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>>ladies and gentlemen, please welcome chairmanand chief executive officer, dr eric schmidt. [applause] >>schmidt: it's great to have everybody backon a nice afternoon in may. i hope you enjoyed our lunch. everybody enjoyour lunch? [applause]and you get a sense of what life is like at google.welcome to our annual shareholder meeting. and, of course, you know i'm eric schmidt,chairman and ceo. i'll be presiding it.i hope you all have registered. looks like everybody has their badges.if you haven't registered, do go ahead and

make sure you register at some point duringthe meeting. hopefully, you all have an agenda, and thelist of rules of conduct, and all that kind of stuff.i'm going to call the meeting to order. i'd like to begin by introducing the membersof our board of directors who are here. ann mather, to my left.ram shriram, to my left. art levinson, right there.and paul otellini. also with us today is douglas ives, who isa representative of computer share. there he is. raise your hand.and you're going to be the inspector of elections, so make sure you count correctly.and dave cabral. where's dave? over there

in the corner.he is a representative of ernst & young, who is our independent accountant.as we did before, last time, we're going to have david to the formal proceedings of themeeting. let me introduce david drummond, who, i thinkyou folks know, is the chief legal officer and, of course, secretary.so david, you'll do the formal business of the meeting. [pause] >>drummond: thank you, sir.thanks, eric, and welcome everyone to another google shareholder meeting.we're thrilled to have you here.

we'll get on with the business, and we willtry to be quick. one preliminary note: we'll have some timefor some stockholder questions. the rules of conduct here--we should makesure you don't address the meeting until you are actually recognized.we'll have the q&a period that will follow the business of the meeting and eric's presentation.when we get to the q&a period, we've got microphones in the aisle here, so you can step up andask your question. when you are recognized, please identify yourself--thatyou're either a shareholder or you're here representing a shareholder so we know whois speaking. thanks for cooperating with the rules, andi guess we can go forward.

i need to say that i've received the affidavitof mailing of computer share. it states the notice of the meeting, the accompanyingproxy material, and the annual report were mailed to shareholderson march 10, 2009, the record date of the meeting.in addition, i've been advised by the inspectors of elections that holders of our outstandingclass a and class b common stock, who represent at least the majority of ourvoting power of our outstanding capital stock that's entitled to vote,is represented here today, in person or by proxy.a quorum is present, the meeting's duly constituted, and we can proceed with the business.first item, election of directors.

ten directors will be elected at today's meeting.the directors elected today will hold office until the 2010 annual meeting of stockholdersand until their successors are duly elected and qualified.the board of directors has nominated the following people today:eric schmidt, sergey brin, larry page, john doerr, john hennessy, arthur levinson, annmather, paul otellini, ram shriram, and shirley tilghman.our bylaws require that our shareholders provide advance notice of their intent to nominateanyone as a director for the meeting. we didn't receive any such notices, so i declarethe nomination for director closed. the next matter for today is our ratificationof ernst & young as our independent, registered,

public accounting firm,who we've used for many years, as all of you know.the board of directors has recommended that the stockholders ratify this appointment forthe fiscal year ending december 31, 2009. the third matter today is, actually, a stockholderproposal. i'm sorry--it is actually the approval ofan amendment to our 2004 stock plan. that amendment is to increase the number ofshares of class a common stock that is available for issuance under that plan by 8.5 millionshares. our board of directors has recommended thatour stockholders vote in favor of that amendment. the next 2 items are, actually, stockholderproposals.

a third stockholder proposal, which was proposedby the teamsters general fund of the international brotherhood of teamstersand was included in our proxy materials that you may have received--that's actually been withdrawn by the group proposing it.as a result, we won't be presenting this proposal to you today, and there will be no vote onit. the board had recommended that you vote infavor of that proposal, however. we're actually looking forward to implementinga number of principles of that proposal, which had to do with transparency of our publicpolicy and government relations activities. we thought much of that was a good idea.getting to the 2 proposals that we actually

have on the ballot, our board has recommendedunanimously that our stockholders vote against the 2 proposals.however, one of our founders, sergey brin--who is also a director--he'll be abstaining andnot voting against the proposal brought by the comptroller of new york city.he's doing that in his capacity as a stockholder. the first stockholder proposal is being broughtby the office of the comptroller of new york city.i'd like to introduce mr tony cruz. there he is. welcome. >>thanks. >>drummond: he's a representative of the officeof the comptroller, and he's going to present

the proposal.you've got, tony, 3 minutes to present it, and i'll let you know when time's gettingshort. >>cruz: great. thank you.thank you members of the board and fellow shareholders.my name's tony cruz, and i'm here today representing the new york city pension fund, which holdsmore than $300 million worth of google stock. i'm also here representing amnesty international,the largest human rights organization in the world.today, i'm here requesting your support for the proposal on internet censorship.as many of you know, there are concerns about google's participation in the restrictionof the access to information online that has

been well documented, including a report byamnesty international. as shareholders may be aware, google is currentlyparticipating in the global network initiative, which is a coalition effort to guide and assesshow companies like google respond to censorship and privacy demands in all countries.amnesty international participated in this initiative in its formative years in an effortto ensure that the outcomes reflected a sincere commitmentto upholding the highest attainable standard of corporate responsibility for human rights.however, amnesty international officially decided not to endorse the initiative in late2008, expressing concerns about loopholes and weaknessesin the guiding documents, which we feared

would enable participant companies to circumventor ignore their commitments. this included what we viewed as a reluctanceto submit to a truly independent and rigorous monitoring system.today, we're urging shareholders to critically assess google's response to this issue andto take into consideration the fact that without the tireless efforts of independentorganizations like amnesty international, the truth about google's participationin censorship efforts might never have come to light.the proposal before you, for vote today, requests that management go beyond aspirational statementsof principle and actually take concrete and measurable steps to help protectfreedom of expression on the internet.

