Column: Google ex-chief Eric Schmidt on why we can trust the market to fix what ails the internet

The first official message dispatched by telegraph — the Bible verse “What hath God wrought” — was relayed by Morse code 175 years ago, across 40 miles.

What have humans wrought since? Fifty years ago, at 10:30 p.m. on Oct. 29, 1969, Leonard Kleinrock, a professor in the new-ish field of computer science, along with his colleagues in their UCLA lab, laboriously fashioned the first computer message. It went the 350 or so miles to a Stanford computer set up through a Defense Department program. The intended pioneering message, “login,” only got as far as “l-o” before the system crashed, so the effect, if not the intent, was likewise biblical.

Next week, UCLA marks the 50th anniversary with a daylong symposium tracking the evolution of the world-altering phenomenon. Among the panelists at the event will be Eric Schmidt, former CEO of Google and former executive chairman of Google’s parent company Alphabet. The engineer and technology pioneer said he could not speak to current Google-related topics but reflects here on the state of tech and its place in the world, a half-century after that breakthrough.

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It wasn’t like the moon landing, where everybody experienced it at once and could remember for decades after what it was like. But do you remember, growing up, when you first heard about the internet, about email, and what you thought it might do, and whether you’d have any hand in it?

Well, as a young computer scientist, I had no idea what was going to happen. What I remember the most about that period is how these were engineers just working on interesting problems.

I think the important point is the internet changed so much of the world, and yet the people who founded it started off with a vision not to change the world, but to get everybody interconnected.

There was no sense of what the magnitude of this might be?

There were probably some people who saw it in the 1980s. But it’s important to remember that in the 1970s and 1980s, the internet was not allowed to be used for commercial purposes.

And there was a change made in roughly ‘91, which was a change around the ability to use the internet for things. And that change led to the creation of, for example, Netscape and the IPO phenomenon of Netscape and that sort of thing.

But before that, the internet in the 1980s was seen as essentially an academic exercise. People led by [groundbreaking internet pioneers] Vint Cerf and Bob Kahn obviously spent all their time trying to get everything interconnected. Bob and Vint are sort of the greatest heroes of all, because they didn’t just design the underlying TCP/IP work [which lets computers communicate with one another]. They also spent years of meetings to get everyone to agree to it.

Everyone has forgotten that there were competing choices. There were competing design centers. The internet didn’t just take over and win on its own. It actually had to vanquish other approaches.

And we would have all these meetings and all the technical people would get together and collectively design what the next iteration was. This is remarkable because I have never — and I worked at the time at Sun Microsystems — I’d never seen people act in such a non-self-interested way.

And what I remember was that that was the purest form of engineering. Remember, this is before the web and the arrival of [World Wide Web creator] Tim Berners-Lee. And the web, HTLM, http, those sorts of things, URLs, really then turned on the gasoline. Because that then enabled applications’ use of the internet.

Here we are in 2019, and Microsoft president Brad Smith has said the government needs to put up some guardrails around all that’s happening; it needs to be done to help democracy, it needs to create a healthy environment, and leave a healthy legacy. Do you agree that there needs to be more action from the government when it comes to the internet, social media and tech?

As a general statement, I have always thought that the less government the better in this area, and in general terms, having the collective community figure out a way to solve these various problems that have [been] created.

The best example here is spam. Everyone was upset 15 years ago that email was being taken over by the spam problem. It was a huge crisis, and there were calls for regulation.

And in fact, the industries at the time, the email providers, figured out relatively unsophisticated and now extremely sophisticated filters that would largely eliminate the spam problem. Had the government come in early and written down some long set of rules, then all of a sudden that would have been harder. It might not have been possible. So I always urge only doing that at the last possible way, not preemptorily.

In this last [presidential] election, and in the last few years, we’ve heard so much about democracy at stake, about foreign interference, about hate groups in the ascendant on the internet, where algorithms feed into white supremacist videos that at least validate their points of view.

