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  • >>Eric Schmidt: It's a great pleasure to invite all of you back.

  • I hope everybody enjoyed their breakfast.

  • I certainly did.

  • And it's my privilege to invite you and welcome you to our shareholder meeting.

  • I'm, of course, Eric Schmidt, the executive chairman.

  • You know me.

  • Everybody should have registered.

  • If you haven't, please go ahead and get your badge so we know who you are.

  • There is an agenda that includes, on the back, a Rules of Procedure for the meeting, which

  • we will, of course, be following.

  • I want to make sure everybody knows we've got a couple of folks here -- I'm just going

  • to describe them.

  • Starting with John Doerr, one of our longest-serving board members, my personal friend for many

  • decades, and a fantastic venture capitalists.

  • John Hennessy, among other things, a brilliant computer scientist, and former president,

  • I guess just recently stepped down at Stanford, and remaining at Stanford as a computer scientist

  • and also on our board.

  • And, of course, Larry Page.

  • It's hard to describe the contribution that Larry Page has made to the world, but just

  • say that he is one of the most extraordinary human beings alive today.

  • And I'll stop there.

  • [ Laughter ] I can go on, but I don't -- he hates this,

  • so I want to be respectful and just say, let's start with that as our threshold.

  • You're going to hear from Ruth Porat, myself, and David Drummond.

  • And -- who are part of the management.

  • We also have Maura Stanley, she's a representative of Computershare.

  • Maura, I didn't see where she was -- Oh, there she is.

  • I'm sorry, would you raise your hand there.

  • She's right over here on the right.

  • And she's our Inspector of Elections.

  • So make sure the numbers add.

  • That was a problem in another award show.

  • And Andrew Cotton and Matthew Taggart, representatives of Ernst & Young.

  • Where are those two?

  • Over here.

  • Okay.

  • Sitting in the opposite corner.

  • And they're our independent accountants.

  • And they've done this forever and, of course, do a great job.

  • What we normally do here is we have sort of the formal procedural part of the meeting

  • and then what will happen is I'll do a short sort of update of where we are and go right

  • to your questions.

  • David Drummond, my colleague for 20 years, I think, close to 20 years, will now run the

  • proper part of the meeting.

  • I think you all know, he's the senior vice president, corporate development, chief legal

  • officer, and secretary of everything.

  • >>David Drummond: All right.

  • >>Eric Schmidt: David.

  • Thank you.

  • >>David Drummond: Thank you, Eric.

  • [ Applause ] Well, thanks, everyone.

  • And welcome to the Annual Meeting of Stockholders, as well as the annual opportunity for Eric

  • and myself to wear a tie on the Google premises.

  • So we're really glad to have you here.

  • So quick note about logistics.

  • As stated in the Rules of Procedure that you probably received -- you should have received,

  • stockholders should not address the meeting until you're recognized.

  • We -- as Eric said, we have a question and answer period, so you can ask your questions

  • after we've finished the formal business.

  • So when we get to the Q&A period, if you'd like to ask a question, we have -- we usually

  • have mics -- I don't see them.

  • Maybe they will be from in the Q&A period -- where you can step up to the mic and ask

  • your question.

  • Once you've been recognized, when you are recognized, please identify yourself and your

  • status as either a stockholder or a representative of a stockholder, and then you can ask your

  • question.

  • I've received the Affidavits of Mailing from Computershare and Broadridge, which state

  • that the notice of the meeting was dual given.

  • All stockholders of Class A and/or Class B common stock as of the close of business on

  • April 19th, 2017, are entitled to vote at this meeting.

  • I've also been advised by the Inspector of Elections that holders of our outstanding

  • Class A and Class B common stock representing at least a majority of the voting power of

  • our outstanding Class A and Class B common stock, which are entitled to vote, is represented

  • in person or by proxy at today's meeting.

  • And I apologize for the longest sentence in the history of mankind that I just read.

  • Therefore, a quorum is present today, and the meeting is duly constituted, and the business

  • of the meeting can proceed.

  • So the first item of business, as always, is election of directors.

  • We have 12 directors to be elected at the meeting today.

  • Those directors will hold office until the 2018 Annual Meeting of Stockholders.

  • The board of directors has nominated the following: Larry Page, Sergey Brin, Eric E. Schmidt,

  • L. John Doerr, Roger W. Ferguson, Jr., Diane B. Greene, John L. Hennessy, Ann Mather, Alan

  • R. Mulally, Paul S. Otellini, K. Ram Shriram, and Shirley M. Tilghman.

  • Now, our bylaws require that stockholders provide advance notice of their intent to

  • nominate persons as directors.

