Google's Schmidt: Full steam ahead Yahoo ad deal

Regulators haven't shared any opinions yet, so Google plans to go ahead with its search-ad deal with Yahoo. Also: YouTube revenue engine starting to rev.

Stephen Shankland principal writer
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Stephen Shankland
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MOUNTAIN VIEW, Calif.--Despite increasing scrutiny from regulators, Google Chief Executive Eric Schmidt showed no signs of being deterred from its plan to put into effect its search-ad deal with Yahoo less than a month from now.

"Time is money in our business," Schmidt said in a meeting with reporters at company headquarters here, and in the absence of an opinion from regulators, the company plans to go ahead with the deal. "We do not know their position," whether it's a great deal, a poor deal, or whether regulators will want changes, he said.

Google CEO Eric Schmidt
Google CEO Eric Schmidt Stephen Shankland/CNET News

He reiterated Google's position that the partnership with Google, signed in August, doesn't require approval--though of course regulators could raise objections after the fact. Some are concerned that the partnership, under which Yahoo will show some Google search ads, could undermine Yahoo's independence and give even more of market power to Google.

"My understanding is that because it's a commercial deal, we have a choice of when we implement it. We voluntarily delayed it so the government could take a look at it," Schmidt said. "The deal was designed precisely to meet the terms of antitrust laws in the United States, because we knew it would raise these sorts of questions."

The Yahoo ad deal is one of seemingly innumerable fishes Google has frying. To name a few others in recent headlines, the company also is working on improving the electricity distribution grid with General Electric, lauched its Chrome Web browser two weeks ago, and is building the Android mobile-phone operating system that will go on sale with partner T-mobile on September 23.

YouTube revenue: breathe easy
Earlier this year, Schmidt had pointed said one of the company's top priorities is to make money off YouTube, but Wednesday, he sounded much more relaxed about the issue.

"In a business, sometimes you have the luxury of patience, and sometimes you're in a really hard situation. We have the luxury of time to try and invest in things that are really revolutionary," said Schmidt, who earlier called a successful YouTube revenue strategy the "holy grail.".

The company has been working on various strategies to increase YouTube ad money, including overlay ads, ads in the "chrome" around the videos, pre-roll and post-roll ads that show before and after a video, and deals with content creators in which Google shares revenue from videos posted without the copyright holder's permission.

Co-founder Sergey Brin also was comfortable with the online video site's progress.

"Google as a whole took awhile to get our monetization going. It grew, but grew very slowly in the early days," Brin said. "YouTube monetization is a significant business and it's growing pretty quickly."

Android ahoy
Android phones are due to be announced Tuesday, and co-founder Larry Page flashed his briefly.

"I'm optimistic Android will also catch on in the marketplace," Brin said. And he believes even before the phones begin shipping, Android has helped the industry. "Another effect of Android (is) with the Nokia announcement with Symbaian. They're going to open-source that. That's already progress from our point of view and the general trend of openness."

Because Android is open-source software, anyone may use and modify it for free. "I expect there will be others taking that code and producing phones without us," Brin said.

Why invest all that money in a phone operating system? To bring the mobile Web to the masses.

"If the Internet is widely available, that's good for us. We invest in Android, better browsers, alternate broadband providers like broadband on powerlines, the equatorial satellite system O3b," Brin said. Improving access to the Internet is "core to our mission."

And search does well in areas where mobile phones are widely used, such as Japan. "As people get better phones, they do 20 times more searches," Page said.