maybe I need to learn something new." And those are tough times and I'm not trying to minimize the personal cost of going through that but all the literature indicates that going through that often produces amazingly committed and creative leaders who say, "Hey, I'm not going to make the mistakes of the past, I'm going to try and do something different. I'm going to go out in a new direction. I'm going to try to solve a new problem." And that's again the genius of America.

Ryssdal: In ten years, given the growth in computing and innovation and the Internet, where is Google going to be?

Schmidt: Well hopefully Google will be very similar to what it is today just even more products and even more reach. But hopefully the Google that ten years from now will have the same values, the same focus on the end user, the same focus on creativity and innovation and of course the world will have moved on much farther in terms of what we can do. A simple rule about the rate at which things are getting better is something called Moore's law. Roughly speaking, it's the doubling of capacity over 18 months. That works out to be an improvement of a factor of 10 in five years and a factor of 100 in ten years. So one way to think about it is that in ten years, the computers you use, the networks and everything you use will be a 100 times faster, a 100 times more capable, or a 100 times cheaper. Think about what we can do with that kind of an insight.

Ryssdal: Well how are you going to make money on that environment? Right? Because things are going to be so cheap that you're just giving a lot of it away. I mean that's your business model now, right?

Schmidt: Well we like free . . .

Ryssdal: Free is good.

Schmidt: Free is good because we use an advertising model. Well I'll give you an example. I bought a printer for $100.00 and I looked at the printer and I thought how do they make any money on the cost of this printer? I mean by the time you add up the cost of this and that and so forth, it's a remarkable product. There's no profit margin in it at all, and yet they have become profitable because these are scale businesses and they've learned how to manufacture things in volume and still make money. That's the relentless pace of American capitalism. So one way to think about it in ten years is that there will be even more cost effective solutions for hard goods and soft goods, such as the digital world that I live in, there will still be mostly advertising. We're going to have more people in subscriptions, people will pay for specialized content, people will pay what is called 'Download to Own'. It will clearly be true, for example that the majority of movie sales will be on-line because it will be possible when it is 100 cheaper just to download the movie to your computer or to your home video. You won't need all of the infrastructure that exists today.

Ryssdal: You guys get though 97 percent of your revenue from advertising.

Schmidt: Yes.

Ryssdal: I can't believe that at a board meeting or two some board member hasn't come over to you and said, "Hey Eric, 97 percent is a lot of eggs in one basket!"

Schmidt: What's funny about it is that not only do they do it at one board meeting, they do it at every board meeting.

Ryssdal: And probably several board members, right?

Schmidt: Of course. The good news is that if you are going to be in advertising, we're in the best kind of advertising because it's targeted advertising, it's measurable, it's called return and investment advertising. And frankly if you are going to start a new business out of this recession, the first salespeople you'll use are the Google Ad Words product because it's very, very efficient to reach your customers to sell your product. You literally have these little text ads. It's a remarkably successful business for us and we are very proud of it. From our perspective, the next big one is in the enterprise area because the kind of innovation that is occurring in the consumer market has not yet occurred at the same rate in the enterprise -- big companies, little companies and so forth. And all of the same things apply just with greater concern over security. So as the networks become more secure, as we become better at providing high qualities of service, we think we can build a significant and non-advertising based business out of enterprise.

Ryssdal: There's a story I read about you actually, when these engineers came to you and said, "Listen, we've got this new program called Ad Words and Ad Sense and it's going to make our revenues go up by 10 percent." You actually went up to them and said, "Please promise me it's not going to go down 10 percent."

Schmidt: Yeah I was terrified because the company used . . . it's a good lesson at how wrong you can be or at least I can be that in the first year of the company, the company had no cash, almost no revenue, and the company was using fixed prices for advertising. And the company invented this auction system that we use now where people bid on keywords. And I was terrified at our revenue because I figured the ads didn't work very well, that the ads would go to zero, and what happened was that we did this conversion, our revenue exploded positively. Prices went up by a huge factor. All of a sudden we had lots of cash and also we had very angry consumers because the consumers weren't getting the same kind of reports. I remember sitting in New York at our sales meeting and a sales person talking to a customer who was yelling at this poor young woman about "couldn't get his report, couldn't get his report" and I said, "Why?" and they said, "Because they need it every day." That's how central the on-line advertising is to these businesses. If they don't get it every day, they don't get paid. If they don't get paid, they don't make their payroll. That's when you know you have a successful business.

