Eric Schmidt at Progress & Freedom Foundation Aspen Summit

GEORGE KEYWORTH: Good evening,
ladies and gentlemen. It is a great pleasure for me
to introduce our dinner speaker, Eric Schmidt, chairman
and CEO of Google. I doubt if there are any other
of you who flew your own twin-engine jet into Aspen
with your own hands. From the very beginning of the
internet, Eric was there in a leadership role, whether in
strategic planning, meaning understanding where it was
going, or in technology development, that is, helping
it get there. I first met Eric a number of
years ago when he was CTO of Sun, during the early days of
Java, and Sun’s internet software program, where Eric
played the key leadership role at a very critical time. He then went on to become CEO
of Novell, which he piloted through some challenging
times, and superbly so. But for the last six years, he
has had one of, if not the very best and most interesting
job in the world as CEO of Google. It has been Eric’s job to move
Google from its startup phase to a sustainable business that
could grow rapidly while still preserving its unique
corporate culture. I might as well add here, by
the way, that everything I didn’t already know about
Eric, I found out by Googling him. Now, in my welcoming comments
yesterday, I noted that it’s not only technology that drives
innovation today, but it’s new business models, too. Google symbolizes that, and
I look to Google to help illuminate the path of
opportunity that binds all of us here in this room tonight. It is my pleasure to welcome
Eric Schmidt. ERIC SCHMIDT: Why
thank you, Jay. Thank you very much, Jay. Thank you very, very
much, Jay. I have always wanted to come
to this conference. I’ve always thought it
was fascinating. So now I get a chance to come. And what I fundamentally
want to say– and hopefully, I’ll be brief and
we can get into questions and comments to see if you
agree or disagree– is that the internet has created
this remarkable set of free markets, open competition,
competitive growth, and we need to keep
it free and open. It’s actually important,
right? People nodding their heads. If it goes the other way, we’ve
got a serious problem, because this thing is
really phenomenal. So how did this happen? Well, there’s the very
long version and the shorter version. But the global growth of the
internet is essentially about open standards, about
interoperability, and people working together to
make stuff happen. And that these platforms,
whether it’s internet or mobile, are platforms of
opportunity that are at a scale that we’ve never
built before. They’re at the level of roads
and electricity and so forth. But it’s happening quicker. It’s happening more
universally. It’s happening faster and
growing more quickly than we’ve ever seen. So we’re going to need a
whole bunch of stuff. We’re going to need to promote
universal broadband access– everybody here already
agrees to that– keep the internet open– and I’ll talk a little bit
about that– making information available, and
defend freedom of speech. All of which are fundamental to
taking the internet, which is not at the end but in fact
at the beginning of this remarkable phenomenon,
to the next level. So I actually read the PFF
stated philosophy. Pretty interesting. Limited government, free
markets, individual sovereignty. I agree. And the internet
agrees as well. Much of the internet was built
on these principles. You’ll notice, those of you who
have studied the way it was designed 30 years ago, free
markets, free markets and open standards that lead to
technical innovation. Limited government, we all
understand the role, and governments always like
to muck around and try this and try that. Hands off is usually
the right answer. And empowering the individual. And one of the things that
people are struggling with is we’ve never had a tool that has
empowered individuals at this scale in society. We’ve always had mass
structures. The small numbers of people
controlling or influencing or helping or whatever, a large
number of people. Well now, we have this
enormous number of individuals, not all of whom
are perfect and not all of whom are right, who are now
participating in this experiment. And by the way, my personal view
is that one of the great triumphs of America is
the American system. In fact, it not only created
this, for all the reasons we know, but in fact, it’s
perfectly adapted and capable of dealing with the challenges
that it poses. Not just this year but 10 years
from now, and 50 years from now, and 100
years from now. Look at what we’ve survived
as a country. We can survive spam on email
on the internet, too. The internet– the statistics are phenomenal. 1.3 billion users. There are on the order of two
and a half billion mobile phone users. There are estimates that there’s
another billion or so people who will enter the mobile
telephony world in the next three to four years, for
many of whom this will be their primary data
communications device. And these are people who
have not participated in the global dialogue. By the way, will they see a more
open network or will they see a more controlled and
contained network? It’s a fundamental– these are a billion people. It’s a lot of people. And they’re important, because
they’re suffering. And we have an opportunity
to influence that. I went to our Ann Arbor office
and– these are young employees, many out
of college– and I said, how many of you
have a home phone number? And I counted 9% of
the hands went up. And I thought, God,
I’ve gotten old. I won’t ask this audience. But the world has changed. And it’s a simple model. It’s a simple example of how
that’s all changing. The technology base case
of all of this is not slowing down. Everyone here’s heard
about Moore’s law? Not slowing down. Doubling every 18 months,
pretty exciting. There is a similar law, which
is even more frightening. It’s called Kryder’s law, which
says that the rate of disc drives is improving at
roughly double every year. So you might have thought that
you’d be spared by having all of these copies of everything
following around all your life. In fact, it’s the reverse. It’s gotten to the point– we did a little estimate that
in 2019, you’ll be able to carry a device for the hard
drive, which will have 85 years of high-quality
video in it. So you would be dead
before you watched everything you’re carrying. I’m not quite sure what problem
