Google Annual Stockholders Meeting 2007

Uploaded by Google on 15.05.2007


ERIC SCHMIDT: Good afternoon.
And we are delighted to have you all come to Google.
I hope you enjoyed lunch.
The lunches are worth coming to Google for.
And it's a delight to have you all here.
The first thing is, I noticed we have some people in the
back, who are standing.
We have a wonderful overflow room downstairs, which has all
the same high quality food.
So if you get tired of standing, please feel free to
do downstairs, come right back up.
No problem.
And what I wanted to do is, first, we're going to have
just a brief comment from myself, and then we're going
to have David Drummond, who's our general counsel, go ahead
and conduct our formal meeting.
And then after that, we'll have a short talk by myself,
and then some Q&A from everybody.
I wanted to begin by introducing someone who is the
best business technology partner that you could ever
have in the world, and I'm fortunate to have him as my
business partner, Larry Page.
ERIC SCHMIDT: And Sergey's out of town, and is the other of
the troika, and is just unbelievable.
I also wanted to take a minute to acknowledge that we have
some of our very, very distinguished board of
directors here.
Of course, Larry and myself, but the ones that really do
the work, Art Levinson, Paul Otellini, and a number of
others that I think are on the way.
I wanted to take a special minute to acknowledge one
board member for whom this is the last official time point
in their board service, and that's Mike Moritz.
Mike, as you know, decided not to return to the board simply
because of the pressure of the firm of which he is one of the
leaders in venture capital.
His contribution as a venture capitalist to the world-- in
fact, honored in the Time 100 this week, and I think quite
properly so, but his contribution to Google has
been phenomenal.
And we will miss him.
And we wish him very much the best.
So what we're going to do here is everybody here has
And everybody has an agenda.
We've introduced the directors.
And I also wanted to introduce a couple of other people who
are very important.
Amy Waldman who's a representative of
Right up here.
And you have to pay attention, she is the
inspector of the elections.
And David Cabral, who is a representative of Ernst &
Young, who's the inspector of the whole company, because
he's our independent and outside auditor, and of
course, a fine one, and one we've worked
with for a long time.
So David, why don't you begin?
And let's do the formal meeting with David in charge.
DAVID DRUMMOND: Well, good afternoon, everyone.
Thanks so much for coming.
Thanks, Eric.
I'm David Drummond.
I'm the senior vice president for corporate development, and
also the company's chief legal officer, and have, I think for
a while, been the company's secretary, so I'll conduct the
formal part of the meeting today.
A quick note about questions, because I know all of you
probably have them, as stated in the rules of conduct
governing the meeting, stockholders should not
address the meeting until you're actually recognized.
We'll provide a question and answer period after the formal
part of the meeting so you can ask questions.
And that will be after Eric's presentation.
If you want to ask a question during the Q&A period, please
move to one of the microphones.
You see them in the middle aisle here.
And after you're recognized, identify yourself and your
status as a stockholder or a representative of a
stockholder, then go ahead with your question.
So I thank you for complying with these rules.
Now, I've received the affidavit of mailing of
Computershare, which states that the notice of meeting,
and accompanying proxy materials, and annual report
were mailed to the shareholders of record on
March 22, 2007, which is the record date for this meeting.
In addition, I've been advised by our inspector of elections
that holders of our outstanding Class A and Class
B common stock, representing at least a majority of the
voting power of our outstanding capital stock
that's entitled to vote, in person or by
proxy, at this meeting.
Therefore, we've got a quorum, and the meeting is duly
And we can proceed.
First item of business, and that is
the election of directors.
10 directors will be elected at today's meeting.
The directors elected today will serve until the 2008
annual meeting of stockholders, or until their
successors are duly elected and qualified.
The board of directors has nominated the following
persons for election today, Eric Schmidt, Larry Page, John
Hennessy, Ann Mather, Ram Shriram, Sergey Brin, John
Doerr, Arthur Levinson, Paul
Otellini, and Shirley Tilghman.
Now, our bylaws require that a stockholder provide advance
notice of any intent to nominate
additional persons as directors.
We haven't received any such notices, so accordingly I
declare the nominations for directors closed.
Now the next matter being submitted to you, our
stockholders, is the ratification of the
appointment of Ernst & Young as our independent registered
public accounting firm.
Our board of directors has recommended that our
stockholders ratify this choice for the fiscal year
ending December 31, 2007.
The third item of business being submitted today is to
approve an amendment to our 2004 stock plan.
And that amendment is to increase the number of shares
of Class A common stock available to be issued under
that plan by 4,500,000 shares.
Our board of directors has recommended that our
stockholders vote for this amendment.
The fourth item of business being submitted to our
stockholders is to approve the executive bonus plan.
You may have seen a description of this plan and a
copy of the plan that was provided with
our 2007 proxy statement.
Our board of directors has recommended that our
stockholders vote for the proposal to approve the
executive bonus plan.
Now we have one final item of business to be submitted
today, and that's the consideration of a stockholder
proposal that's brought to this meeting by the Office of
the Comptroller of New York City.
Our board of directors has recommended that our
stockholders vote against this stockholder proposal.
At this point, I'd like to introduce Mr. Pat Doherty,
who's a representative from the Office of the Comptroller
of New York City.
He's going to present the proposal to you.
Mr. Doherty, you have five minutes to make a statement
regarding the proposal.
I'll let you know if you're running out of time.
PAT DOHERTY: Thank you.
Thank you, Mr. Chairman.
Fellow shareholders, my name is Patrick Doherty, and I'm
here today on behalf of the New York City Pension Funds,
to present our Funds' resolution calling on Google
to institute policies to help protect freedom of access to
the internet.
Early last year, Google launched, a search
engine, based in China, that censors search requests that
the company feels would be politically objectionable to
the Chinese government.
We believe that companies operating in countries with
repressive governments and a weak rule of law must make
special efforts to avoid being seen as complicit in human
rights abuses.
We are therefore proposing that Google not engage in
proactive or self-censorship of its products, that it take
legal steps to resist efforts of authoritarian governments
to impose such censorship, and that it clearly disclose to
its consumers instances where political
censorship has occurred.
Last year, Google's Vice President for Global
Communications and Public Affairs testified before the
US Congress that the company's current policy of
self-censorship in China is quote, "Something that runs
counter to Google's most basic values and commitments as a
company." End quote.
We agree with management on this point.
We call upon the company to reaffirm its most basic values
and commitments.
And therefore, on behalf of the New York City Pension
Funds, holders of 486,167 shares, I submit the
resolution on internet censorship found
in your proxy materials.
Thank you very much.
DAVID DRUMMOND: Well, thank you very much Mr. Doherty.
Thank you for presenting the proposal.
At this point, I'd like to make a very brief response to
the proposal on behalf of the Google board and Google
Google, as many of you know, is committed to free
expression and to access to information.
These principles guide our approach to this problem of
online censorship.
We think about it all the time.
We appreciate the spirit of this proposal that you've
brought here today, as it expresses an overall view that
is very consistent with ours.
However, we oppose the proposal, because we don't
think that, at the end of the day, it advances the causes of
free expression and access to information.
The reality is, we've got users everywhere, and serving
those users while respecting the local laws that apply to
us requires careful examination of the conditions
of a particular country, and then coming up with a solution
that's tailored for those conditions.
Applying a rigid set of rules here is not always going to
get us to the right outcome.
So an example here is that this proposal would prevent us
from operating, a site that has already made a
very meaningful contribution to access to
information in China.
And pulling out of China, shutting down, to us
is just not the right thing to do at this point, and is not
the answer to the online censorship problem.
But that's exactly what this proposal would do.
So the proposal also fails to recognize that Google's taking
many steps to promote a free and open internet.
Among other things, we're working with human rights
groups, academics, socially responsible investors, to
produce a common set of principles and approaches to
deal with this online censorship problem.
So while we oppose this particular proposal, we commit
to continuing to advance the causes of free expression, the
causes of access to information, and for an open
internet throughout the world.
Thanks very much.

