>> RUSBRIDGER: How's your relationship with the Murdochs at the moment.
>> SCHMIDT: Very--it's very good, actually. We're all very good friends.
>> RUSBRIDGER: They haven't-- >> SCHMIDT: And I'm very good friends with
Steve Jobs, I should say, as well. I know it's a shock.
>> RUSBRIDGER: Um, but Murdoch called you a thief and a parasite. That's quite rude.
Has he apologized for that? >> SCHMIDT: I did not ask for an apology,
nor would I expect one. >> RUSBRIDGER: Do you--do you think you're
a thief and a parasite? >> SCHMIDT: Well, now, that's a direct question,
and the answer to that question is no. >> RUSBRIDGER: Um...
>> SCHMIDT: There was another question. >> RUSBRIDGER: There was a piece--we were
just discussing the piece in The Atlantic by James Fallows which, um, which seemed to
suggest there was real serious effort inside Google to engage with this issue of the future
of newspapers. >> SCHMIDT: Yes.
>> RUSBRIDGER: Is that genuine, or is that just 'cause you feel it's bad publicity and
you want to put out an olive branch? >> SCHMIDT: Well--well, hopefully, Google
does not do things like that because of publicity at all. That would be sort of a violation.
We view ourselves as innovators, and we try new things, and we're not perfect, and we
make mistakes. But hopefully, the things that you hear about are sincere efforts to do something
new. In the case of news, here's the argument I would make. Again, we'll use the iPhone,
iPad, Android phones and future tablets from other manufacturers and so forth as a metaphor.
Think internet first. What does the news reading experience look like some number of years
from now? Well, it's clearly gonna be on one of these digital devices, 'cause you carry
it everywhere. It will have color, it will have lots of information, it will have text,
of course, it'll have video. It'll have the ability to go very deeply. It'll know what
you read, and so it'll show you what's changed, as opposed to repeating things over and over
again. The newspaper often tells me things I already know, because I already read it
and they forgot I knew it, but it's static, not dynamic. It'll have very, very sophisticated
advertising products that are much more multimedia-centric. Think of--the current print ads on newspapers
can be replaced by multimedia display ads that are likely to be quite lucrative. But
the most important thing is it'll be highly personal and that the newspaper will be much
more of a personal construction. When I was trying to comment earlier that there's some
danger that that, um, personal construction will narrow the field of view--and the serendipity
principle of newspapers is very important-- so we'll find some balance in that. So if
you follow that line of reasoning, then Google wants to be the company that offers the pieces
that I just described to content publications like yourself to do with as you see fit. So
the article that you're referring to, Jim's article basically talked about not only the
development of the kind of user interface that I'm talking about but also monetization
both in terms of advertising formats and subscription formats. The Murdoch comment was really about
what are known in the industry as pay walls, and there's a dispute within the industries
whether, ultimately, news will be charged for through a subscription mechanism or through
advertising. My view is we wanna enable both, and we'll let the consumers and the businesses
that properly own the content make that decision. It's interesting that there are many publicly
available free websites that, when offered the opportunity to move to a pay wall subscription
service, choose not to move. 'Cause they figured out a way to make enough money from advertising.
So that is a model. Others, which are more traditional print publications, want a subscription
mechanism, 'cause, frankly, that's what they're used to. They're in the subscription business.
I think we should try that too. >> RUSBRIDGER: And how optimistic are you
that you can come up with something that will monetize business?
>> SCHMIDT: We will eventually. There's--the--the sort of the snappy saying is that we're replacing
analog dollars by digital cents. So I guess that would be pounds, pounds and pennies,
in your case. And the current problem in the industry, in media in general is that the
analog rents, if you will, are being replaced by smaller digital rents for the same technology.
And the numbers really are smaller, the gross margins are different, and that's leading
to a loss of jobs. It's very real. I'm not trying to suggest it's an easy problem at
all. And believe it or not, it's quite--it's much better here in Britain because of the
history of newspapers and I think the British pride, and those sorts of things. But in America,
for example, there are quite a few very, very unhappy people, especially the regional newspapers
and so forth, who fundamentally have been losing their audience at a faster and faster
rate. So it's a very severe issue. I believe that ultimately not only will the revenue
be replaced, but I think it will be higher. And the reason I believe that is that ultimately
the medium is more personal. You know, fundamentally today, you have something where you're targeting
a generic price for an ad on television that--typical example is the television has an ad, at least
on some of your television channels, that are-- that's a, you know, baby diaper ad,
but there's no baby in the house. That's a wasted time slot. They should show something
which is more relevant to people who are in the home, right? So you should be able over
time to build products that are more targeted and therefore are more lucrative, not less
lucrative. So we're in one of those transition periods, and it's very painful to go through
them. >> RUSBRIDGER: China. What's going on? Have
you heard--have you heard from the government? >> SCHMIDT: Um, yes! Yes, we-- we talk to
them a great deal. >> RUSBRIDGER: Today?