this solves, but someone’s going to build
this product. And I’m going to say, assuming
I’m around in 2019, I don’t have that many years left. Can you give me a summary? Maybe this is like a search
opportunity or something. I don’t know. But you do the math. It’s frightening. So I think one of the errors
that we make is we always assume that the rate of
innovation that we’ve seen up until now is sort of capped. We don’t accurately see that
it’s accelerating. And it’s accelerating
for many reasons. It’s accelerating because
there’s new voices. It’s accelerating because
the rate of science and innovation, which all of us
care a lot about and we respect a lot, is
accelerating. It’s because people can
communicate more quickly. So the power of information, the
power of the internet, I would argue, is not understood
in it’s deepest form. There are many, many examples. An example, which may or may not
be popular, has to do with the impact of YouTube on
presidential elections. And it turns out, YouTube, for
better or worse, has changed American politics. And people are now capturing the
words and actions of our proposed elected officials. And sometimes it’s not a pretty
sight, or maybe it is. I don’t know. But my point is, this is a
different change in how we elect our leaders, and
it’s important. So if you go back, limited
government, which is another thing we talked about,
has actually helped. A number of us were
involved with– I’ve forgotten exactly, I wrote
it down– the Internet Tax Freedom Act, remember? That was a fun set
of meetings. No sales taxes, right? It helped. Pushed it through, it
was successful. So a lot of people have worked
hard to create an environment for this kind of growth, which
benefits America, our citizens, it effects our
global trade, and so forth and so on. It may very well be that, to
paraphrase, the only thing certain is death and taxes. But you can at least sort
of moderate them, right? That’s Benjamin Franklin,
I think. You can go and you can
take charge of this. You can say, I want this
thing to scale. I want an outcome that
empowers the most number of people. I want them to get everything. I want them to get all the
information they possibly can. Now, the platform opportunities
are very, very interesting. I talked about the presidential
debate, the Democratic one. There’s a Republican one coming,
which is exciting. They had 3,000 approved
questions submitted via YouTube, with 500 million video
views the following day. Pretty interesting, right? People care about this
stuff, right? I assume we’ll see a similar
success with Republicans. About 70 million blogs, about
120,000 new blogs created every day worldwide. People have a lot to say. They may or may not have a lot
of readers, but they have a lot to say. They have a lot to say and
they’re going to say it, whether you like it or not. Welcome to freedom of speech. The economy, the structure of
the internet is also creating new businesses. And I don’t want to promote
Google’s economics here, which, of course,
are quite good. In 2006, Google paid over
$3 billion to publishing partners, most of which were
small and medium businesses, creating jobs, opportunities,
careers, new opportunities, and so forth and so on. We’re very, very proud of that,
and, of course, we hope that that will grow
very quickly. So when you think about– one of the things that’s
happening, as a result of all the work that we’ve all done
and this amazing thing that we’re a part of, is you get an
opportunity to, for example, question the structure
of the firm. If you go back to 100 years ago,
the whole theory of the modern enterprise was that you
would vertically integrate, because you could have lower
friction costs if you had everybody under one roof. That sort of created the modern
industrial corporation. We can debate whether that was
the right decision or not, but we ended up with these
large structures. It’s a new model. You don’t have to
merge anymore. You can merge without merging. You just connect all your
services together and everything flows. All of a sudden, you can have
specialized vendors, specialized services
of any kind. Information, products, services,
you name it. And they can be anywhere,
in all the ways that you all know. And you can just stitch them,
best of breed, together. It’s a different model. It’s a different level of
competitiveness and clearly positive from the standpoint of
economic competitiveness, US competitiveness. It has a lot of implications for
how we govern things and how we build companies and
so forth and so on. So there is this new business
model, and there’s this new platform model. Marketing folks in the industry
have called this Web 2.0, but it’s essentially a
new model where you run everything on the web. And what you do is you have
an internet platform. You go first to the internet. You use it to sell your
products, use services, and so forth and so on. And you get these
amazing results. All of a sudden, you discover
that you have radio listeners in Germany, even though
your signal is only in your local town. Well, because people came
from your local town and they loved the DJ. These stories go on
and on and on. We shouldn’t be surprised
by them. We should be excited
about them. So I was trying to think about
what is a call to action for all of us, and I think that
there are four of five that I wrote down. We need to defend freedom
of speech as more speech comes online. It is extremely easy, for even
well-meaning people, to find themselves at odds with
the principles of freedom of speech. Corporations have all sorts of
rules on them, there are all sorts of complex implications
from the way the laws are written. And freedom of speech is a
pretty important principle in the United States and I think
it’s something which we could do well to export as strong
as we can everywhere else. But making sure that web
content regulation– and people are always
well-meaning. I want to regulate this, I want
to regulate that, I want to regulate this. But it has the property
that it restricts speech, in many cases. And I know it’s a fine line,
and I don’t want to have an argument over a specific this
or a specific that. But the principle is
important, right? We have people here who
understand the law much better than I do. Let’s do this in
the right way. Let’s preserve the openness
and the freedom of speech principles. You could use internet
