coming up, it's been quite the week for google. it reinvented the computer and fell victim to a facebook smear campaign. all the inside details, from author, steven levy, who spent two years behind the scenes at the search giant. and, a preview of this year's maker fair, with tech pioneer and make magazine founder, dale doherty. our reporters from "u.s.a. today," john schwartz, and joseph mend, of london's

"financial times," this week on "press here." good morning, everyone, i'm scott mcgrew, in an age of is that correcty tech blogs and rumors of the moment, my first guest is a reminder that solid journalism is a lot of work. author steven levy spent two years inside google, conducting hundreds of interviews for his latest book "in the plex: how google thinks, works and shapes our lives." levy has also written about apple twice, once about the mac, once about the ipod. seven books overall. his first book is perhaps his most famous. while steven levy did not invent the word "hacker" he, more than any other person, is responsible for the word's meaning. steven levy is senior writer at "wired" magazine, joined by john schwartz of "u.s.a. today," and joseph mend of the "financial times." who i should point out, both of

you also wrote books about hacking in your case it was "zero day threat." and john, you were this last week involved in something involving google. we're going to get to that in a little bit. but in the meantime, let me start with you, steven levy and talk about google. as a company. wall street always wants to know this. they always ask this -- i'm going to ask it again. but i want it on a third-grader level. if google finds what i'm looking for through math and we had a guest recently, why do they need all of those people? and why are they hiring so many more? >> well, they have to do a lot of math, they have to do a lot of computer science to be able to handle that and to be able to not only keep ahead of the competition in search, but they need a whole team of scientists and engineers for their ads. because their ad system is based on very complex formulas of predicting how many people are going to click on those ads. that helps them figure out how much to charge and how to get people to serve better ootsds. and they have a lot of other things, they very broadly

interpret their mission to get all the world's information and make it accessible. it includes everything from giving you mail services, and having operating systems now. to cars that drive themselves. so they have big ambitions. that's what the company is all about. and that's why they need a lot of people. >> i want to get to the cars and windmills and everything else in just a bit. but ads, i read in the book, and i was surprised by, that's really what the company does. i mean, the search is how you get there and the ads obviously is where all the money comes from. it's really an advertising company. >> that's the business model. and it worked out much better than anyone expected, because they came across, what really i think is beyond question, the best and most important product, commercial product of the internet age. which is an ad system which satisfies not only the seller of the ad, google and the advertisers, but satisfies the customers. almost every penny that google makes comes from people actively clicking on ads.

and that shows that they like us, they're interested in those ads. which sounds idealistic and impossible when google's founders said we don't like normal advertising, we want advertising that's actually useful information. in this product, it actually worked out that way. >> this is some point in which they move off to other things. what is the thing below ads that's going to be the most promising? it's not self-driving cars. >> right. no, no, it's not. but i think it's a class of things. basically they're moving the world to the cloud. they see that in the future. in the future, all our computing and all our information is going to be done in a cloud sense. and that's going to benefit them. people going to click more ads, search more and use other products. and they're pushing us that way by coming up with products that hasten that day. >> more than 90% of the advertising revenue comes through search, still? is that right? >> well, no, there's a big chunk of it that comes from the ad sense thing. which is where they put ads on

other people's pages there. so it's not necessarily -- >> it's all advertising? >> yeah, it's advertising. but they have the big display advertising now. because they bought double-click and now they just do more traditional ads. and they're trying to make those more search-like. >> i'm thinking about moving forward, competing with facebook for same things like targeted ads. something beyond -- >> they're into that. with the double-click purchase. they're into more traditional ads that know who you are. and they're able to target you. and i think as they get deeper into the social world, they're going to hit that same sort of microtargeting that facebook does. >> late last week they started announcing that they would have this chrome book, which is hardware. they tried hardware one time before and that was cell phones, decided, that's not what we do. why go into hardware again, do you think? >> they're not making the hardware. they're making the operating system -- >> you're right. it's samsung and it's acer

that's doing -- why get involved in yet another thing? maybe that's the better question. >> well that's it. google wants to push the world to where its vision is. if they can create something and give it away and seed the world with these trojan horses for google products, that's very, very good for them. i tried to pin them down, exactly where, how well it's doing, how much does the android system, which is the biggest selling mobile phone platform now, how much that is boosting their searches and revenues, they say, it helps us, people do more searchsearches, but they h broken it down. they're more apak thopaque than. >> go ahead, jon. >> on the chrome book, one of the strange things about it, it only works when you're online. it's only effective when you're online. i see how it fits their vision. i don't see how it fits my vision or anybody else that likes to use a computer whenever