So that completes the business, or at least the
proposals, that have been brought before the meeting.
So because there's no more business to be presented, the
polls are now open.
So if you've previously voted by proxy, you don't need to
vote today, unless you wish to actually change your vote.
If you do wish to vote, you can use the ballot that we
sent to you in the mail.
Or if you need a ballot, you can raise your hand, and we've
got folks with ballots on the side who can
provide you with one.
We've got several in the back here, and on this side.

We've got quite a lot.

I guess we'll just wait.

We should have some music.
Do you have any music?

Has everyone received a ballot who needs one at this point?
I'll give you another couple minutes to go ahead
and cast your vote.

Our inspector Amy, and Ann over here, will continue to
collect your ballots if you have completed them.
Thanks very much.

So it looks like we've collected most of the ballots
here, or pretty much all of them, so thanks very much for
bearing with us here.
At this point, I declare the polls for each matter that's
being voted upon today to be closed.
Don't worry.
We're going to collect your ballot.
We'll make sure we have that.
And at this point, the inspector of elections please
calculate the votes, and provide me with the results.
Please bear with us another moment.

Are we ready?

Thank you.

I've been advised by the inspector of elections that
the nominees for election to the board of directors have
been duly elected.
I've further been advised by the inspector that a majority
of the shares present at the meeting, in person or by
proxy, voted in favor of the ratification and appointment
of Ernst & Young as our auditors for the 2007 fiscal
year, the approval of the amendment of our 2004 stock
plan, and the approval of our executive bonus plan.
Therefore, each of these proposals has been approved by
our stockholders.
I've also been advised by the inspector that a majority of
the shares present at the meeting, in person or by
proxy, voted against the stockholder proposal that was
presented today.
Therefore, that proposal has not been approved, and will
not be adopted by the company.
That ends the official business of the meeting.
I hereby declare that the formal portion of our meeting
is officially adjourned.
Eric will now make a presentation to you regarding
Google's business.
And you'll have an opportunity to ask some
questions after that.
Before Eric begins, let me do the lawyer language.
I'd like to note that his presentation and answers to
your questions may contain forward looking statements
about Google's business, about Google's business outlook.
Our actual results, as you know, may differ from those
forward looking statements for a variety of reasons.
And we've cataloged those in excruciating detail in our
filings on file with the SEC.
So with that, Eric.
ERIC SCHMIDT: Thank you very much, David.
And as I mentioned, it's a delight to have you all here.
I thought I would take just a couple minutes and talk about
some of the ways in which the company is run, your company,
and some of the ways in which we think we're going to be
expanding what we do.
It's worth saying that our underlying
mission has not changed.

Larry and Sergey, literally out of a Stanford dorm room,
said that they wanted to organize the world's
information and make it universally
accessible and useful.
It's actually worth studying this, because the world's
information is more than just the web.
And universally accessible means more than just a
personal computer or Macintosh.
And useful means it has to be right.
It actually has to work.
So if you think about this, it's a very broad, very, very
broad, mission for the company.
And it helps guide us in the things that we want to
accomplish over the next many, many years that we hope to be
in business and to be successful.
When I think of the history of the company-- and I was
fortunate to be here from roughly 2001.
Google started, and you can see the original logo that
Sergey and Larry designed.
At Stanford, they saw it as web search.
And then they found a way to build an advertising business,
which ultimately became one of the strongest and most
interesting advertising businesses in the world.
Along the way, a product like Google Toolbar came around,
which is installed on a personal computer in your
browser, and it gives you access to information more
quickly and more accurately than if you didn't have it.
Again hugely successful.
And then we began a policy of buying very small technology,
brilliant companies and integrating
them into the company.
So for example, Applied Semantics,
Blogger, Picasa, Keyhole.
Those acquisitions, again, small-- and they seemed large
at the time, but I guess they were small then--
have ultimately become very, very significant businesses
for the corporation.
Then we announced our Books projects,
which I'll talk about.
And along the way, we also kept building new, interesting
services and applications.
This brings us up to the point now where we have a very broad
product portfolio.
And we've been thinking about how to organize all of that in
a way to think about it.
Our model, which we've talked about many times, is that our
engineering is organized into 70/20/10.
70% are the core ads and search business.
20% in adjacent markets.
10% in other.
And unusual for a technology company-- we may be the only
one-- we encourage our engineering teams to spend 20%
of their time on projects which they think matter, not
necessarily what their management thinks, and maybe
not even what I'm talking about, but things that are
really innovative.
Many of the new products come out of that 20%
time that we do.
As shareholders, you all have seen these slides many times
in one form or another.
I won't review them.
Just simply to say that our model is working from a
financial perspective.
And I think that's an understatement.
And when I think about it, I think about it as we put users
first. And if we solve the user problem, the other
technologies applied to that can produce quite an
interesting business.
So for example, we don't talk about advertisers.
We talk about ads delivered to end users, making them better,
and then we know the advertisers will be happy.
And we try to give those advertisers tools so that they
can exploit that opportunity.
So at Google, the most important message for you,
representing end users, is the user comes first. And I can
tell you that I've been in many meetings where we will
have a discussion where some very clever person will have
come up with an ads idea or something.
But when we test it with end users, it's not an improvement
from the end user perspective.
And we don't do it, even though it might add more
revenue or other aspects to what we're trying to do.
And you can see the financials are quite strong.
I won't go through them.
They're in both our 10-K and 10-Q. And we talk about them
every quarter.
Again, we hope this will continue for a very long time.
Excuse me.

You can tell my voice went.