censorship, for example, as a non-tariff trade barrier, which
we all need to fight. Because governments, especially
non-US governments, have an incentive to some
degree to control the populations, to do all the
things that are obvious, if you’re afraid of empowering
your citizens. There’s all sorts of issues. What are our standards of
objectionable content, how the laws differ from country
to country. All that’s got to get sorted
out, because this is a global phenomenon. But it has to happen now. The time is now for this. Another thing to work on,
universal broadband access. I think people are familiar
with the statistics. We started off in the number one
position in many surveys. We’re now down to 15 or 16. When you go to– we have a large operation
in Japan, for example. I visited our offices and I
said, how’s the speed of your internet, guys? And they said, oh,
50 megabits. I said, you’ve got
to be kidding. And they go, yeah, don’t
you have that? You know, wealthy company
in the United States. Isn’t there some way you
can get that, Eric? Isn’t there some way the
company can pay for it? Not that I’ve found out. I guess I could start
trenching and run fiber, get a permit. It’s a big deal. You’ve got an infinite number
of hard drives. You’ve got all these CPUs. You’ve got all these enormous
wireless standards, right? And we’re still sitting here
on these slower networks. And this is a case where
government working with industry can really help. A scenario where US
competitiveness is important. We also care a lot about net
neutrality, and I think people here may or may not
agree with me. But I would say to you, whether
you agree with me or not, you would agree with
the following principle. No entity that controls the
last mile, whether it’s a telco or a cable company
or, by the way, a local government, since they’re doing
this stuff too, should be able to control the content
that flows over. Again, it’s another important
architectural principle to create this dynamic that’s
so powerful. Another example. Government needs to act to
make information more transparent. I was reading a book
about a third world country where the local– a fact-based book– reporters who were dealing
with corruption in local government. We take for granted that the
standards of transparency that we have– the auditing and the
reporting records– are standard everywhere. They’re not. Imagine if it became
standard worldwide. The people just wrote down
where the money went. It’s the follow the
money principle. And computers are good
at finding that. And our contribution–
of course Google tries to help here– we did something called
Sitemaps, which is an open standard. We and our competitors
are all using it. And we have now five state
governments, which have signed up to get all the information
that they want publicly available, obviously not the
stuff that shouldn’t be public, and make it completely
available on the web. Re-engineer their web systems
so it’s all out there, so everybody can see it. And then you can judge if your
government is corrupt, brilliant, needs new leadership,
or whatever. It’s the American way. It’s a good way. So to put this together,
we are living in a remarkable time. We really are. There’s every reason to have
enormous hope that the bringing of this technology,
these ideas and these principles, which some people
view as American hegemony, which I simply view as
getting it right– I guess that shows
you my bias– that getting this stuff and
getting the information out so that people can see it,
and empowering people. One of the first and most
important principles about the world is everybody else wants
the same stuff we do. They want cars and houses
and happy kids and good educational systems and peace
and non-corrupt government. And they want to be able to
watch Oprah and all the other fun things that we do. They want it, too. So one mission that we can state
as a group is that our best export is our sense of
hope, our sense of impact, the engineering and technological
architectures that were invented here, and most
importantly, the principles, the basic principles that so
drive everything that we’re all doing together. I think I’ve talked enough. Thank you very much. Jay, did you want to do Q&A? How’d you like to do this? GEORGE KEYWORTH: I think
you should take this. ERIC SCHMIDT: You can
do the questions. You can do the answers. I have a few questions
for you, Jay. No, just kidding. GEORGE KEYWORTH: I’m sure
there’s lots of questions. ERIC SCHMIDT: Yeah, questions
or comments. Do you agree? Disagree? It’s always exciting. JAMES GATTUSO: James Gattuso,
Heritage Foundation. ERIC SCHMIDT: Hi, James. JAMES GATTUSO: Since you raised
the question of net neutrality briefly, I thought
I’d just jump into that. We don’t discuss it very much
in Washington at all, so I’d like to discuss it here. A number of us have taken the
position that to the extent there is, or if there were any
market abuses by the ISPs in the last mile, that that
should be handled as an antitrust matter rather than
a regulatory matter. And given that– I was encouraged earlier this
year when Google’s head of global public policy stated
that this issue should be treated as an FTC or attorney
general question, and then I understand that he went on to
say that getting the FCC out of the picture would
be a smart move. So my question is, do
you agree with that? ERIC SCHMIDT: Again, without
having the quote in front of me, I’d rather– let me talk
about the principle, because I think we’d probably– let’s talk about
the principle. If you have three or four
choices, this is not going to be a problem. Competitive markets, the power
and pressure of end users, we’re going to get lots
of good outcomes. Our concern is that any time
you have a situation where there’s not a choice, you can
end up with the wrong outcome. You can end up with the
wrong structure. So my general message here is
that, let’s be honest and say that the world is a
better place when everybody has a choice. It’s a better place when
there’s a choice, an alternative to Google, because
it keeps us honest, it makes us talk about our principles
and do better, and so forth and so on. It’s true at that
level as well. With respect to the
specifics– and there’s a very long answer
to the complex debates that go on in Washington with
net neutrality– a simple answer is that we, in