the heck they want to use a computer. even when the bandwidth is nonexiste nonexistent. >> the receiver isn't there to catch the ball yet for this. but they're announcing things, they have deals with places like sitrix and other places to do the computing away from your computer. so you can use the same applications you would use in a business sense. and they're finally they say, getting ready to revive project they gave up a while ago to make these things run offline there. but you're right. i think one big problem is, that this country is lagging behind in universal broadband. >> they're anticipating some sort of day in which -- >> they're anticipating and hoping to hasten it, really. >> to me, the decision only oriented towards systems that are online is not only weird. but speaks to, speaks to google's you know, google's far-flung, you know, they're trying lots of different things from the windmills to the cars to the whatever. you know, sometimes only having a few people in charge is pretty

handy. if you want to pull out of the world's biggest internet market, for example. but can it also lead to a diaspora of ideas? >> there's more of a coherent leadership in some things. they allow certain amount of chaos. but there is a small group of people at google i've learned, that really make these big, big decisions. now larry page, the former and no current ceo after eric schmidt in essence around the company for ten years has more atonmy than eric ever had. he's running the company like to the point of a single vision than anyone has before. and so he's going to pursue things like cloud computing and moon shots while trying to strengthen the core things and getting into social. >> maybe it's a bit of a bad comparison, what's happening with cisco, they became overly ambitious and maybe tried to overstep what they could did and suffered the consequences.

i wonder if google, as smart as they are, runs the same rick. i know the last quarter, announced they were hiring to the point it hurt their profit margin. >> in order to avoid the innovator's dilemma, that's a very, very big trap, when you have the company that dominates in one paradigm gets wiped out in the next, they have to look at new areas. they don't want to be like microsoft as we all perceive it now, living off its cash cows, they want to be ahead of the next game. and the thing to look for is something, a product that maybe we're not even thinking of now. but runs on the same strengths that google has, which is artificial intelligence, a massive infrastructure and handling lots of data and doing something that was impossible before the internet provided this great platform. >> i've always thought that about apple. it has moved away from selling music at exactly the moment in which pandora is in our car and we don't buy music any more.

and we never saw that coming. and somehow they did. that they're one step ahead in and their competitors tried to get in. let's build a pad, too. has wall street got the patience for that. if larry's a genius, then put your money into google and step back and say, the guy's a genius. but a lot of people don't behave that way. they want results. what are you doing this quarter and why are you making stuff on the moon? >> well google said from the get-go, if you think that way, invest somewhere else. and they say, this is not a test of us. this is a test of wall street. can wall street handle a company that actually thinks long-term. in a way that's not only good for shareholders, but good for the world. so google doesn't always meet its high moral standards. but it has them. and it puts down a challenge to wall street saying, hey, this short-term thing maybe isn't good for the world at large. maybe we are. and there's a lot of hubris to

that, but there's also something to admire. >> we'll take a quick break and be right back.

we're back with steven levy the author of "in the plex." joseph mend of the "financial times." >> one of the most interesting bits in your book is the stuff about china. and google was kind of the google leadership was kind of split in the beginning about going to chinand and then they were maybe blindsided about how different it was. and rather famously after they got hacked. they said, you know what, forget this, this the self-censorship that's imposed and everything else, we're going to pull back our search so we're not helping with the censorship process. there's been a lot of talk in the news about facebook's plans to go into china. and it's unclear exactly how that's going to come down. maybe a partnership with the

search engine baidu. what lesson should facebook learn from google's experience? >> facebook, in a way, their problem is even bigger than google's. if they go into china. one thing that they should get from google, and i spoke at facebook about it "in the plex" and focused most of my talk about china as a cautionary tale. if you make an initial compromise. that's not the end of it mu fight feel, okay, here's our turf. we're going to compromise by saying, we won't let people talk about this or we might, we might cordon off our chinese users to other users, which might be a terrible compromise for facebook, which is one world. but it doesn't stop there, the chinese keep making other demands, they also maybe so some degree tilt the playing field towards chinese companies there. and the difficulties become more and more and more. and some of them are unexpected. google wound up alienating a lot of their engineers because they didn't allow them access to all