we feel strongly that, for google's effortsto be meaningful, they must include the following: a public commitment to honoring freedom ofexpression and the right to privacy. we want to see a commitment to exhaust allpossible remedies and appeals before complying with state directives that would violateinternationally recognized human rights,including the rights of freedom of expression, accessto information, and privacy. a commitment to independent monitoring, andan assessment of the company's fulfillment of principles that are agreed to.we want to see transparency--transparency about filtering processes used to limit orrestrict search results, including informing users.documentation and public disclosure of cases

where legally-binding censorship requestshave been filed. finally, we want to see it develop the humanrights impact assessments and disclosure of these conclusions.it's essential that google provide evidence to shareholders of the steps they are takingand to end internet censorship to ensure that they are movingbeyond talking about these problems to actually doing something about them.we hope that google's participation in the gni will result in implementation of effectivepolicies and practices. but currently, there is no publically availableevidence that the company has taken any steps at all since their endorsement of the initiativelast year.

while a willingness to engage ngos and otherexperts on this issue is a useful step, the truth is that internet censorship incountries like china continues to worsen. therefore, on behalf of the comptroller ofnew york, and amnesty international, i ask shareholders to vote in favor of this proposalas a strong signal to google that expedited action on these issues is required. >>drummond: thank you very much, mr cruz.let's move to the second stockholder proposal, and that proposal is being brought by theamerican federation-- >>[inaudible comment] >>drummond: excuse me, sir. we will have aquestion and answer period following today's

meeting, so i'd ask if you please not disruptthe meeting. thanks very much. we'll proceed with the next order of business. >>drummond: sir, we will have a question andanswer period following the presentation, and you will have-- >>drummond: sir, we will have a question andanswer period, and you will be able to-- >>drummond: sir, the rules of the meetinghave been published. sir, we have to proceed with the meeting. >>drummond: sir, can you please not disruptthe meeting. we really need to move on. there are many people here.

>>[inaudible audience comments] >>drummond: thanks very much, sir.democracy in action. okay. the proposal is actually being broughtby the american federation of labor and the congress of international organizations reservefund. i'd like to introduce mr brandon reese--brandon,is that you? there you go--representative of afl-cio, who is going to present the proposal.you have 3 minutes. >>reese: great. thank you.chairman schmidt, members of the board of directors, i'm brandon reese.i'm here to introduce the afl-cio's reserve fund proposal on universal healthcare reform.our proposal calls on google to join more

than 35 of america's leading companies, includingibm, staples, mcdonald's, target, and ge, to adopt principles for healthcare reform.each of these companies, like google, provides excellent health insurance to its employees,but each company is powerless to contain costs and improve quality of care until every americanhas health insurance. leading authorities, like emory universityprofessor, kenneth thorpe, cite surcharges as high as $1100 per employee that are addedeach year to the total cost of health insurance, just to pay for the nearly 47 million americanswho have no health insurance at all. we all know about the plight of general motorsand chrysler. falling sales and the recession are certainlyto blame, but the $1500 that must be added

to the sticker price ofevery car produced in the united states to cover health care costs--more than the costof steel--is a major problem. starbucks ceo, howard schultz, said that hiscompany now pays more for health insurance for its employees than it does for the coffeethat it sales every day. john castellani, president of the businessroundtable, representing 160 of america's largest companies,says that 52% of his members cite healthcare costs as their biggest economic challenge.according to him, the current situation is not sustainable in a global, competitive marketplace.president obama has already made healthcare reform a top priority for the economic recovery.later this year, he plans to ask congress

to guarantee coverage for all americans.google is one of the most admired companies in america, and when google takes a stand,it matters. no one company can solve the healthcare crisisby itself. the solution must come from washington.the board statement opposing this proposal says,"we believe that a strong, effective, high-quality, and well-managed healthcare system is vitalto our country's and google's wellbeing, prosperity, and strength.but the board goes on to say that adopting principles for healthcare reform is neithera proper subject for google shareholders nor would it make any difference in the campaignto enact healthcare reform.

i beg to differ, and i believe the board ismistaken. first, the sec has ruled that adopting principlesfor healthcare reform is, indeed, a proper subject for shareholders.second, president obama, congress, and the american people need the support of leadingcompanies like google to enact healthcare reform.google should not sit on the sidelines and ignore the opinions of its shareholders.adopting proposal #6 will give google the opportunity to make healthcare reform a reality.now is the time for the company to state its commitment to universal coverage for all americans.my question is for you, chairman schmidt, and the board of directors, will you supportproposal #6 and urge adoption of it today?

thank you. >>drummond: thanks very much, mr reese. that essentially concludes the business that'sscheduled to come before the meeting, or before the stockholders today.we are actually now declaring the polls open. note that we've received, in advance of themeeting, sufficient proxies so that we know that the proposals we discussed todaywill either pass or fail in accordance with the recommendations made by the board of directorsthat was in our proxy statement. but we really do want everyone to vote.when you registered, if you requested a ballot, you can complete that now, or, i think, wehave folks coming through the aisles.

if you haven't voted, you can do so now. youcan do that. we're going to take a brief break while youget a ballot and fill that out quickly. >>can i ask a short question? >>drummond: why don't we wait until the q&aperiod, if that's okay. okay, sir? okay. it looks like we've had a little bitof time to vote, so i think we'll declare the polls closed, and we'll be collectingthe ballots here. if you have one, please raise your hand, andthat can be collected. i'll give another moment for that. okay. it looks like we've got most of thevotes in.

thanks everyone for participating in that.we can get to the results. i've been advised by the inspector of electionsthat the nominees for election to the board of directors have been duly elected.i've also been advised that the majority of shares present at the meeting, either herein person or by proxy, have voted in favor of the ratification ofernst & young to act as our independent public accounting firm for the 2009 fiscal yearand for the approval of the amendment to our 2004 stock plan.all of those proposals are now approved. i've also been advised by the inspector thatthe majority of shares present at the meeting, by person or by proxy,have voted against each of the stockholder

proposals,the one regarding internet censorship and the one regarding healthcare reform.these proposals have not been adopted by the stockholders. we will provide preliminaryvote totals on our investor relations website probably within the next few days.after the final tabulations of the vote are complete, we will post the final vote on ourwebsite as well. that ends the official business today, soi declare the formal business meeting adjourned. eric is now going to make a brief presentationabout google's business. after that, you'll have the opportunity toask some questions of google management. eric.