Ryssdal: So you guys, being fundamentally an advertising company . . .

Schmidt: Yes.

Ryssdal: Yet you say and the founders have said, "Our mission is to organize all the information and make it accessible and easy for humanity to use." Isn't that a little grand for an advertising company?

Schmidt: Advertising for us is a tactic to achieve a broader ambition, which is to make the world a better place. And that may sound arrogant but it's a good goal and I would hope everyone would have a view of making the world a better place. We like to work on problems which affect a lot of people and which can be where we can make a big improvement in their daily life. Something which all of a sudden they can't live without and if we build such a product, if we can invent such a product and I would argue that some of the Google services are that or close to that, then it's possible to make money. So far we've come up with good advertising but let me tell you that if you have customers who cannot live without your product, you can find a way to make good money from that.

Ryssdal: Do you worry though about that perceived arrogance, I mean there's a not small group of people out there who think Google is the 'evil empire'.

Schmidt: Well in the first place we've always had the arrogance that you are describing and so we have to accept that it's part of our culture.

Ryssdal: In the most positive sense I think.

Schmidt: Yeah and arrogance is needed as a leadership model because you have to believe that you could actually change the world in order to attempt it otherwise you would never try. You would just sit around and say, "Oh woe is me." So we temper it by the reality that we are not perfect, that we make mistakes. We've had a series of business failures and not large ones but small ones, which we talk a lot about so we can understand the errors that we've made. So while we are not perfect, we are consensus-driven as a company. That's the reason why I'm a lot of time talking and learning from mistakes that we've made.

Ryssdal: Who's a threat to you now? Who's the biggest challenge?

Schmidt: There are many different kinds of threats. There's a set of issues involving governments and governments because of the role Google plays could easily write regulations that could make it difficult for Google to operate.

Ryssdal: Let's refine that statement for a second. You're getting some attention now, as much as Microsoft got in the antitrust world and some of the activities in scanning of books and copyright and all that stuff, I mean you're getting some attention from governments.

Schmidt: We are and I think we have good answers in those cases and because we are not the same as Microsoft, because we've grown our company very differently on a legal basis and a practical basis, we think we have good answers there. But I don't think that this is going to stop. It seems obvious to me that information is important and governments will want to be involved in how information is communicated to their citizens. The most extreme cases are countries which block access to Google and/or to You-Tube and they'll use a, sort of an example, they'll pick one video in You-tube out of 100 million and using that as a pretext they'll block the whole of You-tube even though that video has been removed. And that's an example where governments are not being truthful as to what they're doing and we think that that is bad. So that's one category of threats. Another category of threat has to do with our competitors and in particular both Yahoo and Microsoft have new and strong offerings in the market and we'll see how that plays out. We obviously have strong responses coming out as well so we always worry about that. And then another one that is a business threat is that there are a set of companies that have done a pretty good job of picking the parts of advertising that we do that are the most profitable, and we worry about them because it's cream skimming. And we understand that and we worry that the consumer will ultimately find that a better solution. We want to make sure we're just as good, if not better than those specialized vendors.

Ryssdal: How do you run this company?

Schmidt: It's run in a strange way. We have a normal hierarchical structure. The company is organized 'bottoms up' from the standpoint of product creativity and 'tops down' from running the quarter and the financials and so forth. We encourage dissent, we encourage large group conversation, we encourage there to be somebody who's opposed to the decision, and we work very, very hard to be not hierarchical in the way that decisions are made. Often if we can get a decision, we get the best decision if we have two decision makers, not once. We never make decisions in private; we always do them right in front of everybody.

Ryssdal: Is there going to come a time though that when you mature as a company that you won't be able to do that; that you're really going to have to exercise a little adult supervision here?

Schmidt: Well first we would argue that the results so far prove that the combination of tight management in one part and loose management in another is working. By virtue of the enormous world recession that we've all gone through, we face the question of for example, the free food and the massages and so forth. And we've made the decision that those are central to the way that the company works and that we are not going to get rid of those; that the employee benefits and the other aspects that make Google creative are still very important.

