Posted by: Rob Hof on September 17, 2008
A week after Yahoo executives defended their controversial search advertising deal with Google, the search giant joined the fray today with its own rationale. The deal, announced in mid-June, faces intense scrutiny by antitrust regulators in the U.S. and Europe and opposition from some advertisers and newspapers.
In an hourlong meeting with reporters, Google’s executive triumvirate—CEO Eric Schmidt and cofounders and presidents Sergey Brin and Larry Page—said the two companies plan to move ahead on the deal regardless of whether regulators weigh in before a voluntary 120-day grace period ends in early October. “Because it’s a commercial deal, we have a choice of when we implement it,” said Schmidt. “Time is money in our business.”
Schmidt said Google spent "months and months and months" working on the deal with Yahoo to avoid sticky antitrust issues, and the company handed out an extensive fact sheet defending the deal after the press conference. "The deal was designed to meet precisely the current antitrust laws in the U.S.," he said. "They're going to take our ads and put them in places where they have no ads," Schmidt said. "They see this as an addition to their business, not a replacement."
He added that it's nonexclusive and contains no limitations on what other deals Yahoo can do. Brin also noted jokingly that "Yahoo could sign up online" for Google's AdSense, its program for running ads on other Web sites, just like thousands of sites have. "We don't want to be rude and suggest they do," he added. "We started the company partly at the behest of [Yahoo cofounders] David Filo and Jerry Yang," he said. "They can get a lot of value out of our services."
I asked Schmidt why he thinks Google has run into antitrust questions on the deal. Archrival Microsoft's lobbying is one, he said bluntly. Also, "we haven't explained the structure of the deal very well." And, he added, "There's a natural fear of things getting larger."
Miguel Helft of the New York Times asked if, in light of increasing concerns about Google's power over all things Internet, the Yahoo deal was the right thing to do for the company. "We anticipated these objections," Schmidt said. "We're roughly where we expected to be."
The trio met press near the end of the first day of Google's exclusive Zeitgeist gathering of top tech, corporate, and political figures. (Immediately afterwards, Schmidt was walking Mexican telecom mogul Carlos Slim, the second richest man in the world, around Google.)
They also addressed a wide range of other businesses and issues at the company, which seems to attract more attention--wanted and unwanted--every day. The presence of so many luminaries on the Googleplex campus for Zeitgeist today and tomorrow only underscored the spotlight on the company's every action.
In response to questions about Google's new Web browser, Chrome, and its Android wireless software, the executives said they're trying to create new online platforms for applications to flower. "The Chrome announcement is the beginning of a new platform," said Schmidt. Page added that Google, which is offering both Chrome and Android under an open-source software agreement for other programmers to use and modify, is serious about making contributions to the open-source community. "With Android and with Chrome, we really are trying to do things differently," he said.
With the economy tanking and Wall Street melting down, Google executives were asked if they're seeing any impacts yet from the economy. "I think we've actually benefited from the economy slowing," said Tim Armstrong, president of advertising and commerce for North America, also at the press conference. The reason: For the first half of the year, he explained, he saw large advertisers assessing their budgets, but in the second half, they're deciding to shift more spending online. "We continue to see growth everywhere," added Schmidt: "The drama is in New York and not here."
That said, Schmidt thinks the Web 2.0 startup frenzy that started a couple of years ago has noticeably cooled. The trio said, however, that they think Silicon Valley remains vital. "The worrisome or disease states are the bubbles," said Brin. "Tough times bring out the best in Silicon Valley."
Also today at Zeitgeist, Google announced an alliance with General Electric to improve the country's energy network. Schmidt, who had jokingly asked GE CEO Jeffrey Immelt during an interview when he would be able to get a wind turbine for himself, said it will be "quite some time" before Google would benefit from wind energy. But Page said Google has a big interest in making energy cheaper and more renewable because its data centers use so much electricity.
However, in response to a question about a recent report about Google's patent for a floating data center on the ocean to provide cooling for the many computers inside as well as power from waves, Schmidt threw cold water, as it were, on the idea. He joked that in the event that global warming flooded the Earth, at least Google would still be able to operate. "That's a particularly creative idea--do you catch my drift?" he said.
Finally, the executives repeated their faith that Google's YouTube video unit would make more money at some point, though they declined to predict when or how. For the last 18 months, says Armstrong, YouTube and Google have been working on ways to target ads better on YouTube, but haven't found a revolutionary new way. "If only we could schedule the revolution," quipped Page.
Schmidt insisted that YouTube has the "luxury of time" to find a better way to make money off all the videos people post and view there. "We're waiting for the innovations. The innovation will come. We know it will come. We know it's there."