fact, agree with our worthy opponents on this issue
on many, many things. We, for example, agree that the
role of ISPs and the role of data needs to have some legal
protection to avoid this issue of people reaching in and
then creating liability frameworks, and so
forth and so on. A very complicated and
a very painful issue. Otherwise, the business
will never grow. We agree that such carriers, for
example, should be able to offer value added services as
they define them, like video services, as long as they’re
available to everyone. So what we’re concerned about
is, you get into a situation where you have a single vendor,
you have a single choice, and a single content
provider, and that violates the principles of
the internet. That’s a simple summary
of how we view it. The specific mechanics, whether
it’s regulatory or so forth, the government
and all of us will debate for a long time. More questions. Who has the mic? Yes. STEVEN BALKAM: Steven Balkam
with the Family Online Safety Institute. So my 11-year-old admitted to
me the other day that she typed in the word
S-E-X in Google. And she was very, very
upset about it, and she was quite ashamed. What she didn’t know was that I
had chosen, in preferences, the strict SafeSearch
setting within that. So she only actually got Sex
in the City and some sex education sites. ERIC SCHMIDT: By the
way, a good dad. STEVEN BALKAM: Thank you. ERIC SCHMIDT: I would encourage
all of you to follow the leadership of this
father, for sons and daughters, I might add. STEVEN BALKAM: So defending free
speech, absolutely with you, with that goes a responsibility on online safety. You guys have one of the most
powerful tools for doing that. And yet not very many people–
and I do my talks at the PTAs and the rest of it– very, very few people
know about it. Can you say a little bit
about your view on the responsibility as a company
to protect kids online? ERIC SCHMIDT: Well, first
place, we have a legal responsibility and we have
a moral responsibility. The two are important. The moral one’s more important
than the legal one. And we’re subject to all
the obvious laws. And it makes us very upset when
information that’s in Google is misused. And there are such examples,
and we get very upset about it. No system is foolproof. The SafeSearch product that
you’re referring to does allow parents to have some choices. And everyone, I think, agrees
that when we talk about free speech, we’re talking
about adults. Children have a different set
of rights and they’re important, and for a whole
bunch of reasons. And I think parents will
understand why. So we’ve made the SafeSearch
product much stronger. It can be much stronger still. The more we understand the
structure of the net, the more we understand phrases and
inferences and so forth, we can do it better. Having said that, you’ll never
get a perfect solution, because there’s always the new
person, the new evil person who tries to break the
systems. But we can get pretty close. Yes, sir. Would you take the mic so
everybody can hear you? ROBERT MAYER: Robert Mayer,
US Telecom Association. You talked about the value of
content and nondiscrimination. Are the FCC principles
on net neutrality sufficient for Google? ERIC SCHMIDT: They’re
pretty good. It’s more complicated than– the problem is that– and I want to speak for the
telecom people, because we spend a lot of time talking
to these guys. The problem is, I say what
we would like on a set of principles. But from their perspective,
they’re governed by regulation, and the
words matter. So sometimes, the principles
don’t get translated in exactly the right outcome. So they, again in our debates,
they are very concerned that the principle that I’m arguing
will then be misused to cause an outcome that’s not consistent
with the principle and certainly not
what they want. So I’m trying to argue that when
you judge what you do, since you’re sitting in
Washington, you’re sitting in these meetings, understand that
the goal is to make sure that people have choices. And the measurement criteria
is not some intellectual argument. It’s how many people
have choices. How many people in your district
have this choice or that choice, in this
area, in this city? And is it a real choice? Is it a competitive choice? We argued, for example, and
we’ve had a lot of fun with the 700 megahertz auction,
with respect to– and we offered a reserve bid if they
agreed to a set of principles, which were fundamentally
about open access. Because we think that that
creates a better user [? thing, ?] and people respond
very well to that. ROBERT MAYER: If the principles
are not being violated, what is the
issue of choice? ERIC SCHMIDT: Well, again, since
the principles are not in front of me and the
regulations are not in front of me, I don’t want
to parse it. I want to explain my goal, which
is at the end of the day, if people have real
choices, the market will sort it out. The problem is, in many
cases, they don’t. More questions. Who has a mic? Oh, yes, sir. JEFFREY EISENACH: Eric,
on that point, let’s just be concrete. Something like 97% of the
American people have access to three or more cellphone
carriers? ERIC SCHMIDT: With
respect to– again, may I interrupt
you for a second? The question is, what
is the quality? Do they have GPRS? Edge? What is the speed
of the network? My point is that you want to
look at it in a holistic way, not as a statistic. Please go ahead. JEFFREY EISENACH: I thought
you said three or four. But so, you tell me what
percentage of the American people need to have access to
three or more cellphone carriers, because you
said three or four. ERIC SCHMIDT: Yes. JEFFREY EISENACH: Before those
cellphone carriers would have the right to exclude Google
from their services. ERIC SCHMIDT: If the answer is
that 97% of them have high speed data wireless capability
that is of similar quality, and there’s competition on
price, the answer is absolutely. JEFFREY EISENACH: Is
97% the benchmark? ERIC SCHMIDT: Let’s not
have the debate. The principle is it’s their
choice to exclude Google. And by the way, perhaps their
competitor, which used to include Google, and then the
market would sort that out. In general, carriers do not do
well by excluding traces of their customers. But maybe you have a different
particular model in mind. JEFFREY EISENACH: I agree, but
I think that’s the counter argument to the
regulatory/legislative approach that Google has taken
