to that and it will allow us to take action against the people doing it. how do you draw on and use the resources of the private sector? if ibm is in intruded on, they will spend a lot of money to find out who it is on. how do you use that without turning the internet into the wild west? >> the network will be a contributor to exactly that relationship. it will be a place for, not only prosecutors and agents in the field to plug-in, but also to be a forum for interaction with the private sector. to share information, as much as we can, in a way that will be helpful to the private sector. our goal is to make sure we have got all tools that we can apply to a particular problem.

and to make sure that we are preserving those options and working with interested parties to make sure we can do that. prosecution will not always be the silver bullet. obama be applicable in all circumstances. it may well be -- it may well be a viable option. the more information sharing we can house, -- we can have, its wilma always be satisfactory, necessarily. we first have to know about the breaches and intrusions that occurred before we can do anything about it. that sometimes causes concerns for companies. if they trust that we will use that information wisely, and try and work with them, to combat this siphoning off, hopefully we

will all be better off. >> thank you for graciously giving us your time this morning and sharing your thoughts. we want to give you a copy of our latest publication. please do not be offended, but i think your counsel will find this of minimal value. [laughter]>> no comment. >> thank you. [applause]>> that concludes our breakfast program. >> next, google executive chairman eric schmidt talks about the latest innovations. then, the role of capitalism today. after that, a form on state and federal marijuana laws. >> recently, the economist

magazine held their world in 2013 festival, which coincides with the release of their annual report. they offer a global perspective on the upcoming year in the areas of business, economics, technology, and media. at the event, google executive chairman eric schmidt discussed new and ovations, the importance of mobile devices and the impact of technology on society. his remarks are about 35 minutes. >> that is an introduction to our conversation on technology. these welcome eric schmidt, executive chairman of google. [applause]>> thank you very much, good to see you. >> first of all, i do want to thank you very much for stepping in at such short notice. >> i was planning on coming anyway. >> humming and speaking in public are two slightly

different things. thank you very much. we have a load of questions for you from the floor, but i want to ask you about how technology will change our lives in various different ways in 2013. what i thought is to start small and go bigger. in the publication, we mention a number of google initiatives that are fascinating in the way that they might change lives. one is google glass so the idea of wearable computing. is that going to be available next year and beyond that? >> if you look at google glass, it's sort of glasses that they don't put it right in your eye. they put it right above. they can show a video. we have been experimenting what this could be used for.

there are obvious uses in your daily lives. we never had a device that records or could record what you saw contemporaneously. think about it. >> so how will we use it? we don't know. not crashing into doors because we're looking at our glasses. >> hopefully there will be telemetry that will tell you you're about to trip. when you have the digital world that tells what the analog world is doing. people fixing eyeglasses and medical applications to more interesting ones involving performers who show the audience what they say in addition to when the audience sees at a performance. there are many, many creative things. you just saw at the new york fashion show where some of the models were wearing this.

you looked at what -- one of the eye catching literally trends. another was the whole idea of driverless cars. >> the driver has been doing something else. >> so you know, it's a lexus 450 and there is a button. and you take your hands off the steer wheel and it goes along. it takes 20 minutes on average for the person to stop freaking out. we have been studying this extensively. there are cameras in the car. for the first 20 minutes, their faces are ashen and they're watching the car drive. the first 20 minutes, the car did it exactly right. the car in front of you lurches like this, you can see that the a.i. system is deciding whether

it has an escape lane or it has to slam on the brakes. it can do it faster than you can. >> so the moment, just to be clear, they're experimental vehicles -- you move so slowly if new york anyway, that it wouldn't make much difference. >> it wouldn't make much difference in new york. the great thing in california, you're 65 miles an hour, you click it up and you're a sports car. we do a race, we have a private racecourse, we race priuses against each other. we have a driverless prius against a human prius and the driverless prius wins every time. just to get a sense, releasing numbers of these, over the last few years -- >> a lot of them. >> five years time -- >> we really don't know. it's important for these things to be production, they have to

