will. there's evidence the way our brains work is we study a scene and we subset the things that are really important. and we then put them into the brain. this is called reinforcement learning. we believe that reinforcement learning to be a core part of his next ai algorithm. charlie rose: take these five companies, apple amazon google facebook microsoft. is there a race to do any one thing, are they all the same business? apple made a fortune on smartphones. google has made a fortune on search. microsoft made a fortune on software. amazon made a fortune on a range of different things. in these companies are they in pursuit of a holy grail?

eric: the tech companies as a , oup are highly competitive seeking new -- i want to say it right, think of each of these as a platform company driven by innovation that solve the problem that's global. in some cases a problem you didn't think you had but they solve it well. microsoft is the eldest of them. it solved the problem of interoperable workstation platforms. amazon started as a virtual bookstore. i didn't realize i wanted such a large bookstore but now i'm happy i have it. each of these has had that. apple's transformation is legendary with steve's resuscitation of the company. when steve took over the second time he clearly wanted to do hones.

we have never had that many companies fighting so brutally against each other and yet also collaborating. in our industry we always have i.b.m. and microsoft. a few others. charlie rose: where is the collaboration? you are also suing each other. schmidt: that's normal. there's lots of collaboration. our apps all run on microsoft. they run on apple. charlie rose: last year they announced a partnership with microsoft. eric:a traditional model would say we won't put anything on that platform. it turns out that apple is a customer in our case. we are also a customer of apple. everyone argues with each other but we benefit from open markets and globalization.

a sense the technology is transformative. charlie rose: should we insist on open sources? in terms of all this being discovered or are we looking at a world where each organization is going to be jealously guarding not only what it knows and it's learning but also trying to hire away and protect itself from losing the most talented human beings? schmidt: this is the genius of competition. this is evidence of real competition. we fight brutally to hire the top people. think about the android phone or the iphone that you use today. about how powerful it is. it is a hundred million times more powerful than the computer i used in college. there was only one of them in college. i stayed up all night to use it.

it was the only time i could get access to it. real consumer benefit. the competitive structure, the architecture you describe will continue for a while until nother one joins us. the current and next one is uber. as a disclosure, google is a arge investor in uber. charlie rose: so is saudi arabia. eric: i didn't do that fund. they have done incredibly well. i wish i had invented uber. t the same time travis and his partner were standing --it was invented at the base of the eiffel tower. i was giving a speech about how there will be amazing companies founded based on smartphones google maps and gps.

but i didn't figure out what the app was. the next one will be built on a machine intelligence platform. it will use very rapid iterations. i don't know what the app is. charlie rose: in terms of how smart machines are becoming, we xpress fears about people like elon musk and larry and bill gates, the idea is there is some danger from machines becoming so smart and so human and uncontrollable that they provide threat to the planet. schmidt: these people have been atching a lot of movies.

elon backed up his concern -- charlie rose: that's steven hawking, too. concernon backed up his over this very important issue by investing $1 billion in a competitor to piedmont. you never say never. but let's go through what is needed to make that scenario happen. we are still learning how to do basic intuition. there will be breakthroughs and e'll get excited about it. we hope to be able to assist humans in their daily jobs. who doesn't want help? think about all the

professionals and so on. we think we can do that. there is real speculation to get to the kind of human level intelligence that everyone has here in the room, let alone going past that. my own intuition which is just a guess is that there is another discovery needed. he human level of intelligence is hard to define, what it actually is. there's probably another discovery needed. oh my god, the robot has decided to kill its owners. i saw that movie and it was really good. charlie rose: there are also questions of disruptive technologies. does google fear there could be some disruption so that search engines will be obsolete? schmidt: in my industry you always worry about the next idea.

inevitably there is always a new team in a garage somewhere, the young professor and the two graduate students. that's how google started. you always worry about that. there are many many ways in which what we currently do could be disrupted over time. this is why we invest so much. this is why we focus on this assistant model because there we have signature advantages in terms of the engineers. charlie rose: this is what technology has done. uber is a disruptive technology. amazon was a disruptive technology. the power of technology to disrupt the way things act is best. eric: if you look at uber it's both disruptive. schmidt: it is a two-sided market. you have to have a pricing model which they don't set as well as the pricing model to get enough customers.

