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The challenges ahead for Google

Steve Henn Jan 21, 2011

The challenges ahead for Google

Steve Henn Jan 21, 2011


Kai Ryssdal: Well, I’ll tell you what. Even though Google tried mightily yesterday to spin the news that CEO Eric Schmidt’s stepping down is a net positive for the company, Wall Street was having none of it. Shares gave up almost 2.5 percent as traders digested the news that co-founder Larry Page is going to take over.

Marketplace’s Steve Henn’s been on the Google story. Hey Steve.

Steve Henn: Hey.

RYSSDAL: So where does Google go from here with this leadership change?

HENN: Well you know, what Google wants to do is sort of regain its mojo. They don’t want to become the next Microsoft. They’re facing a huge amount of regulatory scrutiny in Brussels. In Washington, many of their big takeover deals are facing a lot of scrutiny. And this has sort of tripped them up. This is how Eric Schmidt described it yesterday, during the earnings call:

Eric Schmidt: An awful lot of the problems that we’ve been having are people don’t actually understand what we really do and what we don’t do. And some of our competitors are assisting in that misinformation.


HENN: The biggest assist here might be coming from Microsoft. Microsoft executives know better than anyone how regulators can take a dominant tech company and knock it off its game. So Schmidt’s new role in many ways will be that of a blocker. He needs to change the playing field Google’s operating on, and really change the conversation about what Google means to the economy. Larry Page’s new role will be to execute at home. Avoid the kind of disasters we saw with the introduction of Google TV; make the Android operating system pay for itself; and most importantly, figure out how to take on Facebook.

RYSSDAL: Help me understand this though: why does Google have to be another Facebook?

HENN: Well they don’t have to create another social network. But Facebook’s making a case to advertisers that it’s found a more effective way to place ads online than Google has. It’s telling people that knowing what you like and what your friends like is a more effective way to advertise to you than search and links. If Facebook wins that argument, it’ll split the online advertising market that Google now dominates. So Google needs to counter, and it can do that in two ways: it can make the case that search really is the best way to place ads, and it can try to build its own social network that collects the kind of data Facebook has and fight Facebook on its own turf.

RYSSDAL: And it’s worth pointing out here from the numbers that Google released yesterday — Google still gets 97 percent of its revenue from search, so it’s no small fight they have.

HENN: The stakes for Google are huge. This is a really big job.

RYSSDAL: Speaking of Larry Page, the first thing I thought of when I heard this news was Jerry Yang, the co-founder of Yahoo who was made CEO for a while — didn’t go so well.

HENN: No, that’s right. Not all founders are Steve Jobs. And like Jerry Yang, Page is young. He’s 38 — that’s very young to be taking over a $200 billion company with 25,000 employees. He’ll have a lot of challenges, and I think the success or failure will hinge in large part on the role he ends up having to take on here. If he has to play both the public relations role and make those big picture strategic calls, that’s a lot for anyone.

RYSSDAL: April 4th is when the change of command at Google happens. Steve Henn, up in Silicon Valley for us. Steve, thanks a lot.

HENN: Sure thing.

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