And we’ve heard about more and more people being hired to fix this. Yet, why hire hundreds of thousands of people to do whack-a-mole, monitoring millions of people in sites in real time, when the algorithms could just be rewritten for the industry to take a hand in this — to keep government out, if that’s what the goal is?

I think a fair statement is that all of the players are working hard to use modern tools and technology to address the negatives that occur on the internet. And there’s a long list. And anything as powerful as the internet will bring some problems.

But I’m going to go back to what I said earlier. The goal was to get everyone interconnected. Now that we’ve got everyone interconnected or, more technically, we have half of the world interconnected, we don’t like some of the things that we see. That doesn’t mean our goal was wrong. That just means we need to evolve the technology.

The internet, social media — people regard it as a single entity, whatever the search engines or the different platforms available. Shouldn’t this be handled like a public utility, like the phone or the cable or the power companies? Those are private companies that have public interests, that operate with some government regulation, acknowledging the fact of their importance, their singular importance, and their singular existence in society.

I’m not speaking for Google or about any specific companies. My general view is that it has worked well to let the industry sort these things out. And I remember that everyone was concerned that the internet wouldn’t be fast enough, that there wouldn’t be enough bandwidth and there wasn’t enough bandwidth. Then everyone was concerned about the browser wars. That ultimately was resolved with a whole bunch of choices for browsers.

The important point here is, the market has a good way of sorting this out. There’s enough money, there’s enough people watching, there’s enough oversight. I would be careful about these calls for regulation.

The first generation of tech was about “moving fast and breaking things,” to use that phrase. Then, in the second and third generation, people like you, like Sheryl Sandberg, have been the adults in the room. How would you characterize those second and third generations that have emerged over the years with the tech community and the tech ethos?

If I look at it over my decades doing it, the groups that started were groups of technical people who had a shared vision to get everybody interconnected. And everyone sort of understood that there would be different levels of service and different kind of connectivity problems.

But the sheer act of connecting the world was a remarkable achievement that we should celebrate. The numbers are that roughly half of the world is connected to the internet. And we need to get the other half, or as many of the other half as we can.

The thing that happened at the same time in the last 10 or 15 years is that a set of companies came out that were internet-native companies. You saw this — probably the first one with Netscape, way back when in the ‘90s. So that’s 25 years ago.

But then you had the whole generation of Google, Facebook, those kinds of companies, all of which had two things in place. One is they had professional management and leadership, professional products. And second, they had monetization, typically advertising or subscription to it.

So it took a while to figure out how to make money on this thing. You had the connectivity, which is great, but it took five or 10 years for people to experiment with different modernization models so that once the monetization worked, it scaled very dramatically.

Once the monetization started to work, you had the internet bubble in 1999, 2000, followed by a crash and then a subsequent rise, which we then have been riding through until this day.

I think what’s happened is this current generation of leaders grew up during that internet-centric strategy, that internet-native company. And I’d say all of the current startups that we’ve talked about, they are roughly internet-centric, internet-native companies.

“Move fast and break things” — that’s not a Google phrase. That’s from another company. And so I think it’s an unfair way to frame the question.

There are many different approaches to how you run your company. Google has one. There are other approaches. My general answer is that customers are now very sophisticated. They understand exactly what quality looks like.

Imagine today if you founded a company that had five people to build an app that ran on iOS and Android. You’d be killed, because your competitors would have 20 people who’ve done it before and they’d move very quickly.

So the difference now is that the consumers are much more sophisticated. They want the things to work, and they want them to work very seamlessly. Ten years ago, you could get away with complicated products for complicated users that were difficult to use but powerful. You can’t do that anymore.

Are they more sophisticated about what they’re buying or what they’re using online or using social media?

I think it depends. You have the little old lady problem. The little old lady problem is one we’ve had forever, since we’ve had little old ladies, that they can be taken advantage of by sharks and people who manipulate them. And I’m using that as a metaphor; I think of little old men, too.