>>schmidt: thank you very much, david.i want to talk about information, because information is what we do, and informationis very, very important. i also want to talk about innovation, becauseinnovation is how you make the world a better place.innovation is at the core of everything that we do.i think, often, people forget that innovation occurs--it may be difficult to know exactlywhen it will occur--but innovation has brought so many great things to the world that wesee every day and, of course, helped us make google the success it is today.it's very easy, as you become a larger corporation, to become more conservative.we have a different view.

we think now is the time to be even more innovative--totake advantage of the resources, the scale, that the internet offers, to doeven more amazing things over the next few years.it's interesting that everyone here, as investors, is well familiar with what's going on withthe global recession and the change in stock markets and so forth.but history has, in fact, show that recessions can be a very good time for innovation andthat companies that invest in innovation during the downturns generallyemerge even stronger than their cost-cutting competitors.that's, indeed, what we're doing as well. larry likes to say--and i like this a lot--thatyou don't change the world incrementally.

you do it through real innovation--search,chrome, android. in some cases, it's actually easier to attackbig problems rather than small problems, because you can define the problem in a new way.in our case, looking forward, the success of google as an institution for us shareholders,in terms of our share price and so forth, will ultimately,in my view, be determined by our rate of innovation, innovation on core business search and searchadvertising, which you all are familiar with, but also new things like display, youtube,mobile, android, and, obviously, the enterprise areas.we're going to invest here, and we're going to invest big time.by the way, there's no recession in information.

the internet continues to grow. people arespending more and more time on it. on an interesting survey, recently, the internetis now the number one choice for americans aged 18 to 49, which is an awful lot of us.television, by the way, is now down to number two. people are spending more than 12 hoursa week on the internet. for those of you who are developing the internetaddiction, you know it's time, every once in a while, to go outside, walk around, thenget back to work. the important thing here is that what we'reseeing here and in other advanced parts of the world, the same revolution is also occurringin places which have never had access to the kind of information that we take for granted.that's a wonderful thing. our next slide.

if you think about the--we had to put a dogpicture in, come on--search is still the killer app.we still don't know quite how to give you every answer that you want without you searchingfor it, although we thought about how to do that.people are fundamentally using the web in all sorts of interesting ways.we're improving search very dramatically. last year, we introduced more than 350 improvementsto search--a long, long list. you see them, and it happens every day, soit's hard for you to remember how much better our service and the things are every year.but doing it right and doing the world's perfect search engine remains very difficult.we have to understand all the world's information,

which is, in and of itself, very difficult.we have to understand the meaning of every query, and we have to give you that answerinstantaneously. we're doing things like, for example, if youtype--here you are, you own this cute dog, and you're looking for a veterinarian.you type "vet," and we'll suggest veterinarian. if you misspell, veterinarian--which, unfortunately,most people do--we'll give you the right results anyway.also, we know, now, enough about where you are that if you don't tell your town, we canprobably give you the location, at least in general terms,of where the veterinarians are near you. next slide.we want to apply the same principle to advertising--another

dog picture--we want to do the same thingwith advertising. it's obvious this is a local business that'sa google customer called happy hound. it's a doggy daycare service in oakland.the tools that we've built are very powerful, but they're still too hard.i hear this a lot from our customers. we're launching, for example, a new frontend for adwords to make it much easier and do things automatically.it's the biggest, overall, in 5 years. some of these we've done recently have alsobegun to pay off. there's something called a conversion optimizerthat allows you to determine--let the computer help you bid more accurately.that works out really, really well.

again, advertisers who have used this, actually,are reducing their cost and improving their performance.it's a better value for them, and, obviously, it provides a more efficient auction, whichis great for everybody. what's interesting about display advertising,which is the next part of this, is display advertising has the same property, but it'searlier in the cycle. what we want to do is deal with the fact thata display ad--those are the picture ads that you see--it's very complicated and convolutedto set those things up. you have to call people. you have to cut andpaste html--those sorts of things. we really want to bring the science of search--whichwe do so very well, in my opinion--to the

art of display.we are developing part of a strategy and products to really do that.youtube--we're doing similar things, with respect to advertising choices.the two together, we think, will ultimately provide a very significant new business but,more importantly, will create a new platform for innovation, happy advertisers,new, creative formats, and so forth. next slide.i don't need to tell this audience, as sophisticated users of technology and the internet, howimportant mobile is. more people are accessing the web from theirphones now. the number of mobile searches has gone up5 times in just the last 2 years.

an interesting statistic is, for the firsttime in 2009, more than half the internet connections will come via phone, not a pc.that's great progress. this new generation of phones, which are calledsmart phones, have a lot of things. they have a camera. they have a gps.the camera can be a video camera. they have a keyboard.you can use them for a browser. oh, and by the way, you can also talk on them.this mobile phenomenon has a lot of implications. all of the leading products in this spaceare doing very well. all of them include significant google components.an example would be a product called google latitude, where you can share your locationin real-time with your friends.