have two fail modes. you don't want to have mechanical systems have single point of failure. the human in a car is a single point of failure. we don't want to replicate. we want duel ways of brake controls and dual ways of steering. those are in development. it's fun as a subject. if you know someone who has lost someone in a traffic accident in america, you understand why we're doing this. 30,000 people, we don't cover it in the news anymore, it's so common. that's a record low death rate given miles driven. we're doing better at 30,000, 10 times more than people killed on 9/11 every year. this is terrible. if we can make a significant dent on that, we should to that. >> i was talking about the internet going increasingly mobile this coming here as the year there will be more internet

connected devices that are mobile rather than fixed. so this is all part of that trend in a way. this is things and devices that are on the move that are connected up. do you see that changing fundamentally how we use technology. >> many of us lived in a model where there was network platforms, standard p.c.'s and so forth that were pretty much controlled by a single architecture or vendor in the case of the p.c. model. what we're seeing now is an explosion in different kinds of devices. whether it's mobility and so forth and so on, we don't know exactly how it will play out. what we do know are the mobile devices are quickly surpassing any fixed use, any of the macs and p.c.'s are being left in the dust. the numbers with android which is now the number one platform

in mobile computing is five times larger in his current sales than the iphone, always an interesting fact for people, more than 500 million in the base, it will be a billion next year. we're turning on 1.3 million of these phones or devices every day globally. so the scale of this in terms of reach and impact and we talk about it here, here in new york, you're lucky if the phone system works. it's an improvement in your life and new yorkers are pretty so kisted anyway.-- pretty sophis ticated anyway. imagine this showing up in your developing village. it's really life changing. >> i want to ask you about video because what, we have a question here from somewhere anonymously, what makes a video go viral. i was wondering whether that was partly gangnam style. >> yes. psy is the record, his name is psy park, if you haven't heard this, your children have.

it's the greatest dance style ever. and last week, last week he surpassed justin bieber as the most popular sort of phenomenon on the net. the video answer is even more interesting. >> you have been caught gangnam styling, haven't you? >> let's just say he is a much better dancer than i will ever be. >> did you go viral? >> yes, unfortunately. [laughter] >> the scope and scale of video online is much larger than people appreciate. what is the content of the internet? it turns out it's video. what's the number one source of video online? netflix. interesting. if you would have asked me 10 years ago is there any scenario where people will use the internet as an equivalent of movies, i said you are kidding me. it's a terrible use of the

internet. i can give you a long list of why i'm right. society has proven me i am wrong. netflix is one and youtube is number two. between the two, they occupy almost the half of the total bandwidth of the internet. you do something viral, quirky and fun. >> talking about new things, new ways that you're experimenting, you also have energy projects. again, we have an article in the world in 2013 about the extraordinary reduction in cost of solar power, for example, something similar to solar panels. >> there is a china law which is china sort of overproduces to the point of bankruptcy. that is why the panel is so low. it's close.

>> do you see technology transforming our energy situation? >> although it's controversial, the fact of the matter is we should give credit to the people who invented these new forms of oil and natural gas drilling generally known as fracking, hydraulic fracking and so forth. those are resources that help us find pore of this stuff. we can have a discussion about recommendation and so forth. it's very controversial. that has materially changed the economic structure of energy in america. if you take a look at conservation and renewables which i think is ultimately the right answer, what you see now is the automation and instrumentation of passive systems, it changes everything. it goes under the term of smart building. roughly 40% of the carbon emissions that are coming out of the u.s. are coming out of building. frankly, if you would stop heating all of the building in new york as high as you do and insulate them better, you would make a significant contribution. you think of passive insulation

as the first thing. the adoption of renewables. the interesting thing about solar, it's not even as good as wind. wind is within one cent of a kilowatt equal to coal in the current structures and that's phenomenal. let it come down its curve. there are a lot of reasons to be optimistic that automation, energy use, instrumentation of your use, so forth. anybody play with a nest thermostat. it's a thermostat that you sort of screw into your wall, it's allegedly possible for you to do this on your own. i think it's one of the great sort of christmas presents for people who are sensitive about these things. it learns what you want if temperature. it does it dynamically and it wi-fis out what it's up to. >> what is google's activity in the energy area? >> we have ultimately decided to fund a lot of this stuff rather than build it ourselves because we thought we were better off as a banker to it. i'll tell you that the level of