So you have to be careful. The reason we have consumer protection and so forth is to make sure that people are not taking advantage of the vulnerable, or people who are confused. I don’t think that any of that needs to change. I think that’s always been true.

So I would say that the generation of young users today is incredibly sophisticated in their use of these tools. You watch them and you look at how digitally native, internet-native and now iPhone, Android phone native they are. It’s remarkable to see the speed with which they go through the world. So it’s probably the case that the most sophisticated users tend to be on the younger side, simply because of their digital-native capability, with some exceptions, obviously.

Considering the European privacy laws that were put in place last year, is that a cultural sort of thing that could not work in this country?

I’ll give you a general answer for that question. Democracies have differing definitions of rights, responsibilities and speech. In the years that I’ve worked at Google, what I learned was that each country is different, and each country thinks it’s right.

There isn’t a single answer to a question of, is it right for one or right for the other? We learned to look at it on a per-country or per-region basis because cultures are different. In the case of autocracies, right, it’s also different.

But it’s different for democracies as well. I don’t think you’re going to see a single [worldwide] privacy regime, free speech regime, censorship regime across the globe, because we’ve had hundreds of years to debate those things among the different countries and they haven’t come to the same answer.

What about the digital divide? The digital haves and have-nots? What’s holding that back? The idea that everyone should have equal access, that this makes the world go around, this makes business go around, if everyone can share in this virtual resource?

The fact that the internet is available in every country in the world is an achievement. The fact that it’s not available to every human being is still a problem.

There’s good news, and the good news is that the internet continues to grow both in the bandwidth and in terms of its user growth. There was a while where it was doubling every 18 months. It was growing as fast as Moore’s Law. It is no longer.

I’ve always thought that the biggest problem is cost of access. It looks to me that we can get Android phones very, very inexpensively because of competition, because of the subsidies of one kind or another. There are whole programs in the Android eco-space around making those phone inexpensive.

So the phones, I think we can get there. But if you go and you look at Africa, any of the countries have broadband prices that are as high or higher than you’ll find in Europe and the U.S. And that makes no sense. So collectively, we need solutions to get the cost of internet access to the consumer down in those countries.

The countries are wiring up. The businesses are paying for it. In many of the African countries, as a good example, the most profitable business is the telecommunications business, because people pay for their service.

The prices are still, however, too high. What I’ve told as I travel all over the world telling this to world leaders, it’s really simple: What I want to see is, I want to see fiber to a city ring of fiber, fiber everywhere, because that fiber investment will add value for decades. And then, competitive telecommunications carriers that are offering 4G and hopefully now 5G.

So a combination of fiber to the cities, to the towns and then competitive 4G, 5G is really the solution.

The competition is important. It is in many countries, the PTPs [a method for moving information, like banking data, smoothly through a phone system] are still monopolies or quasi monopolies. It’s important to have competition, as we have in the United States, and as exists in Europe, to keep the price under control.

So other things being equal, should prices then be variable? We talk about the information superhighway; should there be toll lanes on that?

I don’t know what “toll lanes” mean, but the internet has benefited from the model where the inner core is not charged for; it’s shared. I would be very careful to try to not break that.

Today, the primary source of revenues to the telecommunications carriers is data services, which is primarily internet data. So they have a strong incentive in maintaining that, which is why the interoperability is so strong.

Another thing to know is that Google has been doing its part, because Google has been working hard to get very close to people, so if you use Google from your device or your P.C. or wherever you are in the world, you very quickly get to essentially an exchange point where you’re inside of the Google network, which is very fast.

By toll lanes, I mean the people who pay more get free or faster access than people who pay less or nothing at all.

I’m not sure what you mean; today, in the office building you’re in, there is a building manager who is paying a monthly fee to either a well-known or not so well-known company that is providing fiber optic, I hope, connections to your building. If you pay them more, you’ll get a faster connection. I think the market has served us well.

We just marked the five-year anniversary of Gamergate, where women who wanted to work in that industry were hounded; some of them were threatened with death. Why do you think, having been in it for so long, seen it for so long, that there is this hostility that women report over and over when they work and try to advance in this industry?