this is the big picture. charlie rose: some people worry there may be somehow back to the 2000, 2001, you lived through that in terms of some kind of collapse. technology companies, a bubble bursting. schmidt: we lived through the bubble. we were so much more handsome and beautiful. it makes you feel like you are god. i remember being at this dinner in davos and i said, these are the leaders of the free world? we got ahead of ourselves. thank goodness. that it crashed and we rebuilt it properly. the market and the investors are much savvier now. for the companies that don't have strong profits they have

strong revenue solutions. charlie rose: i did a conversation where john malone was being honored. he just bought time warner. he obviously is intense in terms of his vision and his access to the internet. broadband is what these companies will do for him. he raised a question with me, people like google and apple have so much money that he worries about the possibilities that they have. in addition, they have so much money can they scoop up all of the best talent? schmidt: we are each trying to hire the best people. each of us globally, as we understand the economic return. of these people.

this narrative is not unique to those five companies. for each of the companies represented here in the room, we if you are five or 10 of the kind of engineers we're talking about, we could materially improve the effectiveness of your business. software, big data stuff. a great many examples now. you take what your business is like and you put in it and data approach and you come up with customer insights that really do help your bottom line. that's where the race is. economic value of these people s great. charlie rose: they know it will bring productivity. it will it also bring about problems of people people being displaced from the job market? schmidt: we've had this concern for a long time. you go back to the 1980's automation concern. a great deal of concern there would be a loss of jobs. but in fact the american economy

has generated through all the travails of very large number of jobs during this supposed time when the jobs would go away. the jobs are different than they used to be. everyone has a right to fear for their own future and fear that their jobs will be disrupted. the fact of the matter is -- the u.s. today is running at near full employment. that's a testament to the recovery since 2008-2009. everybody here was in new york at that time. try to remember how you felt. it was only seven years ago. think about how strong the city turned out to be. i'm not as worried about this. i want to be clear, think there is a problem with the loss of high-paying middle class manufacturing jobs. the hollowing out of the middle. we need to find ways to address the job dislocation.

there are many economic solutions for that. but the ultimate answer to this stuff is more education, more education, more education. more competitiveness, and more entrepreneurs. you named the five companies. every one of them was started by incredibly intelligent entrepreneurs. maybe we should thank them occasionally. think of the number of jobs these guys created. think of all the taxes they paid in california. charlie rose: should there be a change in this tax structure so they can bring home all that money they make overseas? eric: we have argued for two decades that the offshore cash should be brought into america. charlie rose: create jobs at home. eric: of course, in google's case we generate a lot of cash from our operations. it seems crazy to not let it come in to be used as

capital. we are under investing in our infrastructure. the country's population is growing. interconnectivity is increasing. we need to spend the money on roads and bridges and airports, you name it. we are not doing it. and interest rates are low. charlie rose: therefore investment in infrastructure will create demand. eric:there is a set of things that businesses can do. they're not allowed to build roads and bridges. there is a proper function for government. government needs to get organized by doing this. that that drives economic creativity, which drives wealth, happiness, and more voters, seems very straightforward. charlie rose: where is the most competition going to come from to the american technological

engine? china, south korea, somewhere lse? schmidt: the history was that america would invent it, korea would perfect it, and china would make it in huge volumes. that's the pattern. many believe that china is going to jump one level higher and they are following our playbook. they are incredibly intelligent. there are critics who believe that their educational model and lack of political speech and a whole bunch of other things will not allow them to get to our level. that's the great debate. there are other arguments that say the economy is slowing down in the numbers are overstating it. china is going to be a player. the most interesting country is israel. on a person for person basis, their productivity and

innovation is the highest in the world. they have forced military service and are very aggressive in their culture. they expect innovation and they tolerate risk. that's a repeatable model. charlie rose: one of the last times i saw you was technicon. cornell is trying to create a silly con valley in new york. schmidt: on roosevelt island they are building this huge campus. an attempt to create a competitor to silicon valley. silicon valley needs a ompetitor. i love this project. if you go through where the innovation will occur. beijing comes to mind. tel aviv comes to mind. london is having a huge renaissance. kings cross has a train line that goes to cambridge. that train line is about an hour nd a half.