innovation and energy is equal to the level of energy in the tech world that we normally celebrate here. >> how does this all this relate to search in your so-called business? what is the rational for this variety of projects that you get involved in? >> google wants to be at the center of the information revolution. we want to be in a decade and 20 years and 30 years. what we're trying to do is trying to be part of what will happen. we're not always perfect and we do make mistakes. one of the more interesting things is in kansas city we have wired up a small number of houses now and we're now beginning to seriously implement it across the city, one giga bit of ether net. you say, well, do i need one giga bit, the measured performance is 78 down and 720 up mega bits, think about how your world could change. at that point, there is no difference between your computer and the computer center that it talks to.

they're literally in one room together. it allows all of the different immediate qua that we so carefully have husbanded into this group and this group and this group all go away. you can handle as many d.v.d.'s as you want, all dynamically and all real-time on this format. if this technology works and the results are fantastic, if the business works, so far it looks like it will be a very profitable business, it may be possible for us and others to wire the new world at a giga bit. that's the next step change. roughly today, an example, your average performance is on the order of 100 times less than that. >> i want to come back to the search. when you look at these initiatives, do you try also to bring them back to how they can make money for google? >> we have the luxury of not worrying about that as much because we try not to worry about these things. it's a luxury. we have the luxury of time because our core revenue engine is so strong.

our success in search continues and the way to think about search is to think that search is imperfect because it gives you a lot of choices. we would like to be able to give you the one answer that is correct. if, again, this is all voluntary and this kind of stuff, the more information that you tell us about yourself, the more accurate the results will be. the next generation of search will be much more targeted at you. in fact, we may be able to get to the point where we suggest what you may be searching for. classic example, we're in a search position, search with a you're looking for. that will be our motto. here you are in a strange city, we know you are a history buff. as you walk along the streets of new york, we tell you the history of the street. it's very easy for us to figure that out. it's very easy for us to generate those searches. you can imagine that the union of the mobile platform, the

cloud computing platform, the information platform, gives us unprecedented vision into what you both are thinking about and you might want to think about as suggestions and, again, if you should opt in to that. >> it's interesting the example you take is walking about the cities. that's an example on where you are mobile. it's no longer someone sitting at a computer and i want to know a. >> the future is mobile. we call it mobile first. here in new york city, you have the explosion of high-tech start-ups. each starts with a mobile app for an iphone and an android phone. literally, that's their first design. how is the user going to interact with my service? how are they going to experience it? >> one prediction to one can make with some confidence if the year ahead is that you will publish a book because -- >> that's right. >> you and google idea director jerry cohen are publishing a

book called "the new digital age." can you give us an idea or preview on what the book is going to cover? i presume some of the things you have been talking about. >> we sat down over the last 18 months, traveled around the world and talked to people about where they thought technology was going and more importantly, how society would adapt to it, and we came to the end of the book with a very optimistic view of this. a simple way of thinking about it, let's go back to the economist. it covers dictators, economic problems, corruption, technological innovation, health care issues and general sort of things. >> and google occasionally. >> last week. >> yes, we were on the cover and covered us as well. so let's go through each of those.

how to you solve the back dictator problem? you empower the simpsons. unless the dictator is willing to some out down the internet and shoot everybody can they're getting desperate enough to do, it puts a real check and balance, even china which is certainly not an elected country, it's sensitive to public criticism if you look at the train accident, which is their version of twitter, disciplined the party chief who was in charge of building up the railways. this guy who was seen as a god is on his way to prison because of corruption. think about the terrible things that go on in the world to people who are at the with him of the police chief or minorities or the terrible status that women are treated in much of the developing world. people have cameras. you can now anonymously report things. you can imagine a network where a bad thing is occurring. you can report it anonymously. you can have anonymous responders. you can build those kind of networks and they're in development now. the fact that everybody is connected has a large number of

step functions and improvement there. think about health care. we were talking earlier in the video about 2050 about health care and people sort of snickered when the gentleman mentioned to it, the f.d.a. just approved the first pill that you can swallow that has a digital chip in it that wi-fis out what is going on in your stomach. all of us would like to know what is going on with our nutrition, here is a simple solution, will you take this pill? yeah, you will and you will because it's your health and ultimately it will in your best interests. we did a series of seminars on somely transdermal patches which are skin thin sort of surfaces that you put on your skin and they have among other things, they use the energy of your body to power a wi-fi connection which then monitors what's going on inside your body. so all of a sudden it wi-fis out to your phone. your phone says you're in big trouble, call the doctor. the doctor calls you back, what a sock.

