Google Executives Discuss YouTube, the Phone Business and Taxes

SUN VALLEY, Idaho â€" It’s a gathering where many executives make it a point to stay largely mum. But Google’s representatives at the Allen & Company media and technology conference here used their time to promote their business.

At a news conference that began with the teasing of a forthcoming Android phone made by Google’s Motorola unit, representatives of the technology giant depicted a company that has moved far beyond search ads.

Here are some of the highlights of the Google executives’ comments:

• Much of the session centered on YouTube, which the company is continuing to move toward a quasi-TV model, built on channels instead of search. Salar Kamangar, the Google veteran who now leads the video service, spoke about his efforts to build up content, with payouts to partners rising 60 percent over the past year.

  “You can’t have the MTV of the future,” he said, “if these partners aren’t making money.”

  And that promise of profitability is becoming more important as Google seeks to realize its vision of an ever-more expansive set of offerings. Just as the shift from broadcast television to cable added more channels, the Internet offers the prospect of even more viewing opportunities: imagine, Mr. Kamangar said, watching a football game and being able to pick from multiple helmet-camera views.

  Eric Schmidt, Google’s executive chairman, added that he and his colleagues had met with “every single possible person, multiple times” at the conference.

  The company, they said, wasn’t standing pat in the changing landscape of consumer consumption. Roughly 40 percent of YouTube’s traffic now comes from mobile, Mr. Kamangar said, and his team is working on ways to make advertising work in that medium.

• But what would probably remain for some time, Mr. Schmidt said, was the traditional offering of video services as bundles. Though many consumers have called for so-called à la carte offerings â€" being able to pay less to subscribe to, say, Food Network while skipping ESPN â€" he argued that many issues with taking apart those bundles have yet to be solved.
• Tied to online video is the Google Fiber ultrafast Internet services project. Now available in three cities, the endeavor has outperformed expectations, Mr. Schmidt said, adding that companies are being established in homes to take advantage of exceptionally speedy service.
• While shying away from the word “dominate,” Mr. Schmidt was pleased to note the leading position of Google’s Android mobile operating system. Picking up the phone of his colleague Nikesh Arora, a Galaxy S4, he noted that the device had become a true challenger to Apple’s iPhone â€" even outselling it in some markets.

  One matter that Mr. Schmidt and Mr. Arora, who is Google’s chief business officer, said they aren’t worried about is the enormous dominance of the Galaxy’s manufacturer, Samsung. Though analyst reports have noted that the Korean conglomerate dominates sales of Android devices, the Google executives offered nothing but praise for its strong operating prowess and salesmanship.

  “If you want to pick a great partner, Samsung is a great partner,” Mr. Schmidt said. “Look at what Samsung has accomplished.”

• One area that Google remains concerned about is the telecommunications industry, with phone companies often hamstrung by government regulations. In the United States and Western Europe, service providers have struggled with low or no growth, hampering the ability to innovate in mobile, Mr. Schmidt said.

  “My friends, whom we are critically dependent on, are having problems,” he said.

• Mr. Schmidt reiterated that Google in no way offers the federal government a direct path into its servers, following up on strongly worded denials by the company’s general counsel. But he said that he remains concerned about the transparency of the National Security Agency’s surveillance programs, adding that the company is seeking legal ways to disclose more information about its compliance with government requests.

  “We’re very happy to discuss this â€" if the law allowed us to do that,” he said.

• In the wake of a British parliamentary committee’s scathing criticism of Google’s tax policies â€" the panel contended that the company doesn’t pay its fair share â€" Mr. Schmidt said that the company complies with the law. He said that Google’s current global tax rate is about 19.5 percent, with the rates in individual countries higher or lower depending on the regime.

  “It’s an outcome of the way the global tax system works,” he said. “If the tax law changes, we will pay the taxes.”

  In Britain specifically, Mr. Schmidt added that the company had an enormous opportunity with the construction of a new campus in London’s Shoreditch area. The project could add as many as 5,000 new employees and could raise Google’s tax bill.

  “We’re doing a lot to invest,” he said.

• Despite sometimes strained relations between two once-friendly companies, Google and Apple Inc. are on “better” terms now, the executives said. Mr. Arora has arranged many meetings, Mr. Schmidt said, and the two are in constant talks.

  “These are two proud, well-run, different companies,” Mr. Schmidt said.

  And the two will remain at the top of the technology heap for some time, he said, sticking to a prediction three years ago that four companies would dominate device platforms: Apple, Amazon.com, Google and Facebook.

  As luck would have it, Apple’s chief executive, Timothy Cook, happened to walk by the news event a number of times, with photographers immediately moving to snap pictures.

  “Tim, everyone wants to take your picture,” Mr. Arora called out. The Apple chief merely smiled and kept walking.

  “We got Tim to smile,” Mr. Schmidt told the reporters. “That’s always a good thing.”