over the course of the past couple years. It is precisely that. That, in fact, for a cellphone
carrier today, or for that matter a landline carrier, to
say to its customers, sorry, no Google, is silly. ERIC SCHMIDT: Well, at the
moment, none of them offer reasonable data wireless
services, so that’s a separate issue. Again, we’re not where we need
to be with respect to wireless data network access, right? And by the way, the
US is behind. The 3G deployments are occurring
quicker outside the United States. In the US, people are catching
up and, by the way, these guys are spending the money,
which is great. So I’m glad that they’re
spending all the money. I want to make sure that
those are open and interoperable networks. TOM SUGRUE: Hello. I’m Tom Sugrue with
T-Mobile USA. Google indicated that, and I
think a letter you sent to Chairman Martin, that you’d
participate in the 700 megahertz auction if all four
conditions were met. The FCC adopted two, but the
other two, frankly, if Google won the spectrum, it’s perfectly
free to implement that particular business
model. So is Google going to write the
check for $4.6 billion? And I’d like to know because
we’re trying to plan what to do. ERIC SCHMIDT: I know, I know. So everybody knows, we’re
in the period where we can collude. And after October-ish,
it’s not– a lawyer in the room will know
the exact date, right? Can we get the exact date? I don’t want to violate
any laws here. Oh, I see. It will be delayed by a month. Yes, the experts know. So during this period,
we can collude. OK, you and I, and our friends
at Verizon, and our friends at AT&T– Verizon has no interest? Verizon has no interest
in colluding? You’re at my table. Oh, I’m sorry. I was joking. I apologize. It’s after dinner. Take it off the record. I know we have cameras. Put your pads away. But when we looked at the FCC
ruling, we felt that we got the spirit of what we
were asking for. So without announcing the bid,
I think it’s highly likely that when we get to that
point, we will see the regulatory framework and so
forth as conducive to the bid that we said we would make. Now, it’s important to know
that the principles are different than the writing. Again, I’ve learned this, that
the actual rules matter, and those, of course, are
in development. So I would say probably would
be a way to answer that. And again, during
this possible– what’s the correct legal
term if I can’t use the word collusion? Collaboration period– we are very, very clear that,
in the US, we want an open network for wireless devices. We think it’s good
for end users. It’s clearly good for Google. It’s also good for our
competitors, by the way. And we think it moves forward,
and we’re delighted to see what happens. LARRY TRIBE: Hi. Larry Tribe, from Harvard. This is not a question on which collusion would be possible. And it’s a question in
which I’m sure we have fundamental agreement. I talked this morning about the
fundamental importance of freedom of speech to the future
of information and the internet and the fundamental
character of America, and how important free speech is to the
success of what everyone in this room is trying
to accomplish. But when you said that everyone
in the world wants basically the same thing– a home, a decent life,
and so on– one of the things that worries
and disturbs me, given how global the progress of what
you’re trying to accomplish ultimately is, is the nagging
question that many societies in the world, perhaps a
majority, don’t really share our vision of individual
freedom, individual autonomy, the importance of free speech,
and have a view that even if you don’t have a decent home and
a decent life, you will in the next world find
your reward. In a world in which some of what
we take for granted, in terms of free speech and the
sort of non-theological character of politics, may be exceptional rather than universal. What, if anything, can be done
with the engine of progress that you so inspiringly
represent to win more of the world to our ideas
of the good? ERIC SCHMIDT: Let me make an
analogy to tell you why– again, you have written
in this area much more provocatively then I can
even articulate. One of my personal heroes
is Ted Turner. And the reason is that he
foresaw the impact of the commercial satellite industry,
launched, helped create CNN and all that. And as a result, we knew
about Tiananmen Square. We knew about Kosovo. We knew about all the
terrible things. The fact of the matter is that
every government, even the worst ones– make your list, there’s always
a list of the worst ones– are responsive to some level
of public pressure. So this is 35 years
ago, right? Launched the first commercial
satellites, roughly 1970. Now, we have the internet. And the internet is analogously
important to the commercial satellite and the
ability to see what was going on and do uplinks and so forth
and so on, that did not exist before the 1970s. That power is very difficult
to stop. Because even if you shut it at
the borders, and even if you make it criminal to possess and
so forth, people will get the information out. Because the technology is
inherently empowering. So whether we like it or not,
that’s going to happen. And governments that are
stupid will just try to prevent that, and
they’ll fail. The really smart ones will say,
this is going to happen, but then how do we control it
or prevent it in some way, because we’re not in favor of
empowerment of individuals? I accept that, as a
technologist, culture is more important than technology,
because culture drives everything in society. We all understand that. And I disagree a little bit
with your premise about people, maybe they don’t want
the rewards now, they want them in the afterlife. I think people would like
them both places. But we can debate that. But the important point
is, the technology is going to be there. People are going to use this. They’re going to take
video cameras. They’re going to record
what they see. I believe that it’s important
that we get a chance to see that, and that it be available
to the world to see. And then we can decide
what to do about it. That if there is, for example,
a terrible war or a terrible injustice– we saw this recently in the
Sudan, and Google was one of the companies that was involved
with satellite imagery to try to get people to
understand how serious this terrible, terrible
genocide was. These things happen