calls, says get to the hospital right now. there are so many examples where the digitization and instrumentation of the world using the combination of the mobile devices and i bet everyone in this room has a mobile device and if i went to grab it from you, you would think i was stealing the most important thing that you have. i'm not going to do it. they act in ways that really make a lot of sense. if we take one of those areas that we mentioned, milwaukee, and the example you gave was in some of the less democracy parts of the world where democracy is in short supply and technology can provide a check and balance and a product for accountability, what about the mature democracies. we just had an election in this country. did that teach any lessons, were there any technology lessons to be drawn from this year's

election? >> it's always hard to reason from one event. the winners get to write history and the losers sort of think about the next election. there is no connection that the obama campaign, because i was part of it, had a technology that helped elect the president. it was cloud computing, servers and targeted programs and get out the vote. so that is to say this is to governments are going to change, too. on the one hand, the governments deliver services and now we can measure them. if someone asked you give me money to donate rice to the following village. we can now check whether the rice actually got there, another check and balance on sort of the corruption nature of things. we can test the effectiveness of programs. to give you some of the more sort of worrisome examples, governments can know where

people really are. they can tell what they are reporting to doing versus what they are really doing. there are the slippery slopes. i'll pick one if britain. in london, when you're walking the streets of london, you're on a camera. those cameras are protected by law. in the last five years, technology has emerged that allows face toe techs to be very accurate. a simple rule, we have a picture of you and 13 pictures of you on the internet. with 95% of confidence, we can identify you. >> you put them there on facebook or something similar. so the fact of the matter is that you can begin to link these system and the linking has a lot of implications for how this will play out. >> as we mentioned, google and others were on the cover of "the economist" this last week. yourself, facebook, apple, amazon, how to you see that battle playing out in the year ahead? >> in the past i have called this the gang of four.

i'm not sure that's such a good analysis, but i think it's roughly correct. in our industry, we have never had four felt work escapable plt forms competing at this scale. we have always had one, i.b.m. and it's monopoly which spent 1 years in the antitrust division, i.b.m., microsoft went through the whole trial 1991 through 2000. now we have at les four. they're each run pi hopefully sharp people who% what they're doing and they'll competing and also cooperating. the reason this is relevant to you all is it's driving prices down at a rate that is phenomenal.

so when you lock at an iphone 5 and android competitors and you realize what amount of computation you have and you got it for a subsidized price of $100 or $200, people say whatever, it is extraordinary. that competition which is brutal by the way is ultimately beneficial. take a look at amazon. amazon, very controversial, roughly 50% of all of the sort of online world and a larger and larger part of the general ecommerce, extraordinarily well run, extraordinarily deep in its understanding of how to suggest things for you and incredibly

convenient. take a look at facebook. if you have a billion users that use you roughly every three minutes, you can make money from them. it's not complicated. these are free platforms that are going to try it. each operates under a different set of religious rules. the analogy i would offer, let's look at apple and google for example. think of these as two countries. in the old high-tech way, one would dominate the other, the other one would disappear fairly quickly. it's much more likely that each country can has its own and its own incompatible view of the other is going to have to put up with the other and find ways to work together. in apple and google's case for example, we compete very, very hard on the mobile world but we also are search partners. >> and new countries appear and old countries that were there that aren't member of the gang of four -- >> i'm certainly not suggesting this is the only group. there are potential fifth candidates. twitter is one that has been suggested and even netflix which i mentioned and microsoft is absent if my calculation, although they certainly wish that they were.

