Yet despite the exponential growth of these new tech formats, the money still lies, and will always lie, in advertising. This was the opinion of Google’s former chief executive Eric Schmidt, appearing just a week after the I/O conference at the Startup Fest Europe conference on May 24, to tell audiences that Google’s revenue stream is never likely to change.
When asked on how Google makes money, Schmidt said: “I have been at Google and Alphabet for 15 years and it has always been advertising and I suspect it will always be advertising, because advertising is such a large part of the global phenomena, and because our advertising is more accurate as a return on investment.”
“We are obviously going to have growth in these other areas” Schmidt added, “but the advertising space is so large and our advertising system is so good in terms of delivering the right ad that I think it will remain so”
Schmidt went on to suggest the use of new technologies such as machine learning and artificial intelligence is helping Google to create more targeted, personalised advertising: “Our tools will get better and better at getting the right ad for you in the right place in these new architectures”.
The former Google boss, who now serves as the executive chairman of its parent company Alphabet, also said his piece on ‘unaddressed’ issues in the European Union, suggesting its tech scene is being held back by underfunded universities and over-regulation.
“There a zillion laws that still make it difficult to be an entrepreneur, right. It’s still much harder to be an entrepreneur in Europe than it is in the US — both in a regulatory [sense], tax policies, the amount of time it takes to create a firm, and so forth and so on” Schmidt said.
He added: “What happens when I meet with governments is they all say ‘yes,’ and they listen very politely… And then they don’t do anything about it.”
Schmidt said the model for entrepreneurship requires “risk, capital, serious investments in the universities”, as well as “tolerating the crazy ideas of the young people coming out of it, giving them some seed funding, letting them do it, and getting out of their way”.
“This model works. It’s created this extraordinary wealth in America. It is repeatable in Europe, without question.”
Schmidt’s comments on the unresolved issues in the European Union come off the back of accusations by the European Commission that Google is breaking antitrust law and may face billions in fines.
The tech giant has been called out by the European Commission for abusing its dominant position in the market, using data from search on its Android devices to maintain an upper hand in the mobile market. It has been claimed Google is making money at the expense of other companies, using their services without paying their way.