You've had a chance-- wow.
Where did my voice go?
Did I say something wrong?
I apologize.
You've had a chance to study our slide here.
And our strategy evolution is really to think of three
components, not just two.
Search, ads, and apps.
And in the case of search, we have a lot to talk about.
In the case of ads, we have a lot to talk about.
And we're also now beginning to build a whole new
interesting applications business, based on the
principles that we're talking about.

I want to make sure that everybody understands how
fundamental search is.

I apologize.
I want to make sure everybody understands how
fundamental search is.
Search is very much at the heart of
everything that we do.

And we have more engineers working on search than
anything else.
We have more engineers working than
anybody else in the industry.
And it's not a solved problem.
There's a lot that's going to happen going forward.
There are many, many examples of this.
A typical example would be the 13 library partners that we
have and the 10,000 publishers that are giving us
Another example is a set of deals that we did with
newspapers and archives.
So for example, if you do a search for Panama Canal,
you're going to see the original news story about the
signing of the opening of the Panama Canal.
Pretty amazing stuff, stuff you
wouldn't normally encounter.
And if you don't care about the Panama Canal, an awful lot
of people do.
And the people who do want the right answer.
So even if it's something that you don't care about, one of
the secrets of Google is that somebody cares about that
And they want it to be the right answer.
So the important point here about search is we're not
anywhere near where we need to go.

Ads can be understood as a much larger business as well.
We're doing two things.
And I don't want to pass over this, because of course it's
the source of the majority of our revenue.
The existing ad system can be much, much stronger.
It can be stronger in a lot of ways.
It can be much better for large advertisers.
It can be much easier to use for very, very small
I'm thinking of the person in their house in the third world
country doing things.
The important thing is that making things deeper really
means covering the entire spectrum of advertiser needs
for a particular advertising product.
We're doing very well there.
You're going to see a lot more emphasis on that over the next
little while.
Another aspect of the expansion is wider.
So why would we, for example, want to do radio ads?
Well, radio ads have not had a lot of technology improvement
over the last few years.
Our technology can make them more targeted.
A more targeted ad becomes more valuable.
What about television?
We all watch television.
We did a series of trials and deals, the most recent one
being with EchoStar, where we're using our targeting and
our math, our algorithms if you will, to produce more
accurate, more targeted advertisements.
The important point here is that deeper and wider means
that we are the technology agent for a whole set of
advertising industries.
And although we're a small part of the advertising
industry today, we think that more and more of that industry
will enjoy the technology that we're bringing to it.
A more targeted ad is a more lucrative ad.
It's a more valuable ad.
Users will like them more.
And advertisers will be happier with them than they
are with the technologies that they have today.
In the case of apps, we've begun to talk about a whole
collection of applications, which can you see represented
here on the slide.
And whether it's a social community like Orkut, Docs and
Spreadsheets, which is applications that run that
allow you to do relatively straightforward word
processing, spreadsheets, and so forth and so on, they're
all unified by a vision.
And that vision is easy to understand.
How many of you have a existing computer that you've
dropped, and you lost all your data.
It happens all the time.
There should be a rule against this.
It's just terrible.
You've worked on this thing and you lose it, and so
forth and so on.
So let me give you an analogy.
50 years ago, people didn't put their money in banks.
Then they put the money in the banks.
Then ATMs came along.
And when ATMs came along, people were willing
to go to the bank.
But it had to be their bank, because that was
where their money was.
And they got the money out.
And then eventually, they would go to the branch bank.
Well, that's progress.
But the money was still in their bank in their mind.
Well, now, when you travel internationally, for example,
you can go to essentially any ATM in the
world and get money.
I think this is phenomenal.
Think of the computing and the network infrastructure that
allow me get my money out of the bank that I put it in
right on the street corner.
And of course, we all know that the money isn't actually
sitting at the local bank.
It's actually in the big bank somewhere in the sky.
The important point here is that--
This is how banks work, right?
So the important point here is that if you think about it
from your data, why wouldn't you make the
same series of decisions?
Wouldn't you prefer to have a trusted partner that won't
drop your computer keep your important information and have
it available for you wherever you are and on every device?
Seems obvious.
We can finally now build these services.
Let me give you an example of a calendar product.
We have what looks like the number one online calendar.
The product was introduced six months ago.
How did this happen?
Well, obviously, a very impressive team.
But our calendar application, and there's plenty, is
organized around sharing.
Because there's another observation, that people are
So once you have all this information in the big bank in
the sky, if you'll excuse the analogy, you can also begin to
make it sharable.
And calendars are obviously sharable.
So the logic makes sense.
So now all of a sudden we find ourselves in a very
interesting and expansive business.
We've just announced Google Apps for enterprise, where
enterprises are looking at this, and they're saying, hmm,
maybe I could use this new technology within my company.
And I'll get the same high quality of service that my
employees get when they're not at work.
And that's a business that looks like it's going to grow
very nicely for us.

When we talk about quality, it's clear that quality has
improved significantly in the last year.
And in all of the scoring and all of the algorithms that
we've built, this is perhaps the thing that
we're proudest of.
We're just getting better.
Our index is much, much bigger.
There's much, much more content.
And we've been able to scale it.
Historically, in computing, what happens is you hit walls.
You hit limits.
We haven't hit those limits yet.
And I think there's a good chance that we will be able to
continue to invent new technologies, new ways of
indexing all this information, that are going to continue to
deliver tremendous value to people.
I wanted to highlight radio, because this is the year where
radio advertising will be automated by our model, we
think in a significant way.
We're very proud of a deal that we did with Clear Channel
about 2 weeks ago, which involves about 675 stations,
where we have high quality radio inventory.
And our computers talk to their computers
to do radio ad placement.
And so we bring our advertisers, the many, many,
many advertisers that Google has, who typically do not
think of radio, into the mix.
Excuse the metaphor.
And all of a sudden, you can literally record an audio ad--
and of course, it's all computers anyway--
put it into your computer, ship it into our network, and
it gets served in the right way.
The pricing is done in the right economic way.
It's a win.
It should bring, and we hope it will bring, truly
incremental revenue to an industry that's not had a lot
of revenue growth.
So our partners are excited about it.
And we're excited about it.