[laughter] >> we have some very good questions from the floor that relate to some of this. one question is how will the scrutiny offense the use of user data by companies such as google and facebook, affect their business strategies in 2013? >> so what happens with these, all of tees companies correct a lot of data. each of them has different rules. in the first place, their behavior is largely going to be controlled by the european privacy laws. there is something called the european protectorate which is what you do with the big data analytics. a sane solution is going it to say that the data is owned by the person, not by the company or at least cannot be used without that person's permission. data has to be really anonymized. security is our job. our system has to be secure. if you trust our data to us, it can't be available to fib else physicals it's by court of law.

privacy is something that is sort of up to us and you. you have to decide how much of this information you want to be sharing with other people and we need to page sure that it remains private. >> another good question from the floor, do the current heads of aol, yahoo! and facebook leave google because they saw to rewards internally? >> in each case, they became, c.e.o.'s of important and powerful companies. that position has been occupied by larry and myself.

so i think perhaps they wanted a career path that wasn't in front of them. each of them is fantastic and if you look, each of them sort of trained at google, they'll make a good showing. they certainly will. >> i wanted to ask you about antitrust. you have some limitations on what you can say on that it. that too is clearly going to be one of the big challenges mountain year ahead for all of these companies, but for google in particular? >> yes, why don't you ask your question. >> how are you preparing, planning, responding to that challenge? >> there is a couple comments about antitrust. the laws differ in europe and the u.s. the european process is a finding at the e.u. level. we have been for investigation for it almost two years by the commissioner there and his staff. during this period, they comment from everybody and we give them literally millions of documents. we are busy negotiating with them. we don't think we violated any european laws, but we're happy to have the conversation and

we're sort of now waiting on with a they decide to do. we have been negotiating back and forth and they have announced that publicly. in the united states, the law is similar but different if the way it's applied. in our indication, the government to have the federal trade commission look at this and a similar investigation is underway. there were a series of hearings. i testified at the hearings and, again, i don't see the consumer arm under section 2 and we have asked the government to come back and give us the examples of things which are violations of law. we haven't seen that yet. we are also in negotiations with them. that's probably all i should say.

what i would say is we talk to these people a lot. we're waiting on them at some level. the ideal scenario would be that we come to a mutual argument with both of these. >> thinking about that, you mentioned so many of these other initiatives that you were involved in. how do you decide where to focus, was to focus on when you are planning for 2013? you have such a huge range of things. >> you use the wrong word. you don't plan. you build a product, you build a system that innovates in 2013. innovation comes from everywhere. if you would asked us five years ago, would we be in the driverless car business? we would say it's an interesting research idea. it's taken this long to build the lasers and other algorithms. our decisions are based on how much progress we're making in each of these initiatives. we're lucky that people are constantly suggesting new ideas and new uses of this technology which is i think one of the great things about google and one of the great things about high-tech. it's fun to work in companies where people are constantly suggesting new approaches to the problem.

>> here is a very nice question from the floor which sort of combines some of the smaller video things that you are involved in with a bigger picture that you have been talking about. it talks about translation as a very fast fwroge industry globally. given that translation is key to spreading democracy and capitalism, what role will machine translation play in giving the middle class, solving middle east problems? >> when we started this, we had a scientist who invented a new technique which is called statistical machine translation. here is how it works. if you take english and chinese, english and russian, tbhrish and arabic and you sort of put the paragraphs next to each other. one goes one way, one goes the other and the other stuff, you apply these algorithms, it can learn to translate text into any other text. i am not making this up. it is literally mainly.-- magic. mathematically what it's doing, it looks for patterns, a pattern

repeats and the translation is done. this translation does not use a dictionary. that's why it is so interesting. sometimes it's brute force. it doesn't have any understanding of what it is translating at all. the beauty of the statistical machine translation which is what we use is we can go from any language to any language, if a small amount of time, we'll end up with a situation 100 languages into another 100 languages for all of the content if the world. the question is how does this affect things in the middle east? it affects everything because a lot of conflicts in the world an especially wars have been created because of a lack of understanding. one of the comments would be, was that there is a large body of arabic language work that has never been translated into anything. almost none of that is online. all of a sudden if we can put all of that stuff online, sort of the notion of having a little bit of respect for each other is going to go a long way. >> another question coming up related. related. i'm from africa, what is