Nearly a year into the Obama administration and two years into the "great recession," a tech industry leader is endorsing the way the White House is managing the U.S. economy.
Google Chief Executive Officer Eric Schmidt said that President Obama and his team "have done a good job in getting the thing turned" but that "the report card on jobs has yet to come."
Mr. Schmidt met with reporters and editors at The Washington Times on Friday, one day after attending the president's jobs summit and hours after the Labor Department announced an 0.2 percentage-point drop in November's unemployment rate.
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"We are in a situation where there is an economic recovery," he said. "God knows what the recovery will look like in the future, but clearly the worst of the recession is behind us."
The Google CEO grew up in Northern Virginia and joined the Mountain View, Calif., company in 2001 after a stint as CEO of Novell and chief technology officer of Sun Microsystems Inc. Mr. Schmidt indicated that business inventories and corporate profits were looking better, including at his own employer. Google, he said, "is hiring now. We're going to hire a couple of thousand people, maybe more, over the next 12 months."
Mr. Schmidt said Google's product pipeline remains strong, citing the company's online search, advertising delivery and mobile applications as well as Google's new Chrome computer operating system. All this, he said, would lead a march to "cloud computing," moving data and applications to Internet-connected "servers" and supplanting creaky corporate information technology networks.
He said Google walked a delicate line in providing its services in societies such as China, where government censorship of the Internet has drawn global criticism.
Google faced a hard decision in China, Mr. Schmidt said. "Do we stay engaged or do we become estranged?"
The decision to engage was based on the company's principles of making as much information available as possible, he said, noting that when something on Google is censored, "we tell the Chinese citizens it was censored."
Noting the success that Iranian election protesters had in using social networks such as Twitter and Facebook, Mr. Schmidt said that "even in a dictatorship there are some limits to power" and that technology can enable individuals to carve paths through government-erected barriers.
As to the jobs summit, he said, "the administration was clearly listening. Sometimes these events are political, you know, sort of a big grandstand, but in the sessions I was in, there were a lot of suggestions that were interesting or at least ones that were re-emphasized.
"The ones I'm primarily concerned about are the issues of how you deal with banks and small banks and the area of lending. The small banks were complaining about various regulators. So, for example, you have the regulators saying you have to strengthen your balance sheet, and on the other you have the government saying you have to start lending. It's very confusing.
"In a recovery," he added, "most of the jobs that are created are created in high-growth small business and not businesses that are slow-growth; that's kind of obvious," noting that job creation happens "especially in ... newly formed businesses. So you want to adopt a policy that encourages the creation of new businesses, small businesses that are new and entrepreneurial."
Mr. Schmidt said "wealth is created by business, not government," noting that "roughly two-thirds of our business is tied to small- and medium-sized businesses via Adwords," a Google service that pushes online advertising links to millions of Web sites. Google gets paid every time a Web user clicks on an advertising link.
In one sector of the economy, the beleaguered newspaper industry, Mr. Schmidt offered sympathy but few solutions for media workers caught up in a swirling vortex of layoffs and cutbacks.
"What is happening with respect to the media is hurtful to America," Mr. Schmidt said, noting that the problems of local newspapers affect their ability to cover issues vital to their communities. However, he said, "we don't know how to solve the problems the newspaper and magazine industry has." Buying newspapers, hiring reporters or writing checks to publishers are not "a long-term, sustainable answer."
Mr. Schmidt is betting on technology to provide part of the answer.
"We operate under the assumption most users will consume news on mobile devices either for free or by subscription," with the free content supported by mobile advertising. Google, he said, "is busy building the infrastructure" to help make that happen, including a technology called "Fast Flip" that lets digital users "page" through content in the same way they read a printed newspaper or magazine.
Asked about personal privacy when using Google's services, Mr. Schmidt said that although the company could, conceivably, "cross-correlate" the usage of an individual connected via a single computer and Internet Protocol (IP) address to its servers to form a picture of someone's interests, Google does not do this and does not use that data for marketing purposes.
"If we did, users would move to our competitors," he said.
Mr. Schmidt said he was upbeat about Google's new Android software for mobile phones, currently offered by carriers Verizon Wireless and T-Mobile, as well as applications for Apple Inc.'s iPhone, all of which mean "more searches" leading to "more ads and more revenue."
He also had kind words for AOL, whose fortunes have fallen as Google's have risen. "AOL was the first company to do a big deal with us in advertising," he said.
The pending spinoff of AOL from parent Time Warner "is a good maneuver" that will allow the pioneering Internet service provider to do things it could not accomplish now.
Asked what kept him up at night, Mr. Schmidt admitted: "I'm always worried about Microsoft. The position they have with Windows and Office is so profoundly powerful." He also said he worries about the "next Twitter" or Internet startup that could catch Google napping.
Success, he said, "is ours to lose."
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