all the time. Why don’t we figure out a way to
stop them using technology? And I think that’s a pretty
good outcome. And then let the cultures adapt
with good leadership and smart governments, even if the
cultures are different. And they’ll work it out. And maybe they won’t call it
free speech and open elections and so forth. But it is a check and balance
on the role of government, even in those cases. GEORGE KEYWORTH: Transparency
is viral. ERIC SCHMIDT: Thank you. Transparency is viral. Jay, of course, is very
good at this. Transparency is really
fundamental. If you go back to the notion of
small towns, you never had any privacy in a small town
because everybody knew what everybody else was doing. That served as a check and
balance on the bad behavior within the town. OK, well now, we have an
opportunity to see what’s going on in the town across
the ocean, right? And it does serve as a mediating
effect on the bad aspects of human behavior, and
it gives us a chance to reward the good, in my view. Some more questions. Do we have a mic over there? AUDIENCE: Mr. Schmidt, while
Google offers and continues to add an amazing variety of really
cool services, which I enjoy using, the vast majority
of your revenues are advertising revenues. We’re in a period when
advertising money is migrating from old media to online. What changes do you see in the
online advertising market between now and the end of the
decade, and what is Google doing to capitalize
on those changes? ERIC SCHMIDT: Google can also
be understood as an advertising company, as you
point out, and the vast majority of our revenue comes
from advertising. We have been able to participate
in the transition from untargeted to targeted
advertising. There are lots and lots
of examples of this. When you watch television, it
shows you ads for products that you’ll never purchase. Baby food for a house that
doesn’t have any babies in it, that sort of stuff. And it’s essentially a wasted
advertising spot. We started in text ads,
which has been very successful for us. We’ve branched out
into display ads and some other areas. We’re now experimenting with
some significant success in radio, television, and print. And in each case, what we’ve
tried to do is use our technology to provide
a more targeted ad. So we take the view that
advertising is good if it’s targeted, and it’s bad if it’s
a waste of your time and the advertiser’s money. Because there’s no reason
to waste your time watching the ad. There’s also no reason to waste
the advertiser’s money, whether it’s television or
newspapers or so forth. And we’re running a series
of experiments. For example, with newspapers, we
federate their ad network. And we actually can take all
the print ads that they do, put them in an ad, and basically
provide additional reach for their sales people. It’s an example of using our
ad technology, which looks very promising. So a simple way of saying it is
that Google and, I think, our competitors, as well, in
this targeted ad space will all, with varying degrees of
success, try to take the traditional models of
advertising and make them work in this new model. And that should provide, if it
works, even higher revenue for those media. Because a more targeted ad
is more valuable than an untargeted ad. So put another way, if all the
television advertising were targeted, the revenue to the
advertisers would be higher because the ads would
be worth more. Of course, then,
technologically, that’s extremely difficult for
many, many reasons. But you get the idea. So the spread of targeting is
key strategy for the next– and by the way, all of
this works worldwide. All the same principles
work everywhere. And just to toot the mobile
phone for a bit, everybody here has a mobile phone. You carry it for safety,
for information, for entertainment, what have you. Your mobile phone
has a GPS in it. There are more mobile phones
that are cameras than digital cameras sold right now. So by definition, every computer
is a phone, is a camera, is a GPS. That is a hugely targetable
advertising product. So you can imagine, I’m driving
along with my mobile phone, and it says, Eric, you’re
at this intersection and there’s pizza on the right,
but you had a pizza yesterday, so you’re having
a hamburger tomorrow. At which point I will
turn off the phone. But that ad’s worth
a lot of money. Sorry, my favorite example. More questions or comments. Yes. AUDIENCE: I just wanted to
briefly ask you to talk about Google’s vision of what might
have happened, just hypothetically, if the FCC would
have taken you up on your offer with respect to
Carterfone, and what an open platform would be like
in the cellular industry, in your view. ERIC SCHMIDT: Well, I think
that the regulatory ruling that is in the process of
happening will basically– as long as it’s possible to walk
up to the equivalent of a wireless network with a device
that you paid full price for, that is properly registered and
doesn’t do bad behaviors and so forth, and connect to it
and pay for your usage of the network, it’s a pretty
good outcome. So we think that that will
then create a competitive environment where operators
and other people will say, well, we’ll give you a free
phone, and we’ll subsidize it with subscription or advertising
or whatever. It’s important that the
choice to possible. That’s the principle, and we
think we’re essentially there. And again, it is the Carterfone
principle, as you pointed out. The ability to do– any device can connect
into this. These networks are incredibly
important. The telecommunications
industry is doing an incredibly important thing. They’re building the
infrastructure that we all depend on. It’s important that
it be done right. It’s a national issue. BRANDON WATSON: Brandon Watson,
I’m with IMSafer. Given the reach that Google has
now had, especially with the addition of Double Click,
and the inventory and the ad reach that you have, since your
algorithms decide who sees what ad and where those ads
ultimately lead, it’s not purely based on who’s willing
to pay more, is there some risk that, at some point in the
future, Google might fall under the same scrutiny of the
last mile problem, considering you’re the gating factor of
getting to businesses? ERIC SCHMIDT: Well, a
couple of things. First, we’re acutely aware
of our role with respect to that targeting. And the company, I think, has