they can find you, and you can go and havea good time with them. we had more than a million users sign up forsuch a product in the first few weeks. that gives you a scale of what this thingis doing. from my perspective, i sit there and i saythat what i really want--since the phone has a gps and it knows where i am as i walk downthe street-- i want it to tell me about things around me.i want it to tell me the history of the buildings as i walk along the street.all of that is now possible by thinking of search not so much in the traditional, textway, but rather, the search is by the person. next slide.the same principle applies at home, as well

as work.people are now building these cloud computing services, as we call it.you all are beginning to use them in your daily life, not just e-mail, but all of theother google services. it looks to use like the data files and photosthat you have on the public internet. you're going to want the same access and capabilityinside the enterprise. we now have a very successful business inthe enterprise, essentially taking our consumer-hardened apps andgetting them to work extremely well within an enterprise.a classic example is gmail, where gmail is, by far, the best e-mail service on the web.it turns out that the same principles also

apply to business that actually want high-qualitye-mail services for their employees. we have a way for them to do that with securityand all the appropriate things. next slide. when i think about where we are--and i saidthis on the earnings call a couple of weeks ago--the economic situation is still tough.but we're going to run google for the long term.that's a commitment we've made to you, and that's a commitment we will honor.we want to grow through innovation. we think the areas that i've highlighted areareas of great innovation. although we don't necessarily know exactlywhat the new areas will be, we know that the model that we followed and, in particular,the kind of people and approach we've taken

as a corporation will give us a very goodshot at being innovators in so many new and exciting areas in the future.with that, thank you very, very much. i hope that that was quick enough, becausei wanted to make sure we had plenty of time for q&a.i think we were going to have david drummond, who's been introduced, and then we have susanwojcicki and marissa mayer. susan and marissa have been executives inthe company, essentially, since its founding. susan, among her many roles, is now in charge,largely, of our advertising businesses. marissa, in addition to her many roles, isin charge of our user experience--user products--as well.david?

[laughter]that's fine. now is a great time to ask questions on whati've talked about or any other questions that you all might have. yes, sir. >>ehrlich: thank you. my name is shelton ehrlich.i'm a small google shareholder. i want to say how proud i am to be a googleshareholder. as small as my stake is, i feel i'm part ofcreating this wonderful thing. i had a comment on the first shareholder proposalwhich i had hoped to make before the votes were taken.in the wake of the 2003 enron debacle, some powerful investors formed a committee to fixcorporate governance.

these powerful investors were not hedge fundmanagers, banks, or mutual funds. no, they were the trustees of employee pensionfunds. included in the group were alan hevesi, recentlyousted as new york state controller for corruption, sean harrigan, ousted as president of thecalifornia public employee's retirement system and now under sec investigation just thisweek, and eliot spitzer, and you know why he gotfired. the controller of the city of new york waspart of this founding group. mr thompson wants to be mayor of new yorkcity. he uses his control of the city employee pensionfunds to further his political ambitions.

in 2008, by my count, he had his subordinatestravel to silicon valley and other distant points over 60 times to pushshareholder proposals that are very unlikely to increase the value of the pension fundshe controls. public employee pension funds should be considered,almost, a sacred trust, but every week, we hear another pay-to-play scheme.the wall street journal, on april 19, headlined the public pension shakedown regarding ournew car czar's connection to the new york state pension scandals.i want to say, mr thompson, even though you're not here, go back to new york and mind yourshop. google people don't do evil, as you imply,and don't hang with evildoers. thank you.

>>schmidt: thank you for your comment. shallwe go over here? >>rafat: thank you. matthew rafat, shareholder.first of all, i want to thank you for being google.without your company, the internet and all the mesh of information online would be nothingmore than a tower of babble. thank you very much. having said that, i'vegot 3 suggestions for your wonderful company. i noticed for the proxies, the procedure forcollecting them at the meeting was somewhat haphazard.some shareholders, like myself, do come to meetings and would like to vote and we'vedone so today. but i noticed, with the proxies themselves,there's no place on the proxy that lists my

name.so of course i have to give the proxy itself, as well as my own td ameritrade document,together, but it could get lost, and it may confuse the inspector of elections.i realize that my small number of shares will not affect the elections, but it does strikeme as more haphazard than it needs to be. in the future, it seems to me that it wouldbe beneficial to have a more orderly process for voting. >>schmidt: seems like a great suggestion. >>rafat: thank you. my second issue is withthe chinese gentleman who attempted to speak. i realize that your procedures do not allowfor comments to be made by regular shareholders

prior to voting.that strikes me as somewhat problematic, because some shareholders, like myself, who show upat the meetings, vote at the meetings. we would benefit from more information thanjust the prepackaged "lines" given to us by side 1 versus side b.it strikes me as google, almost implicitly, having censorship at its own meeting.i realize that, obviously, you would want to limit the time of these gentlemen who comein to speak on your shareholder proposals, but it strikes me that a balance can be achievedbetween outright censoring of somebody who would like to speak on the shareholderproposals and allowing that person to disrupt >>schmidt: let me take that as input. we obviouslydo not want to censor anyone, so again, this

is the time, if you have questions or comments,in our plan for this meeting. if the earlier gentleman would like to makea comment, this is an excellent time for him to be making that comment, or anyone else. >>rafat: the gentleman actually left. he obviouslydid not feel as if he was being heard. >>schmidt: i don't know why he left, but thiswas the preplanned time to hear him and yourself and anyone else. >>rafat: the difference, however, is thathe may have said something that may have affected the vote.the whole point of allowing comments prior to closing the polls by ordinary shareholdersis they might have something relevant to say

on thoseproposals that may affect the vote. >>schmidt: okay. thank you. >>rafat: my third issue is with sports. yourcompany is number one in almost everything. however, yahoo has a wonderful fantasy sportsplatform. as a result, you have my yahoo account asmy primary homepage. i think a lot of men between the ages of 20and 40 do gravitate towards your competition precisely because of that gap.i'd like to know if you guys are planning on expanding and trying to capture some ofthat market share from your competition. >>schmidt: i have 3 great athletes to my left.marissa?

