Google Expects More Government Scrutiny

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SAN FRANCISCO (Reuters) – Google Inc Chief Executive Eric Schmidt said he expects more regulatory scrutiny from around the world and the company is paying more attention to the way it approaches certain business issues as a result of the attention.

But Schmidt told reporters it had not crossed his mind to recuse himself from the board of Apple Inc, even as the U.S. Federal Trade Commission looks into whether the ties between the two companies violate antitrust laws.

Schmidt, along with former Genentech CEO Arthur Levinson, sits on both companies’ boards. Schmidt said he did not consider Google and Apple to be primary competitors, and that he recuses himself when competitive issues are discussed.

Google General Counsel Kent Walker confirmed media reports that the company is “in pending” discussions with the FTC concerning their two shared directors. But he said the law provides a safe harbor for mutual shareholders in cases where there is no overlapping revenue.

“What is changed is that we are more careful about when and how we do things which are going to raise concerns of any party,” Schmidt told a room of journalists at the company’s Mountain View, California headquarters ahead of its annual shareholder meeting on Thursday.

“But it hasn’t prevented us from doing them,” Schmidt added.

Shareholders at the meeting voted to reelect Google’s board of directors and to approve its external auditing firm and amendments to its stock plan.

A trio of shareholder proposals concerning the company’s political contributions, Internet censorship and universal healthcare did not receive sufficient votes.

YOUTUBE TO BE PROFITABLE

Schmidt said recent cost-saving measures at Google have made the Internet search leader more efficient and have not hampered innovation.

Company executives who appeared alongside Schmidt at the media briefing said Google was looking at ways to generate money from the surge of social networking activity on the Internet, as well as at ways of integrating microblogging capabilities, such as those popularized by Twitter, into its search product.

Google has monetized “hundreds of millions” of videos on its YouTube video site, executives said, and the company has recently introduced new types of ads such as video pre-rolls that are streamed before a clip begins playing.

Schmidt would not address a recent report that YouTube, which Google acquired for $1.6 billion in 2006, could lose more than $400 million this year.

“What we said is we believe YouTube will eventually be a successful and a profitable business and it will take some time to do it,” Schmidt said.

He also declined to comment on reports that Google’s Android mobile operating system, currently featured in smartphones, could turn up in the new breed of miniature laptops known as netbooks.

But Schmidt said the use of netbooks fits nicely with the so-called cloud computing model that Google believes in.