Eric Schmidt Calms Wall Street
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Today at Google’s Annual Shareholder’s meeting, Google CEO Eric Schmidt tried to brave the storm as he attempted to reassure Google shareholders that the search company was in a decent position. Although Google is at the top of its search game, the giant faced several challenges over the past year, some of which are still pending.
Probably the most pressing issue that Google is facing is a possible US antitrust case against them for their purchase of AdMob. AdMob is a mobile ad agency that sells ads on mobile apps like you’d find on the iPhone. Google paid a cool $750 million for the company. The US FTC is investigating the sale to see if the US Department of Justice should press a case against Google. A combined Google-AdMob venture would serve up 21% of mobile ads and several members of the US Congress (from both parties) signed a letter warning the FTC to carefully investigate Google’s “growing power”.
Despite some rumors reported on TechCrunch and other sites that all but assured us that the FTC would press a case against Google – Google CEO Eric Schmidt was pretty sure they would get through the process. “…we expect these things to get approved.” Schmidt said. In the event the FTC blocks the AdMob-Google deal, a recent media report said Google would still have to pay $700 million of the $750 million, even if the deal didn’t go through. Schmidt was grilled on this too, but didn’t confirm or deny if they would have to pay the so-called “kill fee” in the event the deal was blocked.
Other issues for Big G include the China issue. After an alleged hacking attack by the Chinese government, Google moved its Chinese operations to Hong Kong. Schmidt assured stockholders that the Chinese situation “seems to be stable”.
Some Wall Street analysts said that they were starting to lose interest in all of Google’s ‘pet projects’ which are constantly losing money. They also wanted to see Android start making money for Google. Schmidt, speaking to Google’s financial health over the last year in the worldwide economic recession, simply said, “all is well after a year of great tumult.”
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While I’m sure Google is still in a relatively safe position, it is about time that Google starts thinking in the long term. Specifically, I think Google needs to put a significant amount of resources into creating something worthy of competing against Facebook.
While Google Buzz was interesting, I haven’t used it, and I don’t see the general public using it either.
Google needs to create something that enables people to connect with their friends, while offering great privacy controls. Only then can someone feel truly good about Google for the long term.
In the short-term, however, I think Google is doing quite well. However, this AdMob debate could prove costly, although Apple’s iAd platform should convince any judge that there is now viable competition.