Former Google CEO says he ‘screwed up’ by underestimating Facebook

If he had a another chance, former Google CEO Eric Schmidt would have pressed the internet search leader to focus more on mounting a challenge to Facebook while he was still running the company. “I screwed up,” Schmidt said late Tuesday during a 75-minute question-and-answer session at the D: All Things conference in Rancho Palos […]

If he had a another chance, former Google CEO Eric Schmidt would have pressed the internet search leader to focus more on mounting a challenge to Facebook while he was still running the company.

“I screwed up,” Schmidt said late Tuesday during a 75-minute question-and-answer session at the D: All Things conference in Rancho Palos Verde.

Schmidt’s admission comes nearly two months after he ended his decade-long stint as Google’s CEO and became the company’s executive chairman. He was replaced by Google co-founder Larry Page, who is pushing the company’s employees to develop more ways to connect people with their friends and family like Facebook already does.

That was a priority that Schmidt said he started addressing in internal memos written about four years ago when Facebook had about 20 million active users.

But he acknowledged he and other executives didn’t take Facebook seriously enough. Now, Facebook has more than 500 million users who share billions of links, posts and photos each month.

Facebook’s growing popularity is becoming more nettlesome for Google.

As Facebook’s audience grows, it is attracting more online advertising and stunting Google’s financial growth. Perhaps even more troubling to Google, much of the information on Facebook’s website can’t be indexed by Google’s search engine. That restriction threatens to make Google’s less useful as more people form social circles online and could make it more difficult to get a handle on personal preferences so it can do a better job selling ads.

Schmidt said the company has been working hard to solve this “identity” problem. “I think the industry as a whole would benefit from an alternative” to Facebook’s network, Schmidt said.

Google has tried to negotiate partnerships with Facebook, Schmidt said, only to be repeatedly rebuffed. He said Facebook has preferred teaming up with another Google rival, Microsoft Corp., which owns a 1.6% stake in Facebook. Google also has ties to Facebook; one of its former executives, Sheryl Sandberg, is Facebook’s chief operating officer.

Just before Page became CEO, Google introduced its version of Facebook’s ubiquitous “Like” button to enable web surfers to endorse search results and ads. Google’s recommendation button, called +1, is expected to be expanded to other websites Wednesday, according to the Techcrunch blog and industry newsletter Search Engine Land. Schmidt didn’t mention a timetable for expanding Google’s +1 button.

Google used Tuesday’s conference to announce the launch of another networking service that will offer discounts from restaurants and other merchants if enough people agree to buy the coupons. The service, called “Google Offers,” is based on the daily deals offered by Groupon, which Google unsuccessfully tried to buy last year. Google’s offers initially will be available only in Portland, Ore., before expanding to New York and the San Francisco Bay area later this year. The offers are part of the new mobile payment service Google unveiled last week.

Schmidt views Google and Facebook as part of a powerful “gang of four” that’s building influential platforms for selling a variety of products and services to consumers. The others, according to Schmidt, are iPhone and iPad maker Apple Inc. and the web’s biggest retailer, Amazon.com Inc.

Apple once had a close relationship with Google, but Schmidt said things have gotten “rough” between the companies since Google introduced its Android software for mobile phones in 2008. The intensifying competition prompted Schmidt to resign from Apple’s board of directors in 2009.

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