This is a picture of something called iGoogle.
Now some of you love the Google search box
and the white .
Page I'll tell you an interesting statistic.
One of the fastest products growing at Google is this
page, what we call iGoogle.
And by the way, what's interesting
is, this is not static.
These things are called Gadgets, and there are many,
many tens of thousands of Gadgets now.
And they do many different things.
We used some obvious ones, like Calendar and the weather
and the date and the NASA image.
Of course, it's Google, so it has to be NASA space related.
But you get the idea.
Of course, we have a crossword puzzle, and we have a social
network, and so forth and so on.
People are now putting up their own.
And not any one of them is the same.
So all of a sudden iGoogle is my Google.
You can do whatever you'd like.
And you can add these gadgets.
And in fact, we're having a big, big developer program
later this month, to try to get even more
people building on it.
What's nice about it is, it's also a nice way to unify this
applications vision.
If the apps also run inside of iGoogle, then you don't even
have to think about it.
It's always there.
It's always available.
And it always works.
If we think about iGoogle and personalization, these are
some examples of the developer day we're going to-- and
again, normally a developer conference
would be in one place.
We're going to do it in 10 locations worldwide all at the
same time, globally, and get everybody really excited,
because it's a global footprint.
I haven't talked much about the international component of
Google, but I can tell you that part of our secret has
been the international reach of the company, and the
tremendous growth we've had in international.
We're very excited about that.
Partnerships turn out to be one of the two or three key
components of our growth.
This is one of the highlights, KDDI.
KDDI is the number two mobile phone provider in Japan.
And KDDI offers both targeted ads as well
search to their customers.
What's interesting is, these are the highest performing ads
that we offer in the company.
I go, like, wow.
How could that happen?
The obvious answer is because it's a personal device.
It's highly personal.
We know a lot about that person.
And the phone knows where it is.
So not only do we know who you are, we also
know where you are.
So we can show you a much, much more accurate ad that
people are much more likely to click on.
Things like, what am I going to have for lunch, and those
sorts of questions.
So the combination of these partners then, layered on top
of KDDI is showing tremendous growth for us.
It's a good model for other partnerships that we hope to
do in the mobile space.
There are many other kinds of partnerships we do.
And I think we'll be doing many more in different
I haven't mentioned some of the other ones, such as the
Dell partnership and so forth, but they're all incredibly
important as well.
This is an example of what happens when
you combine all this.
This is a fellow who decided to drive himself along Route
66, took pictures, and created an oral history as a layer
inside of Google Earth.
So you can have the benefit of the bad food and cheap motels
that this gentleman had to stay in during his drive, from
the comfort of your office.

This is a product, a French product, that's a GPS-enabled
device, where you drive along-- this is for cycling--
which does your altitude and your location
in the obvious way.
And at the end of your ride, you press a button.
It goes right into Google Maps.
So all of a sudden you can see where you went, and you can't
lie about the altitude you had.
So perhaps the most serious one is
what we did with Darfur.
As everybody knows, there's this huge
humanitarian crisis in Darfur.
And it's very hard for us, sitting here, to understand
the tragedy of this crisis.
So again, using this technology, and using a layer
within Google Earth, we were able to highlight that.
We've won many awards for this.
And I hope that this kind of activity actually makes a
difference in people's lives.

We are absolutely committed to the mission that I outlined at
the beginning of this talk.
What's great about being at Google is that the employees
are happy to serve all of you as our shareholders in this
extraordinary mission.
So with that, thank you very much.
Let's just get the--
maybe Larry can join me.
And Larry, you have a mike?
I think we'll just take questions.
You want to sit in the chair, Larry, or stand?
Questions or comments at the mike.
The gentleman in the back, why don't you begin?
I'm interested in international revenue,
specifically the non-UK revenue.
When I tried to learn about it, I looked at China, where
you have tough competition with
They have a high market share of search.
They've positioned themselves very well with the hip group,
with the crowd that wants good cultural language skills from
a search engine, and wants a lot of content like MP3s.
So that bothers me.
But when I look at the rest of the world, there's a lot of
rich countries where there should be a lot of market,
France, Germany, et cetera, the rest of Europe, Latin
America, a lot of people in India and China too.
So I'm wondering why is it only 30%?
Why does it differ so much from the 15% we have in UK?
Are there other baidu.coms out there, Yahoo, et cetera?
Or are we really competing with traditional media?

ERIC SCHMIDT: In most of the countries we are in the number
one spot in terms of market share,
as best we can determine.
In many of the countries that you named, we have a very
significant market share, as best we can tell from third
party surveys.
In China, as you pointed out, the surveys indicate that
Baidu is number one.
There's evidence that we're gaining share there, by virtue
of our investment and so forth.
So the strategy is working.
I'm not sure what your question was, because our
commitment to international is strong.
Did you have--
maybe you could refine your question just a bit?
AUDIENCE: Large population in a rich countries that add up
to two or three USs, why only 30%, compared to the huge
amount we have coming from the US market?
ERIC SCHMIDT: Well, partly it's because the advertising
market in the United States is more mature.
And we actually looked at not user traffic, but advertising
market, and the United States is still a significantly
larger advertising market than the other three.
And they are in order, by the way, Japan,
China, the UK, and Germany.
And we're doing well in all those, and we're improving
ourselves significantly in China.
Next question.
Yes, ma'am.
AUDIENCE: Is it on?
It is.
I just wanted to say it's very exciting to be here with you
fun people and all the colors around me.
And after jumping off a plane from that lousy Berkshire
Hathaway, or whatever that Buffett's company is called,
where people have 110--
Oh, I'm a shareholder.
My name is Lauren Babette.
But after jumping off the plane, and the shares there
are a $110,000 a share, and they served you one taco,
coming here--

I mean, I have no faith in Warren Buffett anymore.
He's no longer--
I'll keep the shares, let him make money for
me, but that's it.
Other than that, I enjoy being here.
I just wanted to say your meeting was terrific, very
I learned nothing at that last one I came from.
I'm very impressed with the fun, spirited college
atmosphere, college campus atmosphere.
The colors of Google all around me, the great sensuous
food, sushi and delicacies you serve to the employees, and
all the dogs from all walks of life you allow the employees
to bring them to work, from golden retrievers to poodles.
The only thing lacking is the smorgasbord for the dogs.
Now my questions are, how high do you think Google can go?
Can it go to $1,000 a share?
I hope that's not insider information.
And I noticed a couple of you are 33 years old, unless I
read that wrong.
But I just wanted to know what your secret is of success,
even on a personal level, what made--
because for a company to become as great as Google,
it's the ingredients of the human being behind it, or
human beings behind it.
What is it in you, besides genes?

And here's a more serious question, because sometimes
when I'm on Google, and I've had friends tell me the same
thing, they feel there are spies.
Are there, like-- because then I'll get pop-ups sometimes.
Is it the people advertising with you that kind of throw in
some spies?
I hope you got all of those questions.
ERIC SCHMIDT: Larry, why don't you comment on the drive of a
33 year old?
LARRY PAGE: I think I might actually be
older than that now.
I think we've been really lucky to have a really large
And so I guess we were lucky enough to have the confluence
between having a really interesting vision of how do
you get all the information in the world to all the people in
the world efficiently, and we were lucky enough that the
computer science actually really could help with that,
and that we were in the right place at the right time to
make that happen.
And we also happened to be in Silicon Valley, and there was
people who could fund it, and people who could manage it,
and all those hard things too.
I guess just not all those things usually come together.
But I think also it's been an era where individual teams,
small teams, still can really make a huge difference.
So you can build a product that does spell correction or
something like that, and then you can show it to your
mother, who's doing Google searches.
And you can be a small team, maybe 10 people or something
to do that.
And they really feel like, oh my gosh.
I've improved the spelling of the whole world.
That's a pretty good feeling.
I think it's really motivational to people, and
has really helped us grow the company and do all the things
that we've done.
ERIC SCHMIDT: My comment is that of people my age there's
sort of this negativity about the world.
And I will tell you that--
that's a broad statement.
And I will tell you that one of the great pleasures in life
is working with the next generation of people getting
out of the colleges and universities
in the United States.
The optimism, the creativity, the drive, and the passion is
at a level that was certainly not present in my generation.