>>mayer: we generally try to look at solutionsthat are very broad, in general, like search. in the case of sports, one platform that wehave that's been working well for us is igoogle. there, we actually have a wide variety ofgadgets for basketball fans, football fans, cricket fans, rugby fans--for sports all overthe world. we're seeing a great response there, in termsof people being able to follow their teams, follow matches, on the igoogle homepage andon their personalized page. in addition, we've also been adding sportswords to our search. so when you search on google, if you search,say, on rugby or the cricket world cup, you actually get the current matches and thosescores.

you can also search for particular teams andget those scores, and we're looking at making that search offering even more robust. >>rafat: two quick comments. i noticed yourgoogle maps search capability has somewhat declined when compared to yahoo.i don't know why, but i found that, at least locally, i prefer to use yahoo maps more thangoogle, at least as of 6 months ago. i don't know why, but i've noticed that yahoomaps has improved more so than google. >>schmidt: we'll take that as feedback. thankyou. >>rafat: last comment. i appreciate the diversityyou have on your upper levels of management. i can't tell you how many shareholder meetingsi go to where there is absolutely no diversity.

that seems strange to me in a county thatis so diverse and that derives so much of its strength from diversity. thank you again. >>schmidt: thank you. diversity is a realstrength globally. diversity is important for many societal benefits.we celebrate it at google, and we're very committed to it in many different ways ofthought, view, opinion, personality. we had a question in the back. i apologize. >>sutton: my name is tim sutton. i am a shareholder,but i'm also a publisher, an adwords purchaser, and a google tools user.i kind of span the whole gamut. i guess my comment, in the same way, spans the wholegamut.

it's really suggesting that google is kindof at an inflection point in its future of deciding how it evolves in those directions.here's what i mean. i've got some concerns, as a publisher especially, in what seems tobe a total lack of support for publishers. >>schmidt: can i just be precise? you're apublisher in what kinds of things? >>sutton: i own a number of website that putup google ads and adsense ads on the websites. for example, i have a very seasonal website,one particular website, that happened to be earning $2000 a day in december, which isthe height of its season. suddenly, it dropped to $100 a day. i'm fullycomplying with the google terms and conditions, as far as i know.absolutely no indication as to why i get these

vast swings in revenue.it stayed that way for a week or two, popped back up, stayed that way for a week or two,dropped off again, and so on. what i would like, as a publisher, is to havesome support mechanism where i can come to google, even for a fee, and say,"what's happening here? i don't understand this."there doesn't seem to be any mechanism like that.i see certain websites that go along and produce the same, you know, $500 a day, every day,no matter what. i see others that fluctuate all over kingdomcome while, apparently, following exactly the same rules.similarly, because of different business entities,

i would like to have multiple publisher accounts.you seem to restrict that for some unknown reason.if i'm in a corporation with one business and in a partnership with another business,for tax reasons, i want to have different google accountsset up to match those entities. but you seem to--not you, personally, obviously--googleas a company seems to, for some completely unknown reason, restrict that.now, i'm not saying this just to complain as a publisher or in these other roles asan adwords purchaser or other kinds of things, but i think that,in the end, as a stockholder, google is in danger of leaving substantial money on thetable and, in fact, of appearing arrogant

and drivingits customers to other alternatives. so far, google is the predominant player inthe field, so there's not a lot of risk in that, but some day, there may be.i, in my websites, have gone and sought out some other types of advertising source revenus. >>schmidt: with your permission, could wehave susan answer some of this? >>sutton: sure. >>wojcicki: first of all, thank you for beingan adwords advertiser and an adsense publisher. i heard a number of questions and concernsin what you addressed. i think the first is the support questionof how do i get the right support and how

are my answers and my concerns addressed.i think it's something where we receive so many volumes of e-mails and inquiries fromour advertisers and our publishers. we really do our best to always answer thosein both some amount of human touch, as well as some amount of automated touch.but i certainly hear you on that concern. i think for some of our smaller advertisers,where they need more help, it is an issue for us to be able to provide it at the levelthat they want. i heard your suggestion about a fee-type ofservice, and i think that's something that could potentially be an option for us in thefuture. i also heard you say that our adsense earningssometimes vary.

for the most part, we try to always keep thatconstant or as consistent for our publishers as possible, but we're always changing thealgorithms and we're always optimizing.we're doing that so we can serve the best ads for our users, and we're doing that sowe can get the best returns for our advertisers as well.so it's a very careful balance between our advertisers, publishers, and users. >>schmidt: thank you, by the way, for theobservation that there's more money to be made there.susan, there's more money to be made here. let's get our act together.

[laughter] >>wojcicki: yes, so we hear you on that. thankyou very much for those comments. >>mezzapelli: tony mezzapelli, shareholder.i'd like to ask about the us search market share situation.according to comscore, our market share is about 63%.our 2 largest competitors, yahoo and microsoft, combined are about 30%.what bothers me about that is that, first, 1 out of 3 customers goes to our competitor.second, the 30% market share is a multi-billion dollar property, maybe tens of billions ofdollars of property. what interests me about the situation is ourscale.

with our volume of search, we learn more aboutour customers' usage and get more profits than anybody.we can reinvest that into making search better and better, making our database and our userinterface state of the art and making our algorithms tocome up with the answers and rankings. that makes the customers happy and come back.my question is, do you think our customer base is loyal?i keep hearing from people saying they could use any of the top search engines.secondly, with all the power in our company and all the money that's in that 30% market,why aren't we totally blowing away the competition right now?