Ryssdal: Do you ever feel that maybe we all just need an off button just to be able to disconnect for a little while? I know that's a little bit counter-intuitive for a guy in your position.

Schmidt: I would argue even more strongly that every device needs to have an off button and you need to know how to use it because it's possible to spend your whole life on-line and miss out on the enormously wonderful human things about life. That technology will never replace the joy of holding your child or grandchild's hand, the smell of food in the bakery. We're not trying to compete with that. And I worry that the human brain is so easily addicted to things that we can become addicted to information. And that we can discover that you need to go out and smell the fresh air, go get some exercise, be healthy, tell people you love them, all the things that are important about being humans. Humans are not the same as computers. We're not trying to replace the human mind by the computer, we're just trying to have the computers do things that they do well to augment human lifestyles.

Ryssdal: You've seen those new ads for Microsoft search product Bing, right? where people spout off random bits of information and out of context and out of all syntax and then they come up and say, "Bing! A different way to search." Do you worry that maybe this ubiquitous access to information just isn't good for us?

Schmidt: I think the evidence so far is that people really do want to see everything. And if that changes, then we'll adapt because part of our secret is that we are willing to throw out the mistakes and the ideas and the beliefs of five years ago for something that works better if it's tested and if consumers really do it. So in the scenario that you described, I'm sure we would face that question. So far the evidence says that our approach is the better one.

Ryssdal: What keeps you up at night though? I mean you're in a position of extreme consumer influence. You've got lots of brand awareness. What's not going right for you?

Schmidt: The thing I worry about the most has to do with the infrastructure of the culture of the company and the way that management works. The issue, that we have plenty of cash, we have a very strong brand, we're very creative, our model works and it scales . . . but you always want to tweak it. If you ever let things stay the same, somebody else comes along with something better. So what I worry is have we not spent . . . if we spent enough time criticizing ourselves. Have we been tough enough on the kind of decisions, have we been smart enough on where we put our resources or have we gotten sort of 'fat, dumb and lazy' as you can because you take your eye off the ball?

Ryssdal: What do you think though about some of these Web 2.0 applications: Twitter and Facebook and all these other things that have come along since you brought Google to national . . .

Schmidt: Both Twitter and Facebook are very good examples of the Web and Web 2.0 success and we think they've done very, very well. It's interesting that out of that there were many, many, many hundreds of companies with 2.0 that took and then you've not heard of, they're gone, that never did anything. So once again it's survival of the fittest. It's a brutal world out there and there's now a phenomena curiously called Web 3.0 and I'm sure we'll go through that.

Ryssdal: Oh is there? See I hadn't heard that. Oh God.

Schmidt: And I'm sure we'll go through the same cycle. And out of that a number of other companies whose names we don't know today will emerge in a year or two.

Ryssdal: Well, make me smart here. What's Web 3.0?

Schmidt: It's basically just the Web and the social apps and building applications on top of everything that you just talked about.

Ryssdal: What's next for Google? Where do you go from here? Just more?

Schmidt: Well many things. Search is not a solved problem. There are many ways to understand it, that is when you type in a query we show you 100,000 answers as opposed to just the one right one. Ideally, Google you would type in a search, we would understand exactly what you meant and we would tell you exactly the right answer and we would get it right every time. I'm sure that's not possible but we need to get closer to that goal. Search is not a solved problem by any means, there're a long many, many years ahead of us.

Ryssdal: That's a little distressing actually.

Schmidt: But it's the state of the art and the good news about computers is that they are getting so much faster, we are inventing new ways of what is called artificial intelligence, it's very, very exciting. In advertising we think that we can build much more sophisticated advertising products. Ones which are even more personal, more mobile, more interactive, tells the story better. Advertising, remember is about telling the story and getting people to buy at the end. Don't you want to have this incredible experience through the ad and at the end buy and send us all your money.

Ryssdal: No! I don't.