the production code. that google employees all over the world had. in order to use it. because they were worried that some of the intellectual property might walk out the door. so there were all sorts of other things that were added on top of that. the lesson really that the people at google, a lot of people come to the conclusion even before they were hacked, was, that this isn't working for us. we're having difficulty upholding who we are, we don't feel good about this. and we should rethink it. and i think it's a very dangerous game for facebook to start going down that path. >> you brought up facebook. earlier, this past week, facebook and google and a pr mess that ended up in, putting you kind of in the center of it. >> i was stuck in the eye of the hurricane, yes. >> explain to the viewer in basic terms what happened? >> the two companies in a sense, as much as they don't want us to believe it, they do compete with one another and there's a fair amount of acrimony between the two. so unbeknownst to us, a pr firm

approaches our paper, "u.s.a. today," about a feature in google that they think is an affront to the privacy of consumers. >> about google. >> critical of google. >> we don't hoe who they're representing, turns out facebook is paying them to do this. maybe it's an overblown example of a privacy issue, which steve probably could discuss. it blew up in facebook's face. so facebook wanted to do this to gain an advantage. they wanted to do this to point out something that google was up to. and in the end they ended ep embarrassing themselves, and the pr firm, bristol stiller. that's what happened, now the whole storm goes on. >> a columnist on the internet finds out it's facebook. >> he used to work at "forbes" and "newsweek," finds out it's facebook.

he confronts them they admit to it and now are now back-tracking. >> is facebook google's biggest competition? >> if you duly talk to people at google, they feel facebook is their biggest competition. facebook has information that google desperately wants. people share with facebook who they're in contact with, what they're interested in, what they're doing. and this is information that google could really use to deliver better searches and better products in general and they're in the midst of a giant initiative now called emerald sea, where you know, google wants to really transform itself and become more people-oriented there. and in a way it's going to be competitive with facebook. and facebook knows this. people leave google and go to facebook, i don't think they're shutting up about what they see. >> google can't get its spiders in there to see what's going on at facebook. >> facebook does not share -- when you share information with face book. even if you say, hey, i'd like you to share this information with google, they have a product i'd like to use for this information, they won't do it. they consider it their

information, they're not going to share it with google. google is usually better about this, but they're in a pique. >> that's part of the crux. speaking for all of us, i think covering tech there's a fair amount of deception and lies and all -- this is not something that's the first time this has happened. >> we've all been pitched. >> what's unusual is it's usually not the younger company which is engaging in tactics like this. >> growing up fast. >> i'm so proud. >> the irony is that facebook said when they started their lobbying effort, they wanted to learn from the mistakes of microsoft and google. and yet, they fell into that trap. i initially thought it was microsoft spreading the rumors. >> i think you're justified in that suspicion, my previous in your opinion newspaper, the "los angeles times," in which outraged citizens said why are you picking on microsoft. some of the citizens who were named were actually dead.

>> steven levy's book is called "in the plex" in book stores now. thank you for being here. up next, the slightly insane

and always entertaining fair, dale he "make" magazine, when "press: here" sa welcome back to "press: here." next weekend, some eleofefgcnf inx ther bewxe2er on the san peninsula, for maker fair. where a number of them will set fire to something. really, it's inevitable -- there will be fire. and tens of thousands of volts of electricity, and if tradition holds, mentos will meet coca-cola. explaining maker fair is difficult. you just have to see it to

understand it. it's a gathering of inventors, like this guy, who built a car that duopoly indicates the experience of playing a video game, in which you drive a car. to some people, that makes no sense whatsoever. but, to a certain percentage, probably a geeky percentage, that's the most clever thing they've ever heard of. dale doordy is the creator of "make" magazine, and developed the world's first commercial website, he coined the phrase, web 2.0. he raises lambs on his farm north of san francisco. he's joined by joseph menn of the "financial times." and if you're wondering where in the world did jon go, the facebook google story has turned out to be very big and he's got to go write more about that. in that set-up piece we saw a man with sparks, it's a tesla coil, is that the right thing

for that? >> it's a performance. >> it's a performance. >> and you have offered to allow me to stand in the middle of the tesla coil and have the big bolts come. next weekend. i'm officially saying no. >>'w are you children? >> my 16-year-old, i told my 16-year-old and he was like, understand, but no, i'm not going to. i'm on the record about that. explain the, this is more than just build stuff out of spare parts. there have been lots of magazines and things that do that. this is a movement. and kind of explain how it's a movement. >> well it's sometimes a little bit hard to explain this. but another way of thinking about it, and we talk about technology quite a bit. is that people play with technology. they play with it the way they play with toys. and you know, the car we just saw, the arcade car, is just a