It was not.
Because the people grew up faster, and they're more
connected, and they deal with things more quickly.
And the message inside of Google is one of tremendous
hope for technology, for the world, and a great passion
about the problems that we face in the world.
And it's a great privilege to work with such people.
With respect to your question about--
I think I'd rather not talk about the
$1,000 stock price question.
I prefer not to answer that question.
But the question about people taking a look at your searches
and desktop and so forth, we're very careful not to
allow the advertisers that we work with to do that to you.
So it's probably, maybe other applications or web
applications that you're using that might be doing that.
Larry enforces a set of guidelines on those
advertisers, which they are constantly complaining about,
which really does limit their ability to do that.
LARRY PAGE: Yeah, and partners.
Just like your computer can get infected with a virus, a
lot of computers get infected with a program that shows ads.
And so it just might generate pop-up ads.
We don't run pop-up ads.
So those aren't coming from us.
But sometimes your computer is just infected and it's just
spurring ads.
ERIC SCHMIDT: Let's go ahead and get
a couple more questions.
Yes sir, in the back.
Thank you very much.
AUDIENCE: Jason Dim, shareholder.
Two questions.
What assurances can you give AdSense publishers that they
will not be falsely accused of click fraud.
And is there any recourse if a publisher feels his or her
account has been wrongly disabled?
And the second question is it was recently reported that
YouTube was going to share the wealth
with their video creators.
Have the plans on how this is going been laid out yet, on
how this is going to work?
ERIC SCHMIDT: With respect to sharing the wealth with the
content, those plans are being put in place now.
So they're not there.
We announced our intent to do that, and we're doing it over
the next months.
It'll happen fairly quickly.
With respect to the disabling of click fraud, for those of
you don't know, there is a constant problem of people
trying to game the ad system and the indexing system.
And we apply our computer scientists to this problem.
We're pretty good at sensing rates of click fraud.
There is a manual appeals process.
So basically, if for some reason an advertiser is cut
off, they can actually appeal.
We've had a couple situations where people have been unhappy
with out decisions.
But we have tried very hard to police the network.
Sometimes people find themselves in a situation
where they are unwittingly part of a click fraud network,
even though they themselves did not initiate it.
And it's an education opportunity for us.
So it's a combination of manual appeal and science.
Yes ma'am.
AUDIENCE: I'm Sarah Olson, shareholder.
Thanks for taking our questions, and for your
It was great.
Google has become a bigger influence on people's lives
faster than any company in history.
And I've started to hear some of my friends in Silicon
Valley referring to Google as the new Microsoft, not in
flattering terms. I think that that's perhaps at the very
bleeding edge, but I think it signals a potential drag on
the company.
And I was wondering what indicators you would use, if
you have thought about any, to gauge whether that has become
a material issue for the company.
And do you think that that is something that the company
needs to be addressing in terms of how you're able to
recruit and retain the best people, or in terms of other
factors that affect the company?
And why or why not?
And if it is, or if it ever does become one, what's your
strategy to address that?
ERIC SCHMIDT: It's interesting.
We just had at a lunch meeting on this very topic.
The simplest answer is that its focus--
we really do make decisions based on end users.
And so the goal is to solve end user problems, and unlike
other companies, we made a commitment not
to trap user data.
We won't force you to just use Google.
We can't.
And we remind our engineers every day that we're one click
away from losing that customer, different from some
other companies.
I think for people in the area, and for everybody, it's
kind of natural, as Google's getting bigger and things are
going well for us, it's natural for people to be
concerned about that.
And If I wasn't here, I would be concerned too.
I think our actions over the next 10 years or something
will make it clear that we're not the same kind of company
as some of the companies people are worried about.
And I think it's deep within our culture.
If you look at the engineers here, they all run Linux.
You can walk just around this room here, and you'll see
they're all running Linux.
And Linux is a free operating system.
You can hack on it.
It's a very different model than we've had in the past.
And that's deep in their DNA, of all the people
who make our products.
And I think you'll see that come out as hopefully we
continue to be successful and stuff.
You'll see a lot of our decisions are going to be made
I think also in the area, we do get into contention for
hiring people.
We have tons and tons of recruiters, and we cause
traffic in the area, and the buses are running up and down,
and they're all of our buses.
Somebody actually told me they were trying to work at Yahoo,
and they said, oh, go to this place and get on the bus.
And they got on the bus and it was one of our buses.
And they ended up here.
And it's that kind of stuff too, which is not really
I mean, we try to be sensitive about it, but the scale of
opportunity is very, very large.
I always give the speech when we were 200 people, we said,
you know, we're a search company.
Search is going to be a big deal.
We need to grow, to expand, to deal with that opportunity.
And I still feel like we're in that stage, where
we're still a startup.
And so for us, we're not serving every
country in the world.
there's? tons of things that we should be doing that we're
not yet doing.
And so we need to scale to meet that opportunity.
And some of that is we're going to cause traffic around
this area, and those kind of things.
And that is going to have some impact on other people.
ERIC SCHMIDT: Thank you very much.
Let's have the next question.
AUDIENCE: Carl Hoffner, a shareholder.
Since your IPO, I want to compliment you on maintaining
an open and free meeting with information that's
useful to all of us.
I went to the Apple meeting, and I know you were there,
since you're a director of Apple.
And in order to get in, you had to go through essentially
a worse thing than going to the airport.
They even confiscated my pocket knife and held it for
me until I checked out.
ERIC SCHMIDT: You're holding it up there for everyone to
see, right?
Take a look.
Everyone see.
AUDIENCE: That you guys didn't, and we have cell
phones in here.
And it seems to me that nobody's going to be attacking
anybody else.
The other thing was--
ERIC SCHMIDT: Sir, we did not see you as a distinct threat.
AUDIENCE: --is that you provided information.
Mr. Jobs at Apple this morning, I was, again, totally
Absolutely no information.
I'll probably have gone to my last Apple meeting.
I hope to continue to come to yours in the future, and
they'll be as informative as this.
Thank you.
ERIC SCHMIDT: Thank you very much.
AUDIENCE: Yes sir.
Hi, Dr. Schmidt and Mr. Page.
My question is, you might have already answered this, but I
just wanted to get on camera.
AUDIENCE: I read somewhere where you said that--
sorry about that.
I read somewhere that you said that you didn't see a ceiling
for Google's growth.
Do you still feel that way?
LARRY PAGE: I still feel like we have--
every day that we come to work we see new opportunities, and
just more people coming online, more people doing more
things online.
The quality of search can be hugely improved still, which
causes you to use it more than you use it now.
We're still a very small percentage of advertising
markets in terms of our revenue and so on.
So I think there's still tremendous, tremendous
opportunities for us, yes.
Thank you.
ERIC SCHMIDT: In the back.
Yes, ma'am.
I'm Susan DeSilva, proxy holder.
And I just want to thank you for another part of your
culture, and that is the Google Grants.
I serve on the board of a small nonprofit, and it's made
a huge difference that people can find us on the internet.