>>schmidt: you know, i ask marissa this questionevery day. >>mayer: search is a very competitive space,and i actually really good that it's a competitive space, because it ultimately means we reallyneed to strive to be the best and stay ahead of our competition.we do think we have better searches, which is why we have more search share.i think it's important to recognize it's a very complicated ecosystem.people come to search from a number of different ways.for example, they may come to our or someone else's home page.they also may search from their browser or from a toolbar, and some of those browsersand toolbars go different places.

that accounts for some of the overall share,but i can assure you we really are making the reinvestment, in terms of improving search.we have searchwiki. we have our spellcheck. there are all kinds of different ways thatwe actually use the fact that we have a large market share to our advantage, in order tomake our service even better. as eric pointed out, we make hundreds of changeseach year, more than one a day. google today is better than google yesterday,and google tomorrow will be even better. there are actually changes going on in thesite this afternoon. they are almost every afternoon. >>schmidt: let's see. yes, ma'am? let's lettony first. okay.

>>cruz: i'm with amnesty. we believe thatthe multi-stakeholder initiative that you guys are a part of is a great first step toaddressing the human rights risks facing companies.however, to truly prevent and address abuses by companies, we also believe that these effortsmust be backed by force of law. yesterday, congressman chris smith re-introducedthe global online freedom act. he said, "the gni was a step in the rightdirection. it has not changed the bottom line. it doesn't prevent us it companies from blockingwebsites, controlling search engine results, or answering secret police subpoenas forinformation identify dissidents so they can be tracked down or even imprisoned."the bottom line is that the global online

freedom act can help google resist china'sefforts to control information and its people. my question is, given google's often slightedresponse that they have little power and are unable to stand up to an abusive governmentlike china, will google publically support this pieceof legislation? if you don't support this, which provisionsof the global online freedom act do you find problematic for your company? >>schmidt: david? >>drummond: sure. the bill was just re-introducedyesterday, so you'll forgive us if we're not completely up to speed on all the details,but we are looking at it very closely.

we're going to decide what our position ison it. i think there are a number of things in thebill that you are correct about that could help the situation.there are some things that could be problematic. i think that we need to look at it.we actually think that rules governing the companies are important, but we actually needto do a lot more here, because if you look at whatgoogle actually does----there's a lot of talk about china--but we are dealing with censorship,oppressive governments, authoritarian governments, and even democracies who want to restrictinternet content all over the world on a daily basis.you talked about the secret police and so

forth.we have employees in many countries who have been visited in the middle of the night, notbecause were handing them the information but becausewe won't hand them the information. we're talking about countries like germanyand france. we're not just talking about the places you might expect.we have a very strong commitment to a free and open internet, and we deal with this everyday. one of the things that's lacking in some ofthe legislative efforts here and something we're going to start working on very hard,is government-to-government contact here. in other words, we need to get the governmentsthat believe in free speech to start getting

out there, shaming,and putting pressure on those governments that don't.one of the things that is very clear--in addition to it being a human rights issue--it's veryclear that it's a trade issue as well. you've got governments that are, essentially,cracking down on information, which, in an information age, is, basically, a trade barrier.one of the things that we're working on very hard is to get the united states out in theforefront to push that issue, and you'll see a lot more of that this year. >>cruz: i want to be really clear about something.i'm here representing amnesty international, and when people hear that, it's like, "oh,he's the big pink elephant in the room and

he's going to speak about censorship."i want to be very clear that, when i speak at shareholder meetings, whether it's thisone or yahoo, i'm also approached by people who work for your companywho are concerned about this issue, because they feel that it is compromising the moralsof your company. i just don't want to be misled. it's like,"oh, it's these activists who are the only ones who care about this."the people of your company care about this, and they want you to rise above it.i just want to say it's not like fun being here to bring this up to the table.but is something that a lot of people are concerned about outside the scope of the peoplei work with.

>>schmidt: thank you very much. >>cruz: thanks. >>drummond: thanks. >>schmidt: yes, ma'am? >>harris: marylou harris, shareholder. myquestion is this. even though it is unlikely that google willever be in the utilities business, is it possible that google's energy initiativeswill remake the energy industry anyway? and if they do, how will that translate tothe value of my google stock? >>schmidt: i hope we have the kind of impactthat your question presupposes.

google cares a lot about climate change andenergy consumption. everybody here in the room knows how, overtime, unless we address it, the issues involving climate change could ultimately result inthe deaths of millions of people and a real fundamentalchange in the earth that we so dearly love. google is also a significant user of energyourselves, so we have a moral duty to pay attention to that.of course, our data centers, we run them as efficiently as we can, but the fact of thematter is they need power plants near them, and that's of concern to us.for all of those reasons, we have a significant energy program that's a combined effort betweenour corporation google and

our philanthropic google, google.org, whichis working on a number of very interesting initiatives.one, for example, involves smart meters. we're in the information business. it turnsout that if you have a smart meter in your home and you know more about your energy consumption,you can reduce your energy consumption. you'll just do so, because you'll be smarterabout what you're using. it turns out that can save many, many coal-poweredplants and improve your bottom line and all those kinds of things.we've also worked on things like plug-in hybrids. last fall, we introduced something calledthe google 2030 energy plan, which is a calculation that we've done with the details, in a transparentway,

all published, which says that over the next22 years, at the time, it would be possible for us to become completely energy independentand have the vast majority of our power sources come fromrenewable and have more than half of our cars be, essentially, nonpetroleum-based,but cellulosic ethanol-based and so forth. that's a pretty big ambition that we have.the reality, of course, is that google is in the information business, not in the energybusiness. i doubt that we're going to become an energybusiness. so i think the benefit to you as a shareholderis that we see ourselves at the nexus of information about energy, human consumption,and how these systems will work.