kind of cool toy. you know it's taking one thing, like an arcade and say, i really want to drive it and then it's upping the ante and say i'm going to create a computer vision system that translates what's happening on the road to an eight-bit video screen and shows up there. so i think underpinning creative culture and technical culture is this notion of playing with things. and just doing things because they're fun, they get a reaction from other people. we meet other people. it's the world of hobbies and the world ever doing things, you know, among your friends that people start talking about. >> it's a world in which the kid who is given the stuffed animal that makes a noise, some kid is going to take it apart. he's going to cut it up the spine and take it apart and mom's going to say, what have you done? don't do that. and you're saying, do that all the time. >> absolutely. i think it's not -- the important thing is we talk about something like hands on and using our hands. and you know, that's a really

practical thing. we think with our hands, we take something apart. we want to understand what it is. what's the essence of steven levy had in his book, hackers. early hackers wanted to understand how computers worked and how to build them themselves, because they couldn't get one. it's a strong impulse. and it's an attitude towards i want to do stuff. i want to figure out how things get done. it's a really active sense of culture. of what you can do. and i think that's what's so important here. it isn't just that you know, like playing with your hands has some meaning here. it's that when you start figuring things out for yourself you can do stuff for yourself. >> allow yourself to play. ask an interesting question and allow yourself to play. you've been teaching this to kids at the exploreatorium. >> we see kids come to maker fair and they're delighted. they're inspired. we want to be able to go back to the community and act on that and find a place to make things

and we've been experimenting with clubs, so that kids in their neighborhoods, take a shop, someone's garage and going to make something. as much as we get kids to the fair. we want them to exhibit at the fair in the future. sosw>ram is to build stuff and exhibit it at the fair. one the things you had at the segment was a fire-breathing animated dragon that came from young makers last year. >> one of the things that's so interesting is it's a counterpoint to the consumer cult did your. we he culture. >> it's homogenized and kids are everything is it part of the internet has pushed creativity down and allowed many more people to participate in that. >> i think it's about the democratization of technology, so there's more people using

more technology and more creative ways. so when we look at it through this filter, we see more rather than less. when we look at the consumer and say what succeeds in the market. it's more. and this is about trying things out. we talk about google with the cloud. you can imagine that means there will be lots of devices that we don't have yet that will exist some day and communicate with the cloud and store things. >> and yeah, never before in history have we had the access to so many interesting tools and the way to communicate about those tools. you could build something 50 years >> what' out of wood in your garage but now you have mcmaster car and electronic parts -- >> the sourcing of parts open as lot of doors. >> what's the one thing, i'm encouraging people to go. it's a huge geek love of mine, this fair. what's the one thing that convinces them to go? >> bring the family. think of it as the fair where we've taken out the agricultural stuff, which most of us don't do and we've replaced it with technology and it's still just

as fun. come because it's fun. cometuff, you're amonghuzm , and everybody is happy. it's a great time. >> it's almost a little hippyish, and i mean that in the nicest way. >> counter-point to joy's question, you're seeing what ordinary people are able to do. with some imagination and tools. >> there was, i'm sure i'm supposed to disapprove of this. there was this terrific prank a few years ago. they were sick of the barbies saying math is so hard. they put the gi joe voice in the barby. or it was the other way around. i'm sure that mattel wasn't too crazy about this. you know, the dmca, the digital millennium copyright act has been expanded so you can't hack a garage door and you can't do this. have you ever run into the problems with the authorities disapproving of the -- ñ wellauthorities, butmn

disapproving of the -- ñ wellauthorities, butmn a hacker because he hacks things. and microsoft has sort of raised the, you know, issues around connect, but there's an open connect platform. that all kinds of cool applications you'll see at the make it fair, based on connect. that microsoft never imagined p. we have to do a commercial. we'll be back in a minute. l!7om

steve«ñ&, my thanks to my guests, steven levy and dale dougherty, two of the greats. i highly encourage you to buy steven's book, "in the plex" and attend maker fair next weekend. i'll see you back next week. i'm scott mcgrew, thank you for making us part of your sunday morning.

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