Google’s Eric Schmidt had sights set on Facebook but was rebuffed

Google Inc. Chairman Eric Schmidt admitted at a technology conference that he tried unsuccessfully to team up with Facebook, which posed a major competitive threat to Google’s advertising business, but that the social-networking phenom rebuffed his efforts.

Schmidt, who stepped down as chief executive in April to turn over day-to-day control to co-founder Larry Page, said he should have pushed harder.

“Three years ago I wrote memos talking about this general problem. I knew that I had to do something, and I failed to do it,” he said during a 90-minute onstage interview at the All Things Digital conference in Rancho Palos Verdes organized by the technology blog AllThingsD.

“A CEO should take responsibility,” he said. “I screwed up.”


Schmidt said Facebook is one of the “Gang of Four” tech companies that are growing faster than ever: Facebook, Google, Apple and Amazon. Notably missing from the list: Microsoft.

Investors have complained that Google is not moving quickly enough to counter the rapid rise of social networking. Schmidt said Page, in his second stint as CEO, would move even faster than Schmidt did.

The key advantage for Facebook: It knows who you are. If Google had the same insight, it could deliver better search results, Schmidt said.

Netflix is contributing to the rising cost of online entertainment, CEO admits

Once upon a time, Netflix Inc. Chief Executive Reed Hastings was the tech guy Hollywood loved to hate. These days, he’s treated more like a doting uncle who gladly hands out big checks.

Hastings acknowledged Wednesday that his movie subscription service is helping to drive up the cost of delivering entertainment content online — but not to an unaffordably high price.

“Definitely, we’re on this virtuous cycle, where the more content we have, the more members we get, the more we can pay for content,” Hastings said at the All Things Digital conference. “We are paying more for content every time we renew.”


Hastings was pressed by a conference moderator to disclose how much Netflix might pay to renew its distribution agreement with the Starz cable network, which expires in early 2012. The original licensing deal, struck in 2008, cost a reported $30 million a year, and analysts have speculated that Netflix could pay as much as $200 million annually for a new agreement.

“We haven’t done the deal yet, so it’s hard to know. [But] that wouldn’t be shocking,” Hastings said. “We’ve grown a lot since then, and we can pay a lot more for content.”

Hastings said Netflix’s subscriber growth has paralleled the addition of new television shows and movies. A year ago, the service had 14 million subscribers; now it boasts 23 million.

The next wave of growth, Hastings said, will come from international markets.


Netflix conducted a trial in September of its Internet video streaming service in Toronto. Hastings said he wanted to learn whether consumers would pay a monthly subscription fee for a video service that did not include the ability to receive DVDs by mail.

“It was a huge success for us in Canada; it continues to grow rapidly,” Hastings said. “That gives us confidence.”

The international expansion should begin in the second half of the year, Hasting said, noting that the more rapid the growth abroad, “the more money we’re going to lose” as Netflix moves country to country. It could take up to three years for each new market to become profitable, he said.

Hastings declined to identify which countries Netflix would target, although he noted that certain Asian markets look promising, including South Korea, Japan and India.


Twitter to roll out photo service

Last month, Stefanie Gordon, an unemployed 33-year-old from Hoboken, N.J., snapped photos with her iPhone on her flight from New York to West Palm Beach of the soaring launch of space shuttle Endeavor.

Her photos were viewed hundreds of thousands of times on Twitter and appeared on newscasts and in newspapers around the globe.


Her brief moment of instant celebrity showed yet again just how central photos — not just 140 characters — are to how people communicate on Twitter.

On Wednesday, Twitter Inc. Chief Executive Dick Costolo announced at the All Things Digital conference that his popular online service is rolling out its own photo service over the next couple of weeks.

Photos will be directly connected to tweets on Twitter and can be viewed there. Twitter will also showcase the most popular ones on its home page.

The service ensures that users own the rights to the photos they post.


It will create competition for third-party services such as Twitpic and YFrog. Costolo said the service should eliminate some of the friction in posting photos to Twitter.

All Things D’s Walt Mossberg said he had not experienced any difficulty. But Costolo said Twitter is focused on making the service more accessible to less tech-savvy folks.

Costolo also announced a new version of Twitter search that will rank tweets by relevance and will also include photos and videos.

The services will eventually also be available to mobile users.


Costolo declined to answer questions about whether Twitter is profitable.