Google’s Eric Schmidt: “Really, Our Biggest Search Competitor Is Amazon”

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The attitudes of European policy makers toward Google seem to have hardened of late. On various regulatory fronts, Google faces vocal critics and well-organized opposition. Google’s Eric Schmidt gave a speech earlier today in Berlin seeking to change some of those hardened hearts and minds.

Schmidt argued that Google is not only not a monopoly it’s a good European corporate citizen. He told the origin stories of many now-familiar Google “products” and argued that far from being a “gate keeper,” Google faces intensifying competition everywhere.

Below are some excerpts from the speech, a transcript of which appears on the Google Europe Blog.

On Google’s investment in Germany and Europe:

We employ over 1,100 people across five offices in Germany, and last year alone invested over €200 million here. Overall, we have 9,000 people working in Europe and we have made capital investments worth €4 billion over the last four years . . .

On Google’s evolution:

Imagine if no one had improved on the Wright [Brothers] Flyer … I would have flown here, across the Atlantic, hanging on for dear life to the back of a canvas wing! And if Benz had not tried to improve on his three-wheel car, then his company would have been relegated to history by the competition.

On universal and vertical results in search:

Maps now feel like such an integral part of search that most users probably can’t imagine Google without them. It’s the same with many of our changes. Your search just gets better and better over time. Google “Berlin weather” and you’ll no longer get ten blue links that you need to dig through. Instead, you’ll get the weather forecast for the next few days at the top result, saving you time and effort . . .

On mobile’s acceleration of “answers” in search:

As our screens have gotten smaller, we’ve had to adapt and evolve. Searching on a mobile device is very different from a desktop computer. Speed and simplicity really matter. It’s why the best answer is quite literally … the answer.

How Google’s search innovation is really a response to user “frustration”:

For years Google wasn’t very good at answering queries like “flights from Berlin to London.” We showed a bunch of links to other sites, where users then had to enter their query over again. And we noticed lots of repeat searches, a sure sign of user frustration. People wanted direct answers, with fewer clicks. So we created Flight Search . . .

Schmidt goes on to address the antitrust issue directly (“search is for users, not websites”):

This issue of providing direct answers to questions is at the heart of complaints being made about Google to the European Commission. Companies like Expedia, Yelp, and TripAdvisor argue that it deprives their websites of valuable traffic and disadvantages their businesses. They’d rather go back to 10 blue links. What’s interesting is that the traffic these websites get from Google has increased significantly — faster in fact than our own traffic — since we started showing direct answers to questions . . .

Put simply, we created search for users, not websites . . .

Google is not the monopoly people believe it is:

If you want the news, you’ll likely go straight to your favorite news service. Bild, the most widely read newspaper in Europe, gets around 70% of its traffic directly . . . A little over 10% of their traffic comes from search and just under 10% comes from social sites like Facebook and Twitter . . .

If you are looking to buy something, perhaps a tent for camping, you might go to Google or Bing or Yahoo or Qwant, the new French search engine. But more likely you’ll go directly to Zalando or Amazon . . . last year almost a third of people looking to buy something started on Amazon — that’s more than twice the number who went straight to Google.

Facebook is Google’s most formidable competitor in mobile:

Local information is another really important search category. “Where can I get sushi?”, “What is the best hotel in Munich?”, “Get me a great local plumber”. Of course Google is an option, but so are Yelp and TripAdvisor, Dooyoo, Ciao, or HolidayCheck . . .

And then there is mobile. People use mobile in a very different way from the desktop . . . And the most popular app in the world — including in Europe — is … Facebook, a company which now describes itself as “the onramp to the Internet”.

Google faces tough competitors; look at how Orkut was crushed by Facebook:

The reality is that people have choices, and they are exercising them all the time. Google operates in a competitive landscape, which is changing constantly . . . We had the most popular social network in Brazil. It was called Orkut, and it had many millions of very active users. But in just a few years, Orkut was overtaken by Facebook . . .

Don’t regulate us like a utility:

The reality is that Google works very differently from other companies that have been called gatekeepers, and regulated as such. We aren’t a ferry. We aren’t a railroad. We aren’t a telecommunications network or an electricity grid . . . No one is stuck using Google.

On how you can’t predict the future:

History has proven that size and past success are no guarantee for the future. Great companies can be surpassed swiftly. Look at Yahoo, Nokia, Microsoft, Blackberry and others who seemed unrivaled just a few years ago, but were disrupted by a new wave of tech companies, Google among them . . .

Our biggest search competitor is Amazon:

But, really, our biggest search competitor is Amazon. People don’t think of Amazon as search, but if you are looking for something to buy, you are more often than not looking for it on Amazon . . .

A “Google killer” is almost inevitable:

But more important, someone, somewhere in a garage is gunning for us. I know, because not long ago we were in that garage. Change comes from where you least expect it . . . The next Google won’t do what Google does, just as Google didn’t do what AOL did. Inventions are always dynamic and the resulting upheavals should make us confident that the future won’t be static.

The interesting thing is that almost everything Schmidt says is true. However most of it is probably going to be disregarded as self-serving by those who believe that Google needs to be restrained.

Google has its European fans (mostly users, developers) and critics (regulators, publishers) but there are very few interested parties, it would seem, anywhere in the middle.

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