A lot of people have been working on that. I think there’s two categories of it.

There’s a lot of evidence that on social media, women are particularly targeted. I know a number of women who have reported they were speaking out, they were doing the right thing and then they were harassed in a way that men are not. And that’s not OK.

Within the industry, we have been working incredibly hard to address whatever either direct or indirect prejudices there are. And I think that’s been well covered. I think it also just takes time. But it needs to stop, and it needs to stop right now.

Does the hiring alone of women at some companies, which is something between 20% and 40%, I gather — do numbers alone address this problem?

I think the numbers help a lot, and within the companies, you’re beginning to see very strong both minority and female executives who are obviously superb. And the more of those, the better.

There’s a certain sort of tipping point that we’ve now crossed over. There’s no question that 30 or 40 years ago, this was sort of the engine room kind of guys thing.

We’ve clearly addressed that. Obviously, corporations need to go well beyond what is required to make sure that anything undesirable does not happen in this area.

American companies, I think, have all settled onto a pretty straightforward rule that there is a no-retaliation policy and that kind of stuff.

And again, I won’t talk about any specifics, but the state of the art of governance is, we are working really hard for diversity inclusion, and diversity inclusion means making sure that either direct or indirect prejudices of any kind are not acceptable, any kind of internal biases are not acceptable, and aggressive policing of that.

There was a Stanford Graduate School of Business study that found that share prices jump when companies reported better-than-expected gender diversity, and conversely, they fell when the demographics were not very impressive. Is that it a persuasive argument where nothing else may be?

Well, if you’re an idiot and you still need to be told, then your share price is the only thing that matters, then I suppose even maybe that will be the final thing that will convince you of the rightness of the strategy.

But I mean, come on, guys — you’re going to do far, far better with a diverse workforce. We know this. There’s a great deal of evidence that the products are better, that the quality of management is better with diversity.

I personally and Google have been committed to this for a very, very long time.

The technology that enables people to live their lives more openly, more interestingly, has also, as you know, been used for purposes like recently Ring, the home monitoring system. Police in California have been using those videos in exchange for giving people free cameras. What are the tradeoffs with security data and for the individual versus that larger video surveillance that police and law enforcement may use?

I won’t comment about any of the specifics that you just mentioned. What I will say is that every country has a different tradeoff of security, privacy and the role of the government.

And I’ll give you an example: What’s the difference between the United States, Britain and Germany? All are fantastic democracies now. They have all been around for a long time. They’re great cultures. They’re wonderful countries. In Britain, there is a strong trust of the government. In the United States, it’s mixed. People disagree.

And in Germany, there is a strong distrust of the government, largely involving the Stasi in East Germany and the history there. So if you ask each, in each three of the countries, you ask people, you’ll get a different answer to the question that you asked. It varies by country.

And for platforms, to the deals that they make country by country, what should be taken into account? Whether it’s China, or places like Ethiopia, where the internet’s been shut down, or India, where the internet’s been shut down in Kashmir over protests there.

What you learn in this business is, every country is different and every company will have different outcomes, so they’re based on the challenges that it faces. Our record at Google is well-established.

When it comes to things like terms of service and privacy, issues about what this [being online] will actually involve, that we will look at the baby pictures you post online, or name your example? Should it be something other than either/or? Should people have an option to say, “I agree to this, but not to that” and still have access?

Those are complicated regulatory questions, which I’m not going to comment on.

What about you? When you go through terms of service, do you block ads, do you agree to terms of service? Do you scrub your footprints when you’re browsing?

I personally am careful to only work with legitimate companies. every once in a while you hear about an app and then you discover that it’s essentially a front for some other country and they’re taking your data and so forth. I’m careful to check. I’m careful to check before what I use for that reason.

I encourage everyone to be careful — literally be careful; who are you dealing with?

I personally keep everything in Google, and I trust Google, and I am a pretty good advertisement for believing Google is pretty secure.