ERIC SCHMIDT: Would you mind describing for the audience
what Google Grants are, because it's a pretty
important program for us.
The nonprofit that I work with is called CMRPI.
And we're protecting children from child molestation and
spreading information about that.
And it used to be that it was hard to be
found on the internet.
And we don't know what the secret codes are to get
yourself high on the search list, so we
applied for a grant.
And we were given it, and so now if you put in child
molestation or protection of children, we pop up.
And we've reached a lot of people.
It's just made the whole thing spread.
And we're really grateful.
Thank you.
ERIC SCHMIDT: Thank you for that.

This program is a huge success for us worldwide.
It's one of the best things Google does.
I'm really glad that you were able to use it.
Yes, ma'am.
AUDIENCE: Suzanne Wouk and I have a website called

I also am a user.
I'm an internet marketer.
And what I do is I use the ideas that come up of how to
make money online to try to teach non-profits how to make
money using the same tools.
I've been an AdWords user since the
night you became active.
I stayed up all night putting up ads, because--
ERIC SCHMIDT: April, 2002.
I was an Overture user, and I was really excited that Google
was finally doing it.
And I just want to, first of all, commend you for doing
such a great job.
I do feel a good energy.
And people ask me-- because I say a lot of good things about
Google, and people say, oh, they're so big.
I come from Santa Cruz.
People there don't like big companies.

But I feel very confident and good with Google.
I feel that you are truly putting the user first.
To come to what I want to ask is, as you say, more people
are using iGoogle, and you're developing applications for
the end user.
My feeling is that you not only want to digitize books
and other information, but you want to
digitize grandma's recipes.
You want to digitize people's ideas, just people that don't
have a place to talk, and just people's information.
And I think you're doing a very good job with all the
tools that you're doing, but I think that it's time to figure
out a different package of how to get all those tools to the
little people, to the little fund raisers that I'm talking
about, the little communities, the schools, the churches, the
And I wanted to know who can I talk to with my idea
of how to do this.
There are a lot of Google executives in the room who are
interested in this.
Start with Jonathan.
This is Jonathan Rosenberg.
Jonathan is in charge of all of our products, so he's a
very important person to talk to after the meeting.
And he's willing to stay.
He's already agreed.
LARRY PAGE: We should say too, like Google Apps, which Eric
talked about, you can now get a version of that for very
small organizations.
And a lot of the small organizations I deal with have
started using this, and are really happy with it.
ERIC SCHMIDT: I think your question points out a missed
opportunity at Google, that there are so many people who
want to express ideas.
And it's still hard for them, either because they don't have
their own IT departments or whatever, but they have
interesting ideas or interesting content.
How do they get it online?
And how do they get it online worldwide?
And again, because they want people to see it.
How do they get it ranked and all that kind of stuff?
You'll let us know.
In the back.
Yes, ma'am.
AUDIENCE: I'm actually an employee here, but I'm a
stand-in for a woman up front who wants to ask a question.
ERIC SCHMIDT: Yes, wonderful.
AUDIENCE: Thank you very much for permitting me
to do it that way.
ERIC SCHMIDT: This is a new Google maneuver.
Partnerships, a partnership between an employee and a
It doesn't get better than that.
Yes, ma'am.
AUDIENCE: I appreciate the understanding that seems to go
so far in Google.
And I feel very fortunate in living in a time when I can
have Google.
My last name is Alexander.
I'm a community property shareholder.
I have three queries, please.
The first is, it's wonderful in doing
research to have Google.
When I reach the topic for which I have been looking, I
do have problems, perhaps I don't understand it, with the
arrangement that then comes.
It doesn't seem to me to be chronological, necessarily.
You mentioned the Panama Canal, so either the most
present information, if that could come first. Or, for
example, with prescriptive drugs, you have a small
outline for physicians, for side effects.
If you could indicate the historical aspects, perhaps
the aspects for the engineer, the aspects for the tourist,
so that there's a lot of repetition.
It's difficult for me, when I get to the topic, to find what
I'm looking for.
Second query--
ERIC SCHMIDT: Would you mind?
Let's just answer that, because that's a very, very
good question.

