manufacturers build cost-competitive machines that run Chrome OS and developers write applications that run on it. “You have to be able to run either the current apps you have, or cloud-based apps that are sufficiently good that you’re willing to move over to them,” Schmidt said. “And your employer will probably be very concerned about the cost—what is the lowest cost hardware you can buy? That is how the hardware cycle will go.”
Information technology has a big role to play in economic recovery—but not necessarily as the star of the show.
Schmidt noted that during the original Internet boom from 1995 to 2001, “the entire growth of the bubble was due to two industries, of which IT was one. We were very happy to be at that level of primacy.” But escaping from recession, he said, will require building a new set of industries in which the United States can lead—and the one that he’s most excited about, surprisingly, isn’t IT. “We are clearly the leader in IT. You have an opportunity around biotech, much of which has been done here in Cambridge. In the cleantech area you have massive rebuilding opportunities…[but] then you have the final one, which no one wants to talk about, but which is the most interesting, which is advanced manufacturing—making new things [that come in] relatively smaller volumes but are very technology-intensive, whether that’s batteries or electronics or new materials.” Fortunately for Google, Schmidt said, “Every [area] I named is heavy in IT and the Internet and information processing.”
People fear Google because it upsets lots of apple carts.
I asked Schmidt why so many people fear Google and fret about its plans. His answer came in three parts. “Google is a disruptor,” he said first. When the company applies its unique abilities to new industries such as the news business, Schmidt acknowledged, it almost always tends to upset traditional economic models. But that’s just life, he suggested. “From time immemorial, a new technology comes along and everybody adjusts,” he said. “In this context, Google is a stand-in for the Internet as a whole—if it were not Google doing these things, other people would.” And “we would argue that that disruption has a very strong consumer benefit” in the end, he added.
Second, Google doesn’t choose small problems—so whatever it does affects a lot of people’s interests. “If we do something, we do it at a national or ideally a global level so that it can reach millions of people,” Schmidt said. “That is the standard we use. We are interested in problems that affect millions of people, where we can materially improve the quality of their lives.”
Third, Schmidt said, “We are an information business, and everybody has an opinion about the information business–including every one of you, and me as a citizen, and the government, and the political parties.” Since it’s Google’s business to handle so much information every day, it will always be barraged by questions about how it does so. But “as long as we are on the side of making consumers more empowered, we will be fine,” Schmidt said.
Google stands ready to help reverse the decline of traditional media, but it doesn’t have all the answers.
Speaking of disruption and the information business: Google is well aware of the pain that many news organizations are going through as they deal with declining revenue from print advertising and circulation. If more newspapers decide to start charging for their online content, Google will be there to provide a payment mechanism, Schmidt said. “We’re in the infrastructure business,” he said. He also said Google is “working hard on stronger advertising products” that would help publications earn more money from both print and online ads, but that the problem “remains unsolved.”
One reporter asked Schmidt whether he felt that in the digital economy that Google is pushing forward so quickly, there will still be news organizations capable of covering stories like the Watergate scandal. “We have a responsibility” to help preserve serious journalism, Schmidt said, “but we have not yet figured out how to exercise that responsibility…We are looking for new ideas. It’s a hard problem, because as everybody knows, print circulation has declined, and the online use of newspapers has exploded, so you’ve got a bridge problem.”