been largely successful because of a set
of principles. Here’s an example
of a principle. As we’ve grown, people have been
concerned about our size, and they’ve compared us to
others and so forth who misbehaved. And what we’ve said is, we’re
very focused on end users. So you can govern our behavior
by looking at whether our end users are happy or not. And end users are a pretty
strong-willed bunch in the world. It’s us, right? All of us. And anything that we did that
would restrict choice for an end user, would somehow prevent
them seeing the best of breed, would not be
in our interest, no matter what we did. And advertisers follow where
the end users are. We’ve also said, for example,
that we won’t trap user data, right? So If you are a Google user and
you become dissatisfied with us, we will make it very
easy for you to move to our competitors, as opposed to
preventing you from doing it, which others have done and other
parts of technology. So the principle of you can
move, you can get rid of us, you have a choice, we try to run
our own business that way. It’s highly unlikely that any
advertising network will become the kind of– get to the criticality point
that you describe. And the reason is that
advertising is not the same thing as these zero-sum
networks. If you have a strong advertising
product and you have a competitor,
it’s also good. Advertisers use both. It’s not a one, either,
or both. They actually do both. And that’s one of the reasons
why our industry is likely to remain very, very competitive. You’re not going to get these
80% or 90% market share solutions for that reason. GEORGE KEYWORTH: Two more. ERIC SCHMIDT: Go ahead. Tom from Verizon can
now rebut my– THOMAS TAUKE: No, I’m
not going to rebut. I think I’ll just comment. I think that the principles you
outline are principles we can probably all agree with. It’s the details that are
always the challenge. You haven’t talked about
intellectual property. And as technology has evolved,
we are making available to consumers, in a wonderful way,
so much information and so much intellectual property
in a way they could never consume it before. The ease of that access to that
information, of course, has thrown into turmoil the
framework for our policies governing intellectual
property. As you look to the future, what
is your view about what the intellectual
property policy should be in the country? ERIC SCHMIDT: First place,
everybody here is familiar with all the music stories and
the video issues and so forth and so on? And that’s a good example
to start with. Copyright is something that’s
very important. Copyright is an important
legal right. It’s an ownership right. There are many, many industries
that Google depends on crucially, whose economics
depend on copyright. So let me state the problem
as follows. We’re all in agreement that
copyrights are important. And an end user, who is either
unfamiliar with the law or chooses to ignore it,
violates the rule. What should we do? This is happening, right? It is happening today. One thing is that
we can sue them. We can take each and every one
of them and put them in jail along with everybody else. It’s expensive, probably
doesn’t work. They come back with kind
of a bad attitude. Maybe there’s another
alternative. Maybe you can give them a choice
that allows them to achieve their goal while paying
a moderate and a modest fee for what they’re doing. I’m on the board of Apple, so
obviously I have a conflict of interest here. iTunes has done this. Apple managed to figure out a
way to get legal and licensed content in a tool that works on
a set of devices that work. And it’s ended up with a pretty
good outcome, right? From the standpoint of, end
users have a real choice. They don’t have to
steal the stuff. So given that there’s a new
person in town, and that new person in town, it’s
a new problem. The technologies are naturally
enabling people to knowingly or unknowingly violate
the copyright law. What are the set of things
that we can do to make it easier for them to achieve
what they want, and also easier to detect those
violations? There are obvious solutions. The industry’s working
on watermarking. Watermarking is a way of
basically keeping a registered copy of it. To the degrees that those
things emerge, we will absolutely support them. Google has a content management
platform, which allows owners of content to
register their content, and then we automatically detect
and throw it out if it gets illegally uploaded. So there’s a set of
technological tools that all of us can participate in. But I think you have
to do two things. You need a carrot and a stick. Part of it is that you have to
use the best technology that you can to detect violations
of the law. And the technology’s at the
current state, and you do the best you can. And the second is that
they’re actually trying to do something. They’re actually trying
to consume something. Find a way for them to
consume it in a way that works for them. And I think if we do both,
we will end up in a very good place. And I don’t think we need lots
of new legislation to do that. I think this is a question of
the industries, all of us, recognizing that we’ve
got to do this, we’ve got to do it together. Couple more. Yes. HANCE HANEY: Hance Haney, with
Discovery Institute. I want to thank you for your
remarks and ask just a hypothetical question. How would you feel if Google
were unable to cut deals with broadband providers– for example, feature the Google
search bar as the default search bar for all of
the broadband providers’ customers– because a future Congress or
a future FCC were to apply common carrier type regulation,
which would prevent them from
differentiating between content in any way? ERIC SCHMIDT: There’s
an awful lot of hypotheticals in your question. If, indeed, there were a common
carrier structure, I would hope it would be defined
pretty narrowly at the bit rate thing, and that the common
carrier would not prevent the common carriers from
monetizing their service in any way that they chose. So the problem I have with your
argument is you’re saying that you’re going to end up with
common carriage, which also then regulates the way in
which they make their money, which I think is a
mistake, right? You’re much better off
regulating, if you have to regulate, at a level of equal
access, equal treatment, than saying, thou shalt price