we announced a partnership with general electric,for example, to do that. we think, ultimately, that could result insome significant revenue in the information part of this upcoming energy challenge thatwe all face. thank you. yes ma'am? >>alexander: catherine alexander, shareholder. i don't want to break it. let me just speaklouder. >>schmidt: you can't break it. don't worry. >>alexander: that's like saying you can'tmiss it, when you ask for directions. i appreciate google very much and that i amalive in the time of google.

thank you very much. it's made a tremendousdifference in my life. i agree with you totally, as to information,innovation, and also, perhaps, communication. if you would be so kind as to take some suggestions? >>schmidt: sure. >>alexander: google knows more than the doctorsthat my husband and i have and the pharmacists, etc, and it's wonderful.when i put something into google, however, there's a great deal of repetition. it's alsonot in the state that i'm accustomed to. if, for example, you could make things eitherchronologically by date, obviously i would want the freshest in the list first, so thati can find things.

maybe, let's take the subject of parkinsondisease. if you could have an outline, perhaps individualswho have found something to assist them. it could be a twitter within that group.for example, it's mentioned about mucuna puritans--if i want to find out side effects, to get thatquickly instead of going through page after pageand finding out nobody knows. another suggestion. if one wants to writea letter to someone who has a different language--and i'm not that familiar with it--the translationright now, from what i am familiar with, with all duerespect, is not the best translation. >>schmidt: i think you're being very polite.

>>alexander: so if it would be possible--and,perhaps, the countries would then give you advertisements--for me to be able to put ina letter in english and have it be returned to me, i would loveit. i would appreciate that so much. i would beable to put the dictionary aside. also, if i may make another suggestionã¢â‚¬â¦having just returned from dubai, there is a tremendous market there, as you probablyknow better than i do. eighty percent of those are foreigners. wehave huge numbers of our americans there as bases.eighty percent of the foreigners--the women are not wearing burkas. they are shopping.if you could put it in arabic and many languages,

tell the stores that if they are looking atgoogle, there might be a brand new, large market.thank you. >>schmidt: thank you very much.on the dubai question, in fact, much of our emerging business is headquartered in dubai.it looks like quite a good growth for the principles that you outlined in that partof the world. marissa, you want to answer the first two? >>mayer: sure. on search, i think your suggestionsare all great. in fact, there are things that our teams areworking on. we're looking at how can we improve our accuracyon health searches.

we're also looking at how we can bring tobear the freshest and newest information that's being published anywhere.we are looking at tools that would allow you to slice and dice your results different ways--beingable to look at different factors like time, images, news, or maps.i think that there's going to be some really exciting developments in search that willaddress some of these problems head on. and the second question was? >>drummond: translation. >>mayer: translation. we're very excited aboutour translation opportunities. we have a great machine translation servicethat is able to do more pairs than any other

service we're aware of.there, we can see that our usage can actually help make translation better.the idea is, can we take machine-generated translation and allow human translators tocome through, correct it, and learn from it? we're bringing up tools that do just that.so we're very optimistic that the translation tools will really improve and be able to beused even more broadly. >>schmidt: in fact, our translation technologyis among the fastest growing things at google. because we have so many users and becausewe are doing exactly as marissa describes, there is a very good future for the scenariothat you describe coming really soon. yes, sir?

>>reese: hi. brandon reese, afl-cio.my question is for you, chairman schmidt, and director levinson, regarding your roleon the apple board of directors. just this week, the wall street journal andnew york times reported that the federal trade commission is investigating your role on apple'sboard as a board interlock that may be prohibited bythe clayton act. as you know, google and apple are significantcompetitors in the internet services, as well as cell phones, the iphone versus android,web browsers, with safari versus chrome, picture and videoservices over the internet, etc. this competition will only continue to growas both companies diversify their products

and platforms.my question is, will you resign from the apple board of directors so we can keep the federaltrade commission from investigating google? google is a great natural monopoly. let'smake sure that the company's not an illegal monopoly. >>schmidt: there are so many things that idisagree with in your question, that it would be difficult for me to answer this.i think the question you might have asked was would i like to comment on the rumorsof an ftc investigation involving my or director levinson'sdual role at the two boards, and the answer is i do not want to comment on such an investigation.it is well-established, and i've said before,

that i serve on both boards.it's both legal and proper to do this, as long as you can wear both hats.if something that is competitive arises--for example, something involving the iphone--theni, in fact, recuse myself. let's see. some more questions. yes, sir,in the back. >>soppo: paul soppo, shareholder.i'm wondering if you can give your assessment of employee morale and productivity in lightof the reduced legendary perks. >>schmidt: theres a lot of perks still, letme tell you. from our perspective, we pushed to make thebusiness more efficient, not to save money to return more earnings to the shareholder,although it was,

indeed, a consequence of that.because we didn't think it was appropriate to be spending large amounts of money andwasting it at a time when the whole globe wasfeeling the effects of the global recession. the changes that we've made so far do notappear to have affected productivity negatively and have been very welcomed by the employees.it makes the company more efficient, in terms of decision-making, deployment of resources--ourdata centers are more efficient. we're using things just better. we think thatthat positions us better for the eventual recovery from the recession.hopefully, that will occur very soon, but we don't really know.with respect to morale, my sense of it is

morale's pretty good, having the caveat thatpeople are upset that their friends are losing jobs in other parts of the world, thepeople that they know and so forth. we need, as a society, to get through thisretrenchment as quickly as we can. would you like to add anything else to that? >>wojcicki: i think we all feel that the perksare still really good. the lunch, for example, is an example of whatwe have every day. there are a whole bunch of cafeterias on thiscampus that we get to choose from. >>schmidt: there's at least 15. >>wojcicki: fifteen, with different typesof food.