Schmidt: Well, but that's in fact how ads work. It's important to remember that advertisers advertise in order to get a sale. So the closer that we can get from ad to sale, that's a better product. We have a lot of other things coming. We're working very hard in the mobile space. We think that the next generation of mobile phones are phenomenal -- that this platform that is a still camera, a movie camera, it's got a GPS in it, it's got a big screen, you could do all sorts of interesting things, you could watch movies on it, etc. Oh, and by the way, you could even talk on it cause it's a phone. That is a phenomenal new thing coming out! And this generation of phones, I'm starting, of course, with the I-phones -- of course, I'm on the Apple Board I should say. The iPhones sort of pioneered it and then these other folks coming, they're all just great and we're all going to be big players there. There's a lot of other things that we can do with all this information and we're trying to figure out how we can take advantage of it. The most obvious one is Google Earth and Google Maps. Right? Finding things. Try and understand that we were talking about, climate change. You can now visualize the impact of changes that mankind is bringing to the globe. People care about this.

Ryssdal: What do you care about?

Schmidt: From my perspective, Google and my personal beliefs about the power of information are in alignment. I fundamentally believe that the best solution to a dictator, to bad governance, to bad behavior is more information. I believe that the solution to bad speech is more speech. I believe in the American ideals of communication and people love to talk and they love to know what other people are doing and so far I think that's great! So Google is a force for that and we take for granted here in the U.S. that those things are obvious. In many, many countries in the world their economic systems, their legal systems are really quite fragile and they don't have the kinds of benefits and transparency that we do. If Google can bring that kind of understanding and that kind of information, then we will have changed the world.

Ryssdal: For all that you say you are doing right, what are you doing wrong... stuff that we don't know about?

Schmidt: Well often the things that we are doing wrong I don't know about because if I did, we would've addressed it. Often things take time to discover. We'll start off on a project and it won't work out and you'll say, "Why didn't we know that earlier? Could we have seen it earlier?" As I mentioned earlier, I do worry about retention and loyalty and you know, people as they work in the environment for a while and they say that the 'grass is greener' somewhere else. So I worry are we spending enough time developing our people. I worry a lot about public policy and governments because there are so many of them. And a single politician who doesn't understand something and a judge who doesn't understand something could wreak some significant havoc on the values and principles that we're talking about. Ultimately I think that these are things that are overcomeable things but they're not overcomeable without a lot of management attention. So management's job in a company like Google is to make sure that we are asking the most important questions. There's plenty of able people in the company working on them. Are we working on the right questions, are we getting them right, and are we fixing the issues that are ahead of us?

Ryssdal: You know you have said that we have to innovate our way out of this recession, that that's going to help us get going. President Obama has said many of the same things; you are a supporter of the President.

Schmidt: I am.

Ryssdal: Are we doing that? Are we innovating enough to turn this economy around?

Schmidt: Given the complexity of the federal government and the way it really works, I don't know how we could have done better. Having said that, it's really hard partly because the presidency is not a dictatorship in our country, thank goodness! And the House and Senate have a long and complex relationship around special interests, campaign contributions, agendas for their own districts and so forth. It's a mess, and it's a mess that we love but it's a mess that you have to work through. So many of the original ideas seemed obvious to me don't get through the process because of some special constituency or some issue and regulation or some historical thing I wasn't aware of. So given the way our government works and given the crisis that the president was presented with on his first day in office, I don't think he could have acted more quickly. Having said that, we want to judge them based on the outcomes, not what they say. And we're not done yet. We really want to say, "After the two years of the Stimulus package, did that money really provide stimulus or did it go to special interests?" Because if it went to special interests, then that would have been a disservice to America. But if that money that went into the stimulus package went to the right places and got us moving again quicker, then we should be able to know that, then I want to salute it.

Ryssdal: How are you going to know though? As a guy who runs a company that has enormous access to data, how are you going to know that things are turning around?

Schmidt: In the case of the Stimulus package, the Government has indicated that they are going to publish the details. And if they don't, then we should hold them accountable and that if they do publish it, then we can judge it. And the great thing about Democracy, at least in America is a lot of people will spend time on these things. But there's so many things in front of us: healthcare reform, the energy issues, cap and trade and so forth that it's of enormous complexity. So the only thing I can think of is publish what you are doing, publish the models, and let all the smart people in Universities and research labs and U.S. citizens who are connected to a broadband connection in their home figure it out with you. Don't close the citizenry off from debating the outcome; make us be part of the process. That produces a better country.

