Google Schmidt's Facebook Folly a Cause for Demotion?

By Clint Boulton  |  Posted 2011-06-02 Print this article Print

Google co-founder Larry Page was effusive in his praise about Eric Schmidt when he announced the CEO who had led Google for a decade would become executive chairman at the search engine.

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Page even went so far as to suggest Schmidt's appointment was a promotion. With Page taking over as CEO and day-to-day operations of Google, and Schmidt spun out to handle external diplomacy among companies and governments worldwide, it was hard for media to digest Schmidt's role as a promotion.

From comments Schmidt made May 31 at the D9 conference, I would suggest that Schmidt was actually demoted. Schmidt admitted that his failure to target the burgeoning social media sector allowed Facebook to race out to its world-beating market lead.

"A CEO should take responsibility. I screwed up," Schmidt said, noting that he and fellow executives discussed the growing Facebook threat in internal memos four years ago but did not act on the trend quickly enough.

Duh. With well more than 600 million users, Facebook is to social what Google is to search: the proverbial 800-pound, chest-thumping gorilla.

To me, Schmidt's failure to properly measure the potential for social software and advertising stands out as a singularly stunning failure in a 10-year stint that ranks among the best of modern day Internet CEOs.

To be clear, I am Schmidt fan. All Google did under Schmidt's reign was grow to be a $30 billion a year online ad juggernaut, dominating search and search ads and is well positioned to do the same. Google also landed YouTube, a certain heavyweight for display ads, launched Gmail.

There is talk that Schmidt's position on China led to his "downfall" as CEO (read Steven Levy's excellent book), but after the way Schmidt characterized his failure to grok social, I think he was certainly demoted.

He flat out admitted ignoring what turned out to be the most serious threat to Google to date. Facebook's Like button is expanding across the Web like wildfire and the social network is already beating up everyone in display ads.

Any lesser CEO should have been fired from their company for such a failure, which could one day rank with the failings of Yahoo for the last five or six years, Microsoft's online business history and Apple back in the '80s. That's how serious a threat I feel Facebook is to Google.

Of course, I can't prove Schmidt was downgraded.This is speculative, but it's my gut feeling based on Schmidt's characterization of why Google is behind in social.

Obviously, for Page to suggest Schmidt was demoted would signal a crack in the carefully cultivated Larry, Sergey (Brin) and Eric troika, which would be a public relations nightmare and give Facebook, Apple and even Microsoft some stones to go on the offensive.

With Schmidt at Google, there is a measure of respect among the competition. Without him at Google, there is a feeling that business-tested CEOs will run circles around the Montessori kids known as Page and Brin. |

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