this way or thou shalt not do these deals. So the answer to your question
is, if we ended up in that set of hypotheticals with such a
regime, then there would be other ways in which we would
work with the operators and carriers to help monetize
the services. There’s a lot of money to be
spread around here because people are using these
services and they can’t be monetized. But you have to be clever as
to how you pay for things, because end users, they want the
stuff quick, it has to be fast, and they want it all and
they want it all right now. And all of these traditional
systems that have all of these barriers– it takes forever to log in, you
can’t buy, you don’t have your credit card, so forth,
they end up with 5% penetration. The goal here is to get 100%
using your service, and that’s a hard problem. Can we have Ed have
the last question? He’s been raising his hand
for 15 questions. ED BLACK: Thank you. Ed Black, with CCIA. I guess it’s a kind of politics
of internet issues that I wanted to raise. In the long term, I think the
spread of the internet– tens of millions of people, who
are going to be seeing the importance of the internet in
their lives, will, in essence, create a new political
force of, if you will, internet consumers. But it’s not self-aware yet. It’s still a little
bit in the future. ERIC SCHMIDT: Sort of a Matrix
sense of self-awareness? ED BLACK: Not quite that far. But in the short run, basically,
you have a lot of– and legitimate in many ways,
but entrenched in interests and old business models, which
really have been around and have a great deal of control
over the political system. And I guess I’m trying to figure
out what point in time you think the political power of
the internet consumer world is actually going to be
sufficient to make sure that the political outcomes on
critical internet issues override some of the rather backward-looking entrenched interests. ERIC SCHMIDT: I think in
many ways, we’re there. The statistics on use of
broadband, although I was complaining about the quality
of the broadband, the fact that people have any broadband
is very, very high. Homes passed is well
above 70%. Broadband usage on a home basis
is in the 60% range and growing at a reasonable rate. Everybody here has access to
broadband in either your home or your work or with a
wireless data card. Again, they could be faster, but
everybody here has access. All of us use the services that
Amazon and eBay and Yahoo and so forth provide
for shopping, in one way or another. I think everybody that I’ve
talked to in the political sphere understands that nothing
they can do can shut that stuff down. So it’s very hard to foresee the
government passing a law that would stop any of the
current activities, because it’s just too penetrated. It would be too easy. And by the way, all the
political leaders, Republican and Democrat, even the
independents, are all attempting to use the internet
to get political gain. It’s axiomatic that in the
1980s, the Republicans used a Southern radio strategy to gain
significant material wins in the South, which caused
the South to move over to Republicans, which
is a historic event in American politics. We’ve not yet seen the analogous
effective internet political activity. But it’s probable that
it will happen in the next five-ish years. Because you have too many people
with voices, too many people with broadband, and too
many political leaders who are trying to use it
to get elected. So the good news is, when I used
to go to Washington and spent a lot of time in Congress,
I was always worried that they didn’t actually
understand what we did at all, right? Now, I go and the leaders have
BlackBerrys, they have cellphones, they use Google
and our competitors. They’re all familiar with it. So I think that we’re in
a good place there. It’s now the subtleties, these
complicated questions, common carrier issues, and very,
very complex issues. And the good news, as I said– and I want to end with this
because I know we really have run over, and I appreciate
Jay letting me go on– the message is overwhelmingly
positive here, that this is just at the beginning
of the empowerment. And all of us– and I mean
this literally working together, the billions of
dollars that are being spent to do the both wireless and
wireline data deployment networks, the huge server farms
that Google and our competitors are putting in, all
the new applications that solve problems that you didn’t
even know you had, you’re going to discover they’re
incredibly important. This is all happening now, and
it’s a very good story. So with that, thank you
very, very much. GEORGE KEYWORTH: I just want to
add one point to that, and I thank Eric immensely. I certainly did not
run over time. The only concern I have is that
we’ll never get another speaker if we have a
200 to one attack of incessant questions. But thank you, Eric, so much. ERIC SCHMIDT: This is great. This is the best audience
in a long time. GEORGE KEYWORTH: They care. ERIC SCHMIDT: This is why
I wanted to come. GEORGE KEYWORTH: Enormous
common interest. Thank you very much. ERIC SCHMIDT: Thank
you very much.

8 thoughts on “Eric Schmidt at Progress & Freedom Foundation Aspen Summit

  • Ironic that they're talking openness in an area that is known for outright exclusion. An area that would be quite fitting for those from the Stanford background. The only openness is the sky, which would be bought to exclusion if possible.

    Google just keeps on shooting themselves in the foot.

    Progress, maybe.
    Freedom, not at Aspen.

  • If you note the background of the area, it fits well with Google's exclusionary background. What better place for Google to speak than somewhere that excludes like they do.

    You'd be hard pressed to find inclusion in Aspen, let alone try to find ethics or hard work save for (maybe) a couple of folks in the snowboarding community.

    Next time, they'd do well to speak in more accessible venues, not billionaire hideaways.

  • Hello! thanks a lot for this useful video. By the way, I notice lots of people keep on talking about jumping training course known as Nobolaron Manual (just google it), but I'm not sure if it's good. Have you tried Nobolaron Manual? I have heard many amazing things about it and my work buddy finally can jump higher and dunk in basketball by using it, but he refuses to tell me: (

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