Google CEO Eric Schmidt swung back at Microsoft and AT&T at the Web 2.0 Expo in San Francisco Tuesday, saying his company's acquisition of the advertising firm DoubleClick does not violate antitrust laws.
"Microsoft?" Schmidt said, his mock incredulity recalling Microsoft's own antitrust woes. "Did you say Microsoft and AT&T? What is the year?"
"They're wrong," he said, showing some emotion. "Give me a break! It's false." He said Google and DoubleClick together account for 1 percent of the world's advertising revenue.
"This is an emerging business with lots of different choices," he said. "These were people who were involved in the bidding who lost."
Schmidt's retort comes a day after Microsoft and AT&T asked federal regulators to investigate the $3.1 billion deal. The response was elicited by conference organizer John Battelle, who moderated a lively discussion with Schmidt Tuesday morning.
Schmidt, relaxed in a pink tie and blue V-neck sweater, started off the conversation with a little bit of news: Google is going to add presentation software to its suite of Google Apps.
One would think that's the PowerPoint piece to the software puzzle that will fully enable Google to compete with Microsoft Office for desktop market share. But Schmidt denied it.
"We don't think" it's a competitor, he said. "It doesn't have all the functionality, nor will it ever have all the functionality, of products like Microsoft Office."
Instead, it's just a way for people to collaborate. "We have concluded that collaboration is the killer app for how communities work," he said.
Battelle wasn't buying it. "Come on," said Battelle, the conference organizer who wrote a book about Google. "It's a competitor to Microsoft Office."
The audience applauded. Schmidt acknowledged that Microsoft will have a response, but he maintained that Google Apps is just a collaborative, Web 2.0 product for people who want that.
Other highlights from Schmidt's session:
-- On Viacom suing Google's YouTube to have its 100,000 video clips taken off the site: Schmidt said it is a tactic in a business negotiation. "We took them all down. They sued us later," he said. "YouTube traffic went straight up after that. It's really about user-generated content."
He said Google is bringing out a tool it calls CYC, for "Claim Your Content," to help copyright owners like Viacom identify clips that should not be shared.
-- On his role as a board member at Apple Inc., particularly with potential conflicts, such as Google Apps competing with Apple's software, or YouTube competing with iTunes: "There are very important laws about directors' roles, and we had long conversations to make sure I could serve the shareholders of Apple while doing my primary duty to serve the shareholders of Google."
-- On the portability of data -- in other words, can you take your search, mail and transaction history from Google and take it to another site? "If you felt Google was doing something bad, we want you to be able to take it elsewhere. These systems are successful because end users won't adopt them if they feel trapped."
-- On his relationship with Microsoft, especially having told Battelle when he first arrived at Google that, after competing with the Redmond, Wash., giant while he was at Sun and Novell, he wouldn't have to compete with it anymore. "I was wrong again," he said.
Later, Battelle asked what Schmidt thinks about when he wakes up in the morning. Schmidt said the first thing he does is check his e-mail -- even in bed. Battelle teased him about having e-mail on his glasses.
"It's been awhile since you tormented me about my glasses," Schmidt said.
"At least they're clean," Battelle said. "When I would interview Bill Gates, his were all smudgy."
"No comment," Schmidt said.
-- But seriously, what does Schmidt think about? Top of the list is scaling, growing the company and its computing systems big enough to be a global powerhouse. "That means more data centers, more fiber optics, more cash flow, more people."
And the next big areas where Schmidt thinks growth will occur: "Mobile, mobile, mobile" is the main one, he said. "People see their mobile phones as extensions of themselves." And new generations of cell phones will be even more powerful.
In addition, local advertising is increasingly important. "Most purchases are local," he said. "Most search engines don't take full advantage of the local information that's inherent on the Web."
Is Google too big?
Google has surely become the new Microsoft -- the dominant player that everyone fears. BusinessWeek laid it out in a cover story two weeks ago, and Web 2.0 conference organizers Tim O'Reilly and Battelle grappled with the question at the Expo.
"I don't think Google is too big," said Battelle, who covered Google closely with his book "The Search."
"Google is frightening to a lot of people."
Battelle said big companies like Microsoft and Viacom are trying to "protect and defend" their turf from Google, yet at the same time must move onto Google's turf to compete in a changing world.
Venture capital 2.0
It was standing room only at one session, "Venture capital 2.0: Bright future or broken forever?"
The session was emceed by the jocular, opinionated and irascible Michael Arrington, founder of TechCrunch, the ultimate Web 2.0 blog.
Assembled were the angel investors and venture capitalists that people Arrington's world: Jeff Clavier of SoftTech, Michael Eisenberg from Benchmark Capital, David Hornik from August Capital, Josh Kopelman of First Round Capital and Chris Moore of Redpoint Ventures. The audience was filled with startup hopefuls who crowded the stage afterward to pitch their stories.
It could have been a rather dry session. But nothing is dry when Arrington is in the room. Arrington had a bit of a mishap on the way to the Expo. "Did you really have a car accident?" I asked. "While parking," Arrington replied, who explained that he was in a hurry because Expo program co-chair Dave McClure kept calling, demanding to know when he planned to arrive. Phew. Wouldn't want the founder of TechCrunch to get crunched behind the wheel.
The panel tackled the salient issues of the day: Are we in Bubble 2.0? Will the ability for startups to bootstrap for longer and raise significantly less in seed funding pose problems for traditional venture capitalists? How do you figure out a way to invest in the next YouTube?
The good news, said Clavier, is that the cost of failure is lower than before, both for entrepreneurs and investors, encouraging everyone to take more risks. The smaller, seed rounds of funding in this recent cycle allows entrepreneurs and investors "validate assumptions" before raising capital to "scale," which means "see if it works" before you "grow it bigger" in English.
So, asked an audience member, how can venture capitalists make sure they don't make the same mistakes as in Web 1.0? "All we can do is create incentives to build real businesses," one panelist said.
Well, that's an idea.
