Under that "undesirable" construction, a small number of companies become gatekeepers, forcing Internet users to interact in "highly regimented" ways that rest on verifying their identities, Schmidt said in his keynote speech at a luncheon event hosted here by the Carnegie Endowment for International Peace.
"The registrar has to know who you are," Schmidt said, referring to future gatekeepers. "You can't lie."
The Google chief said he remained optimistic that the Internet will instead tend toward a self-governing set of people and communities. But he acknowledged that "true anonymity is extremely rare...and can be very, very dangerous." In that vein, a middle-ground scenario that supplies "enough insulation so you know who you're dealing with" could also arise.
In a meandering, conversational speech that lasted about 30 minutes, Schmidt mused about challenges that global leaders will continue to face as the Internet's reach continues to expand.
For instance, aside from privacy and security concerns, "we have to define where free speech begins and ends," he said. He suggested tensions might arise in a world where countries like Germany and France have outlawed pro-Nazi speech, Brazil and others , and India makes it a crime to desecrate national icons like Mahatma Gandhi.
Nations that have traditionally restricted stories told by the news media may also have to grapple with the newfound capability of their citizens to discover, just by going online, when their governments aren't treating them well, Schmidt said.
In the end, online communities could even shake up the usual borders that define governing structures, the Google chief said.
"If MySpace gets a billion people, does it get its own government?" Schmidt asked. "Is there some rule that if you have a billion people, you get your own country? I don't know. I'm trying to be a little provocative here."