those are really nice perks, but i will say,from the business side, they're really essential to us, and that's a reason we have these perks.the perks are so we can do our jobs better, so we can be more efficient, and so we'renot driving off campus. we're doing meetings during lunch. we're workingwith other people. so i think the morale is still really goodand everyone appreciates the perks we have. >>schmidt: a measure for that is both employeeretention and the fact that people are very much interested in working for google.that continues to be very strong for us, and we hope that will be true for a long time.yes, sir?' >>eastman: my name is jack eastman, and i'ma stockholder.

i understand that you are having people whisperingin your ears in regards to a stock bonus to the stockholders.i'm not really concerned about that. i'd like to see that also.but even more so, the reason why i'm here is i'd like for you to not split the stock.the reason for that is i'm sure there are a lot of people out on wall street who liketo manipulate the stock, and they just play yo-yo with a lot of theother companies. so please do not split the stocks. put moreout there, but don't split them, okay? >>schmidt: okay. >>eastman: and that's my whisper in your ear.

>>schmidt: okay. the only whisper was, "couldsomebody get me a diet coke?" i'm not aware of the earlier whisper thatyou referred to, but we'll take that as feedback. thank you very much. >>eastman: i think that came from sanfordbernstein. >>schmidt: is that mr sandford or mr bernstein? >>eastman: sanford bernstein. >>schmidt: just kidding. just kidding. yes, ma'am.

you may have the honor of the last question,because it looks like we have all of us. i'm sorry. i apologize. you have the second-to-lastquestion. >>woke: then i don't want to ask it now. my name is suzanne woke. i'm a shareholder.i want to commend google for the work that they're doing for nonprofits.i own a website called fundraisingmom.com with google grants and all the stuff thatgoogle is doing for nonprofits. however, i'd like to recommend for google,also, to look at a market that is not being tapped into, which is the nonprofits.everybody in america, at least, is somehow related to a nonprofit, whether it's a church,a synagogue, a school, organizations.

almost everybody is connected to some kindof nonprofit, whether they know it or not. unfortunately, the way our economy is, thenonprofits are hurting. schools are hurting. schools are not gettingenough money, so the funding is all on top of the schools themselves to become fundraisersas opposed to educators. i think that with the internet, every day,there are incredible, new ways of making money online.a lot of people are making tons of money online. what nonprofits don't have are the businesspeople who are savvy in learning how to use adwords or learning all these new techniqueson making money online. they're kind of like, "i don't know what todo." they're still doing bake sales to make

money.i think that, actually, a service that google can do, which i think would be incredible,is to offer nonprofits, through igoogle or through apps--and i know you're kind of going in that direction, but i don't think that you're focusing onnonprofits per se, in terms of fundraising--to offer fundraisingwebsites. if you offer a website to a school, for example,or a church and say, "sign up here. this is a website.you have all these incredible applications," which you want the school to have, becausethey will give you all their information to digitize.if you sign up and you have "here, take this

website," it comes with all these incredible,very powerful fundraising tools that they can literallymake money in their sleep the way i do and the way all these other business people do--wediscovered this incredible gold mine-- but to offer it specifically to nonprofits.in that way, you will also digitize grandma's recipes that she has in her drawer.you will digitize all this information that you're trying to get at. >>schmidt: so your idea would be a productthat would be a soup to nuts, put it together, and do all this automatically. >>woke: yeah, sign up for it, and it offersa whole bunch of things.

you can tap in to all the other schools andoffer e-books and sell and fundraisers, and people don't have to do bake sales anymore. >>schmidt: susan and marissa, are we jointlybuilding this product yet? >>mayer: it's true we don't have an umbrellaproduct yet. we do feel that need though. for example, we have a great page on google.orgthat goes over all the different tools we have for nonprofits--how to build an igooglegadget and how to use checkout and have no fees soyou accrue the entire amount onto the donation. we've tried to pull it together under thatumbrella. we haven't put together a whole list of nonprofits.

>>woke: my vision is to actually sign up here,sign your school, boom, it's there. >>wojcicki: i think that's a really validpoint and a really interesting idea. we probably have a lot of the pieces, butthey're not put together so that someone can just sign up.someone running a nonprofit doesn't want to put them all together; they want to just signup. i think that's a really interesting idea,and that's something marissa and i can follow up on. >>schmidt: i love it when you generate actionfrom these guys. perfect. >>woke: if you need help, please let me know.i would like to. i have a lot of good ideas.

by the way, if you google "fundraising," fundraisingmomcomes up first. >>schmidt: congratulations. thank you. sir,you'll have the honor of the last question. >>it's going to be a comment. i was happythat the proposal by the afl-cio failed. the afl-cio and others are attempting to bringus socialized medicine. this morning, i went to a shareholder meetingof a small biotech. i was the only civilian, other than boardmembers and employees, so i got to ask a lot of questions.one of the questions i asked was, "what's going to happen to our pharmaceutical r&din the event that we join the path of england, canada,and all the rest of them?"

these countries are free riders on our pharmaceuticalr&d. this company was very concerned.they have $200 million in the bank, because they have a wonderful product that's goingto treat parkinson disease in a way that's never been available before.they are burning the money at the rate of $65 million a year.without the prospect of making a lot of money on selling these products, they are not goingto get r&d money. so i think that it's very important that allof us understand that the path that this country is thinking of going on is not a good path.thank you. >>schmidt: thank you very much for your comment.i want to thank everybody in the audience,

on the webcast, and so forth for participatingin our shareholder meeting. we will very much look forward to coming back,having lunch, and so forth, in a year. thanks again.