charlie rose: is that more important than oxford? schmidt: the people in cambridge have a lot of free land around the university. they allowed the construction of business parks. in europe they don't like to uild anything. they owned a lot of land that was unoccupied. the university was able to title it. they had on the order of about a thousand starups. most didn't work. at some point they have to move to a city and they moved to london. that is a pretty good model. charlie rose: what about the model that stanford had with silicon valley? the two founders of google, they both were in graduate school. and the relationship between the university allowing them to do whatever they wanted to do, does it create opportunities? schmidt: you can argue that

cornell is doing the same thing here. stanford is the best example of this. this is a model you can copy. here's no secret here. stanford is organized around graduate students. they have a lot of funding. they encourage them to do interesting things. they get funded by venture capitalists. to them seems like an enormous amount of money, for me, too, at the time. they move into some dumpy little house in palo alto. they cost too much. and off they go. the cycle has happened six or seven times. charlie rose: if you were starting over would you go into biology rather than computer science and engineering? schmidt: both are having a renaissance.

i spent a fair amount of time with the computer scientists that are working in biology. right at that intersection. all of the interesting computer science problems of scale are true in biology. the number of proteins. i figured that genetics was a solve problem. there is an area called epigenetic spirit your genes change as a result of environmental factors. this is a gold mine for the kind of problems that people like myself are interested in. that work today will become the oundation of nobel prizes. charlie rose: i think the most exciting thing is the marriage between biology, computer science, and technology. they both help each other.

with the power of computing and the velocity that it adds we see in terms of mapping the human enome. how much it cost then, how much it costs now. how much it adds to medicine. they are matching what they know about causes of cancer with a global understanding of all the trials that are going on everywhere. they can compute this so that a doctor that is treating a patient has an incredible amount of information in front of him that might not otherwise exist. schmidt: you will have health care records that are more than just medical bills. you'll be able to digitally describe and say what is going on. calculate the probable utcomes. we have a project it deep mind using the national health service from the united kingdom. they have a large number of blood samples.

trying to predict the prevalence of acute kidney injury. it's a common source of death in hospitals in the u.k. we have early results that we have materially stabilized. we just study the outcomes and then we give the doctor heads up. saying this patient and his combination is far more likely to need intervention in the next hour. charlie rose: i will be going down to washington to interview fbi director james comey. he's been at the forefront, the loggerhead between the f.b.i. on the one hand and national security issues. at the same time encryption. where do you come down in terms of somehow in the national interest on both sides finding a olution? schmidt: the industry is united

in saying that the government forcing us to weaken encryption is a bad idea. if we're forced by law to weaken encryption, there are people proposing that, it won't be just the government that has access to your information on your phone, it will has be the bad guys. the computer can't tell the difference between the good guys nd the bad guys. in countries like china they are not so favorable to human rights. we've taken a position that there need to be other solutions ather than forcing a weakening or a backdoor and this is a hard issue because encryption is getting stronger. in fairness to our industry is important to understand what happened. when edward snowden revealed all the activities, we read about the things the government was doing that we didn't know about. surveillance of united states citizens. we have fully encrypted the data

in google. at rest and transit. i can tell you if you have something that you want to be private, the best place to keep it is in gmail. seriously. it is fully encrypted. we know this because everybody's complaining. charlie rose: what would happen if the f.b.i. director came and said we know this person is suspected of something serious and we think there is an exchange of information through gmail. please give us access. schmidt: america has the fisa court. that is a legal proceeding. that's called the front door. all this terrorism is a horrific thing. the democracies have legal proceedings to deal with it. the fbi director wouldn't come to us. he would go to the three-judge panel and they would give the information just like that.

charlie rose: most of the time they have. eric: in fact something like -- it's public number. less than 50,000 times, maybe 40,000 times per year we're asked this and we have billions of users. it's a relatively rare event. that's for all national security matters. charlie rose: two quick questions. 10 years from now the world will be dramatically different because of what we're doing? schmidt: think about the information you have now you didn't have a decade ago. the companies that we talked about today that didn't exist. find a 10-year-old and watch this 10-year-old manipulate his or her ipad or iphone. you will see the future. it is a good future. all the evidence is that people are getting smarter not dumber.

educational achievement is etting stronger. a lot of this is due to the interconnectedness and innovation of all of us. charlie rose: why is your 13-year-old working on that? because my 10-year-old is at play. thank you very much. [applause] [captions copyright national cable satellite corp. 2016] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]

"washington journal" is live now. host: good morning, everyone on this thursday, august 11. we begin this morning with gun policy and how important is a candidate's stance on the issue to your vote? it ranks on the top five issues for voters. 71% of donald trump supporters and say it is important to them. 74% of hillary clinton supporters say it is the same. we want to hear from you this morning. if you are a gun owner 748-8000. if you do not own a gun 748-8 001. how