Google's Eric Schmidt Talks to Charlie Rose

How does Google see the future?
There's such an overwhelming amount of information now, we can search where you are, see what you're looking at if you take a picture with your camera. One way to think about this is, we're trying to make people better people, literally give them better ideas—augmenting their experience. Think of it as augmented humanity.

What's the challenge from Facebook and social networking?
At the moment, the two companies coexist quite well. But social networking is important, and Facebook is a consequential company. The more we know about what your friends do, with your permission—and I need to say that about 500 times—we can use that to improve the experience of getting information you care about. We're actually building social information into all our products.

But people are saying, for example, in e-commerce, that you're more likely to be served by the opinions of 10 friends than by a Google search.
If that's the future, we'll see. We can certainly make our advertising much more effective to the degree we have more information about who your friends are. The fact is, there's not going to be a single solution here.

And the phenomenon of Zynga, what does that say to you?
People are willing to spend an awful lot of money on fake animals.

You no longer serve on the Apple board. It is said Steve Jobs got very upset with you, his friend. I didn't go into the search business, he said. Why are you going into the phone business?

Apple (AAPL) is a company we both partner and compete with. We do a search deal with them, recently extended, and we're doing all sorts of things in maps and things like that. So the sum of all this is that two large corporations, both of which are important, both of which I care a lot about, will [remain] pretty close. But Android was around earlier than iPhone.

The operating system was around.
That's correct.

Given the app gap, how does Android compete with the iPhone?
The iPhone established a whole new category, but...the Apple model is closed. Same hardware, same applications, same store—a so-called vertical stack. All the other vendors want an alternative, and Apple is not going to give it to them. Along comes this Android operating system, which is a complete turnkey solution with similar capabilities. Most important, we make the software available for free. So all of a sudden, Android becomes very popular with companies like Motorola (MOT) and LG. We now have more than 200,000 of these phones being turned on every day—in 59 countries. We think Android will end up being one of the small number of very successful mobile devices.

What's Android's market share?
Well, we don't really know. What we do know is it's growing phenomenally fast.

Where is the world of apps going?
The Google (GOOG) model is called open-Web applications. There's another model Apple is pushing, which are these iPad applications. The iPad apps are beautiful but highly restrictive. They're written in a specific programming language; they're not Web applications. Over the next few years it should be possible using so-called open technologies to build apps as powerful as those on the iPad but do them on the Web, which means they'll run everywhere.

How far off is that?
The technology is there, and people are developing it. Ultimately, in the Internet, openness has always won. I cannot imagine that the current competitive environment would reverse that.

Where will mobile be in five years?
Today, a powerful touchscreen phone costs about $150. With subsidies it can get down to a small number of dollars. So in five years, that phone can be essentially given away in developing countries. That means we can sell billions of them. The higher-end phones will be approaching supercomputers.

What did you learn from Google's experience in China?
The thing you learn about China is...Chinese citizens are very clever, very creative, and the Chinese government is very, very powerful.

So you didn't change government censorship policies by being there?
The evidence is clear that our entry did not alter censorship policies whatsoever. Negotiating, Charlie, doesn't work with the Chinese.

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