LARRY PAGE: I get the hard questions.
I think what you're getting at is actually the core of what
we spend most of our time working on.
So we spend about 70% of our effort on search and
And very many of the people who work on search work on
just the topic you just outlined, which is how to get
you the exact right thing.
And that includes whether it's structured information, as the
prescription drug information you mentioned, which is sort
of set aside because it's structured more than normal
web search, or whether it's chronological or not, news
archives, like Eric mentioned.
We actually have a program that tries to determine which
of those things you actually want and give you that right
kind of information.
But it's nowhere close to being perfect yet.
AUDIENCE: The prescriptive drug I used as an example of
an outline at a beginning, sometimes it will take me to
page 12, and maybe an hour, to reach what I want, because
it's not within a time frame, it's not within an
alphabetical frame.
It mixes up one word that might be within quotes.
Within a reasonable time, perhaps to two people.
I'm glad to give a phone number and tell you the topics
with which I had trouble.
Second query--
ERIC SCHMIDT: Actually, just to answer the--
we actually agree with you on this categorization issue.
We've invented some technology that automatically goes into
the categories that you just named, the user, the doctor,
the physician.
And in fact, the parts of Google that are used for
health will get much better over the next year, because of
questions like the ones you're asking.
AUDIENCE: I'm indicating not just health.
I only meant that as an example for an outline.
Second query, please.
I assume that with the calendar you mentioned, there
will be sufficient security because of the obvious
protective effects.
ERIC SCHMIDT: Security of what?
AUDIENCE: If you have a calendar online, it's so easy
for people get in, and obviously--
ERIC SCHMIDT: Oh, absolutely yes.
LARRY PAGE: You don't share it with everybody.
AUDIENCE: Third is something that I would really appreciate
your considering and doing.
Now that we have the ability to reach people all over the
world, somehow, for example, let's assume I'm an attorney
and want to reach everyone who feels about
Guantanamo the way I do.
If there's some way that Google--
or someone who says, I have Parkinson's disease.
Let me reach everyone in the world who has that.
Except for blogs, there's no way to put that question in,
or to reach those, and easily Google could do
that, it seems to me.
And it would be a terrific service, and perhaps something
that would give us another step forward.
Thank you.
We're accepting job applications.
ERIC SCHMIDT: We're actually thinking about this question.
We've not yet quite figured out the right combination to
do exactly what you said, but it's a very clever idea.
Yes, ma'am.
AUDIENCE: I'm a very small
shareholder I had two questions.
One, is there any proposal to split the stock, to make it
more accessible to the small investor?
The second is, how do you make sure that the information that
comes out is accurate?
There is so much misinformation on the web.
ERIC SCHMIDT: With respect to the stock split, we're not
considering a stock split, and we haven't for a long time.
With respect to misinformation, your talking
about the misinformation in general on the web?
AUDIENCE: Even in searches if there's information that is
not accurate.
ERIC SCHMIDT: We would view those as just we didn't do a
perfect job on ranking.
We've sort of come to a view that there's so much
information in the world, it's going to be very difficult for
us to say, this is right and this is wrong.
But we believe that the community as a whole, plus the
algorithms and computing technologies that we're using,
can provide a pretty good approximation to the best
quality results.
It is possible, for example, that if everybody thought that
something was false that was actually
true, we could be tricked.
But it's hard to trick Google in the aggregate.
And we're constantly improving the ability to rank the first,
second, and third results.
At the same time, there's this enormous expansion of
information, which is making it hard for us to continue
those improvements.
The magic of Google is that we've been able to do that,
even while the amount of information in the world has
been expanding so quickly.
AUDIENCE: Thank you.
ERIC SCHMIDT: Yes, ma'am.
Thank you.
Yes, sir.
AUDIENCE: Bill Bates.
I'm a shareholder.
Two questions.
When do you think you'll be coming up with your own
proposal relative to the one we defeated today that was
before the shareholders?
ERIC SCHMIDT: Referring to the China proposal?
AUDIENCE: The one that New York Pension Funds wanted.
ERIC SCHMIDT: Referring to the China proposal.
Yes, sir.
AUDIENCE: And secondly, we were talking to your head of
investor relations at lunch.
How do you keep the collaborative, friendly,
challenging culture here, that's made you so successful,
how do you sustain that?
If you keep getting bigger and bigger, that
becomes harder to do.
So how are you addressing that?
ERIC SCHMIDT: I'll let Larry answer the second one.
For the first one, many of the components that were part of
the initial proposal have already
been adopted by Google.
So for example, when we are operating in China, if--
and it's a very small percentage of queries--
we are forced to omit a result, we state that to the
Chinese end user.
The Chinese people are very, very smart.
They're perfectly capable of going and finding that
information through another means.
And in many cases it causes them to be interested and
drives even more traffic to this not such good
information, according to the government.
So the effect of it is that we do in fact maintain
transparency that the end user really does understand it.
And we're comfortable that that balance of choices, if
not a perfect outcome, does preserve the mission of the
company, and also really does serve the Chinese citizen.
As you know, there are an awful lot of Chinese internet
users, and they're an important constituency for us.
LARRY PAGE: On the second question which is retaining
the culture, every time the company
doubles, everything changes.
We've done that many times so far.
And hopefully we'll continue to do that.
Some things actually get easier.
We've learned the cafeteria is a really good way for people
to work together and meet each other and informally work,
which is actually, if you study companies, that's how a
lot of work gets done.
And we know how to do cafeterias now.
Eric's been really upset that I keep--
ERIC SCHMIDT: You cannot believe this.
This is the one source of tension between us.
How many cafeterias, Larry, have you opened this week.
LARRY PAGE: I have no idea.
ERIC SCHMIDT: I went over to the other campus, and you have
four you didn't tell me about.
How can this be?
LARRY PAGE: I have a very simple algorithm, which is to
put one cafeteria in each building.
ERIC SCHMIDT: Oh, now you tell me.
LARRY PAGE: My point was, we know how to do some of these
things now.
And actually, as we scale, we're implementing some of
this stuff faster.
So actually I think in some ways our
culture is getting better.
AUDIENCE: Brad Bates, shareholder.
I also was going to ask the stock split question.
If you sit down, it looks like you
chickened out on your question.
ERIC SCHMIDT: I actually just said no.
AUDIENCE: No, I meant be chickening out by sitting down
from the podium.
But let me just ask, when the stock does get to levels
you're getting to and hopefully going to, do you
feel that it possibly gives the what I would call
professional money managers more
influence over the company?
And do you envision a time at some point, or a set of
circumstances, where you would consider a stock split?
ERIC SCHMIDT: I'd rather not speculate on that.
We do look at this.
And so far, there's not been a barrier to having important
shareholders who buy a small number of shares.
They have been able to buy them.
The markets are efficient now that the high price has not
seemed to have been a deterrent.
If it were to become such, then I think we would have
that discussion.
Yes, sir.
AUDIENCE: Good afternoon.
Dan Huong, shareholder.
My question relates to the fact that you do not create
nor own, control, most of the content on the web.
And how is that fact affecting the fact that most of the old
media is losing advertising revenues as you are gaining?
How are you going to address that?
ERIC SCHMIDT: We're happy that we're not in
charge of all the content.
We depend on the partners for their content.
We want to provide more monetization and advertising
opportunities for them.
That's the core of our strategy.
And in that sense, Larry would say that we should be the best
partners for what you're calling old media, because we
have such nice reach.
We have such good technology.
We have such a good brand.
So it should work.
And as we develop new advertising models, it should
serve very well.
LARRY PAGE: We should say too, I don't think it's like our
gain, their loss.
I just think there are trends going on.
We don't have content.
We don't employ people to make content and so on.
So we're in a different business than they are.
But ultimately, it will give higher rev
shares to those folks.
And we are their best partner for distribution, and also for
ERIC SCHMIDT: Now, we're going to run out of time.
I wanted to make sure we take the questions from the people
who are still standing.
So yes, sir.
In the back.
If you could go.
And we'll try to answer these a little more quickly.
AUDIENCE: My name's Jack Iksterline.
I'm a stockholder.
I personally want to thank you for not splitting the stock,
because I believe that Wall Street would
like that very much.
The other thing I'd like to ask is, I realize that you
have a corporate jet.
I'd like to know if--
ERIC SCHMIDT: We do not.
AUDIENCE: You do not?
AUDIENCE: Oh, I had heard that you did.
And if you do get one--
ERIC SCHMIDT: No, go ahead.
AUDIENCE: --can you assure us that the three of you, the
three that are primary here, can be such that they will not
travel together in the same aircraft.
ERIC SCHMIDT: Very good question.
Since I'm the pilot, and they're the two passengers,
it's really a problem.
AUDIENCE: The last part is, I realize that you have a friend
in the neighborhood here--
ERIC SCHMIDT: Who can speak for himself on whether he
wants to fly with me as his pilot.
Don't say.
AUDIENCE: --who has a large yacht.
I wonder if you people are going to be
doing the same thing.