>> SCHMIDT: I have not talked to them today, um, using the excuse that I was out of the
country and in a different country. Um, the history was that we decided that we did not--you
know the laws require active censorship. We decided to move to Hong Kong, former British
protectorate, thank you very much. And, um, the pitch in China is, um, one country, two
systems. We like the other system better. So we moved ourselves to Hong Kong, and the
way the censorship works is the Chinese government has what is known as the Great Firewall of
China which sits there and--you're not allowed to talk about it very much--but basically,
content goes through it and some then content doesn't make it to the other side, and that's
how the censorship is done. So we made this decision pretty much unilaterally, based on
the things that happened to us, uh, to great fanfare, and that's been in place now for
a few months. As part of our operations in mainland China, we needed a license called
the ICP license in order to run our businesses there. And the Chinese government said, look,
you have to make a few more changes. You have to get rid of what is called the redirect,
and we didn't exactly have a lot of choice. So we made that change, and that change was
done earlier this week. I want to be clear-- the Chinese government has the arbitrary ability
to shut Google down in China, mainland China, if they should choose to. So far, they have
not done so, and we would hope that they would not.
>> RUSBRIDGER: Some people think the redirect is gonna be an end to Google in China, and
some people believe it's an expedient--commercially expedient move on your behalf.
>> SCHMIDT: Oh, I can assure you it's not--no coherent commercial business would have made
the decisions we made about China-- trust me. This was--this was not a business decision.
This was a principle decision. Because it puts revenue at risk and those kinds of things.
But Google is a different kind of company. We made a decision based on our values and
our principles. I'm sure it's--the decisions are surely negative for the standpoint, compared
to the alternative amount of revenue, but we don't run the company that way. So--so
the answer is I don't know. But I do want to make sure--I think that people who speculate
what's going to happen in China don't understand how China works.
>> RUSBRIDGER: How bruised were your engineers' egos when they realized how badly they'd been
hacked? >> SCHMIDT: Uh, engineers have egos. That's
about all I'll... I'll say. >> RUSBRIDGER: Business head of The Guardian
with his hand up, so it would be rude not to--to ignore him, so, Dan, you've got the
last question. >> ROBERTS: Sorry, I was just dying to ask,
really. The life cycle of technology companies seem to get shorter and shorter. If something
one day will kill Google or replace it or--or--or overtake you, uh, what will that be? Or to
put it another way, what--what's your biggest fear? What keeps you awake at night as your
threat? >> SCHMIDT: Well, having studied this for
a long time, almost all of the deaths in IT are self-inflicted. Large, successful companies,
they make mistakes 'cause they don't continue to innovate. They get sloppy, they get slow.
They start to believe their own press, you know, what have you. Um, so an example would
be I started my talk by saying what's new? And I said nowness, okay? Well, that's a new
concept for Google because, you know, five years ago, you didn't need to worry about
now. We were just busy doing search engines. So we now added real-time information and
that kind of stuff. So my fundamental fear about Google is that we have the same faith
as other companies, which is that we lose that edge. There are successful models of
companies that have been able to maintain that, but they're relatively rare. And so
in that scenario, if we lost that edge, we would eventually be a highly profitable but
not very relevant company and eventually be bought, which would be sort of a bad--bad
thing. Although a long, long time from now. So the external threats are likely to occur
from truly innovative companies, really small ones, that manage to see something that we
don't see, you know, and then build a big enough business that we can't catch up. And
that's the nature of our competition. I don't think that's any different from any other
industry. The difference in IT is it happens so fast. The birth/death cycles are so quickly
because of the scale of the internet. And I think that's permanent. In other words,
it's--it's, you know, the next great success will be an even faster success than Google.
The one after that will be even faster than Google just because of the scale of the internet
and the reach and the things that I talked about.