Ryssdal: There was a lot of talk about you as the chief technology officer for the president, chief information officer. While I can appreciate the latitude that comes with being in a private enterprise, why didn't you take the president up if you feel so strongly, as you clearly do, that government can help solve a lot of these problems?

Schmidt: I'm clearly a supporter of President Obama and I like the team and know them pretty well and I think they've done a good job and my biases are clear. For me personally, I looked at Google and I looked at the opportunity before us at Google and I thought that was the best way I could make the world a better place.

Ryssdal: Do you talk to the president?

Schmidt: Yes.

Ryssdal: What do you talk about?

Schmidt: Mostly innovation. What I like about this president among many things is he's a president who believes that science matters. So I'm one of the members of the office of science and technology policy, and we're working on the agenda for the President in terms of making science back to where it should be. That the fundamental facts in innovation and the kinds of things that we've talked about here are really part of the policies of the American government: investment and basic research, understanding where the important things are, what kind of policies the government should have with respect to climate change, nuclear proliferation, technology scaling, those sorts of things. And innovation. And indeed one of the things that we are working on is an Innovation Task Force to understand what are the barriers, because it's easy to say innovation. Everyone is in favor of innovation. What's the barrier? What's preventing you from building your new company, getting access to the new market ultimately creating wealth? Is it regulatory? Is it that you can't get any money? Is it that you can't get the smartest people? Let's figure out those barriers and let's knock them down one by one.

Ryssdal: You have used the word scale many, many times with us here today which implies that you believe bigger and operating at economies of scale is a better way to do things. How do you convince people not to be afraid of Google if clearly what you guys want to do is more of what you've been doing?

Schmidt: At many levels the company is run under a set of principles. These principles have been established since its' founding, they're not going to change independent of the leadership and myself, and so forth. The company was founded on a set of goals, around "don't be evil," focus on the users first, those sorts of things. We face much regulation and much inspection from governments around the world and we'll deal with that. We feel that as long as we are really focused on consumer benefit, in other words if the action we take really does benefit the average consumer, that the rest of the industry, the rest of the government will get around that because consumers speak in democracies.

Ryssdal: I'm going to crib for myself in the conversation we had not too long ago at the Ideas Festival and ask you if "don't be evil" means "always be good?"

Schmidt: You asked and it's the best question I've had on that in many, many years. We use "don't be evil" as a way of discussing what to do. We don't know what the definition of good and evil is but if you see something (if you are an employee) that you think is evil, you're supposed to say, "Hey, that's evil!" and discussion is supposed to ensue. Do we really want to cross that line? Are we really getting what we think about? And often we end up in product reviews where somebody's come up with a product and after we look at it we say, "It's too tough, it's too close to the things that people care about, it violates too much privacy, it's a misuse of information." Those kinds of things and we stop it.

Ryssdal: And so far we, the consumer have had to trust you, the company to make those decisions. Can you see a time, not 'do you think it would be a good idea or not' but can you see a time where the Government might be interested in saying, "You know what? Google, you are too powerful, too instrumental in this economy, we need to regulate you."

Schmidt: Well I hope that doesn't happen because you know innovation occurs in private companies, not in governments. If that were to occur and this of course were a hypothetical, I would hope that the regulations would be written in such a way that they weren't on a per company basis but they were rather about information, and that we would have a debate about the proper role of how information can be used. And ultimately there are many unanswered questions about how do copyrights really work? Who gets access to this or that? And those are issues that were not very important before and because the Internet exists, they are now in front of everyone. The issues of privacy, the issues of misinformation, the issues of transparency are all very important.

Ryssdal: Will there come a time when somebody in government is going to say, "You know what? There is too much Google out there. It's too instrumental and we have to do something about it. We have to regulate it."

Schmidt: Well I hope not because private firms are much more innovative than governments. If it should occur and this of course is hypothetical, I would hope that the regulation that you are talking about would be done on an information basis and not on a company basis. And those rules would be about how information is used. There are many unanswered questions as to exactly what the policy should be about copyright, and privacy and so forth and so on where the old systems were fine because nobody really cared. The Internet has brought those issues right to the fore.

Ryssdal: Eric Schmidt. He's the Chairman and CEO of Google. Eric, thanks a lot.

Schmidt: Thank you very much for having me on.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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