ERIC SCHMIDT: I'm not aware of any large
yacht plans at Google.
And I can assure you the company won't
own one, in any case.
Yes, ma'am.
In the back.

I'm Rita Bomb, and I'm a shareholder.
I'm also in the field of gerontology,
which is aging seniors.
I mentioned to the gentlemen sitting next to me that it's
so nice that I'm here in a large group, different from
concerts and symphonies, where almost everyone has gray hair.
There's just a sprinkling of gray-haired people here.
But on that subject, I'm just wondering--
LARRY PAGE: I don't have that much gray hair, Eric.
ERIC SCHMIDT: It's getting worse, you know.
LARRY PAGE: I'm told they have chemical solutions for this.
AUDIENCE: But yet the field of aging is so vast. The over age
85 group is one of the fastest growing age
groups in the country.
We already have almost 15% of our population is 65 or older.
And in other developed countries, it's
more like 20% to 25%.
I'm wondering, as our baby boomers quickly will become
seniors too, if you've considered doing a sub-set
Google Aging, or Google Seniors, to deal specifically
with the vast amount of information that older people
need and want.
Not only the best places to retire, but even at the other
end of the spectrum the specific health factors that
are important to older people, which nursing homes have the
most citations, including AA citations, which means deaths
that are occurring unnecessarily.
So it's a wonderful field.
I used to write a seniors column.
I know it's very popular, but I don't think there's enough
people who are spending time in devoting information
specifically for seniors.
And I just wondered if you'd consider that.
LARRY PAGE: I think Eric should answer, because he'll
older first. [LAUGHTER]
ERIC SCHMIDT: How long is this partnership going to last,
Larry, at this rate?

We would prefer to solve your problem, as you state it,
which is a very important problem, by knowing more about
the end user, by knowing more about the age, preferences,
lifestyle, medical condition, through a process that we call
And over time, we think that Google will know more about
you, and it will be able to provide more tailored results.
And those more tailored results will be more accurate.
They will reflect your question.
From your perspective, they will be as
tailored as you ask for.
But it doesn't require a completely different site, or
tab, or community, because we don't know how to divide up.
We don't know whether we should stop at 85, or 60, or
maybe 52, Larry, in my case.
Yes, sir.
Thank you.
Good afternoon.
I'm Victor Ramirez.
I'm a shareholder.
I'm just following up to just give you feedback with regards
to the nonprofit that I represent, that has in fact
been a beneficiary of your grant.
Since you awarded the grant to the nonprofit, in less than a
year we've had a 100,000 visitors to the site.
So we thank you.
ERIC SCHMIDT: What is the name of your non-profit?
AUDIENCE: It's called Vibrant Learning Affiliates.
AUDIENCE: Thank you.
ERIC SCHMIDT: Thank you very much.
Yes, ma'am.
AUDIENCE: Carolyn Brown, shareholder.
What kind of frustrations and demands do you get from the
SEC and the United States Congress in relationship to
accounting and to privacy issues?

ERIC SCHMIDT: With respect to accounting , we have this
amazing chief financial officer named George Reyes,
who's here.
He's watching me as we speak.
And Google has--
we've managed to escape the traditional errors, I think
because of the quality, frankly, of the leadership of
George and his whole management team.
We've not had anything particularly notable.
Every once in awhile they'll ask a question or two, and we
provide a clarification.
With respect to privacy, we've had a couple of cases where we
disagree with the federal government over what we
thought was an over-broad privacy thing.
And one of the great things about the United States system
is that there is a legal process that we were able to
use to get it limited.
And we complied with it.
So it was a very good outcome.
AUDIENCE: Thank you.
ERIC SCHMIDT: And it looks like we have two more
questions, so if the two of you can be the last ones.
Yes, sir.
Real quick, here.
Bob Oliver, shareholder.
A follow up here.
Larry, what happened to that 757 that you had all the
problems with on the Formica?
ERIC SCHMIDT: 757 and Formica.
It's not really a Google question.
So maybe you have another question?
AUDIENCE: Well, you said you didn't have an airplane, a
corporate airplane.
There's no corporate jet at Google.
What happened to the 757?
ERIC SCHMIDT: It's not a corporate jet.
The other thing is--
ERIC SCHMIDT: And you're assuming it exists.
AUDIENCE: From what I read it exists.
ERIC SCHMIDT: What you read may or may not be true.
First rule of the press.
AUDIENCE: Good choice of equipment.
As long as it isn't an Airbus.
But anyway, on the other part of the question that's
probably been beaten like a dead horse here, is splitting
the shares.
And now if you're going to not do that, and I don't see why
you have answered it correctly, or even given a
good answer why you won't, why are you diluting what I do
have with 4,000,000 shares of this type A stock that you're
going to put out?
ERIC SCHMIDT: The dilution that you're referring to is
essentially all for employee, both
retention and new employees.
The board has a whole process that it looks at this rate.
They spent an awful lot of time trying to figure out what
that rate is.
So those extra shares are really there to bring in
additional employees.
From a shareholder perspective, that dilution is
very good for you, because it means that these people will
come in at much lower ownership positions relative
to yourself, and they'll work just as hard
as the earlier folks.
So from your perspective as a shareholder, that dilution is
some of the best use of the shareholders' capital and
money that could possibly be used.
The other aspect of dilution that we face is if we purchase
a company with stock, there is some dilution.
Although recently, for example, DoubleClick was done
with cash, for that reason.
AUDIENCE: If you put out more stock, are you planning on
doing it in this Dutch auction way again?
AUDIENCE: Which I thought was a disaster.
Even your underwriters weren't even happy with it.
They wouldn't even sell it.
ERIC SCHMIDT: Well, for the record, we were actually very
happy with the way we went public and
the ultimate result.
And we're happy to have you here today.
AUDIENCE: Well, it kept me out of the market for
about a week or two.
ERIC SCHMIDT: Nevertheless, that was your choice.
From our perspective, if we go to the markets again, we would
consider that at this time.
But the options that we're granting are options--
they're not done as a marketplace transaction.
They're created by essentially the legal
process of the company.
And they're done at market, so they're done at whatever the
price is that day and at the date of grant.
AUDIENCE: Well, I'm just saying that I hope you don't
do another Dutch auction.
ERIC SCHMIDT: It's highly unlikely we would do so,
because there is already a market value.
Let's have our last question.
Yes, sir.
AUDIENCE: Well, I'm Hanson Lee, and I'm a stockholder.
And at one time, when Google started, you were partners
with Yahoo, and Microsoft, and various other people.
Do you ever see where you're going to go back and be good
partners with them again?
ERIC SCHMIDT: There is always hope.
ERIC SCHMIDT: Thank you very, very much for spending so much
time with us.
Thanks, Larry.
Thanks, David.
Thanks, George.