  • We didn't receive any such notice, so accordingly, I declare the nominations for directors closed.

  • Now, the next matter being submitted to our stockholders is the ratification of the appointment

  • by the board of Ernst & Young as our independent registered public accounting firm.

  • And our board has recommended that our stockholders ratify the appointment of Ernst & Young as

  • our public accounting firm for the 2017 fiscal year.

  • The next matter that we've submitted to stockholders is the approval of an amendment to our 2012

  • Stock Plan to increase the maximum number of shares to our Class C capital stock that

  • can be issued under the plan by 15 million shares of Class C capital stock.

  • Our board has also recommended that our stockholders approve this amendment to the 2012 Stock Plan.

  • All of that is described in detail in our proxy statement.

  • Now, the next matter being submitted, on an advisory basis, is the approval of the compensation

  • awarded to Alphabet's named executive officers.

  • Our executive compensation program and the compensation paid to our named executive officers

  • is described in full on pages 38 to 48 of our proxy statement.

  • Now, our compensation programs are overseen by the Leadership Development and Compensation

  • Committee of the board.

  • And they reflect our philosophy to pay all of our employees, including our named executive

  • officers, in ways that support our primary business objectives and mission.

  • Our board of directors has recommended that our stockholders approve the compensation

  • awarded to our named executive officers.

  • The next matter being submitted to the stockholders is an advisory vote, again, to determine the

  • frequency of the future stockholder vote regarding compensation awarded to the named executive

  • officers.

  • So how often we're going to have the advisory vote that we just -- I just discussed.

  • Now, our board of directors has recommended that our stockholders vote for a frequency

  • of every three years for the stockholder advisory vote on compensation awarded to named executive

  • officers.

  • Okay.

  • So now the next seven items are all stockholder proposals.

  • Our board of directors has unanimously recommended that our stockholders vote against all seven

  • stockholder proposals that will be presented.

  • You have the arguments for in our proxy statement, as well as the company's response to each

  • of the proposals.

  • So let's start with the first one.

  • It's being brought by John Chevedden, James McRitchie, Myra K. Young and the NorthStar

  • Asset Management funded pension plan as the colead filers, as well as Boston Common Asset

  • Management, as a co-filer.

  • Ms. Ivy Jack, who is representing NorthStar Asset Management, will be presenting the proposal.

  • There she is.

  • Ms. Jack, you'll have a total of three minutes to make a statement about the proposal.

  • And I'm advise you when your time is up.

  • >>Ivy Jack: Good morning, my name is Ivy Jack, from NorthStar Asset Management in Boston,

  • the beneficial owner of over 7.2 million dollars of Alphabet common stock.

  • Fellow shareholders, I am here to represent resolution number 6, a good governance proposal

  • about equal voting rights.

  • When shareholders of common stock do not have an equal right to weigh in on significant

  • governance matters, we subject ourselves to greater financial risk.

  • When Alphabet went public, shareholders already lacked opportunities to give substantive input

  • into matters of policy.

  • Alphabet's voting structure is heavily weighed to favor insiders, given that Class B shares

  • are granted ten times the voting rights of Class A shares.

  • Matters were made worse when Class B insiders voted in a -- voted in a brand-new class of

  • stock with zero voting rights.

  • The fact that this was approved is particularly remarkable, because our calculations show

  • that only 15% of Class A outside shares that voted approved of establishing Class C capital

  • stock.

  • How was this possible?

  • Well, this measure passed because Mr. Brin and Mr. Page, who currently own only 11% of

  • the outstanding shares of the company, together have 51% of the voting power.

  • While we can ignore this reality when profits are up, this voting structure constitutes

  • a considerable risk to governance and shareholder value.

  • Our company's own 10-K identifies this risk when it states that, "The concentration of

  • our stock ownership limits our stockholders' ability to influence corporate matters and

  • that the Class C structure could prolong the duration of Larry and Sergey's current relative

  • ownership of our voting power and their ability to elect all of our directors to determine

  • the outcome of most matters submitted to a vote of our stockholders."

  • In other words, it continues to be impossible for outsaid shareholders to have any meaningful

  • input on company decisions.

  • Furthermore, the 10-K notes that as a result of this concentrated control, company management

  • may take actions that our stockholders do not view as beneficial.

  • Since Class C shares have no voting rights and given the importance of voting at annual

  • meetings, Class A shares are the only way for outside shareholders to have a say in

  • company matters.

  • We are very concerned about the governance risks that come from relying upon merely two

  • or three people's vision and ability to reduce threats to the company long term without broad

  • input.

  • The founders brought this company into fruition and led it into profitability.

  • But the company's decision to offer common shares of the company on public exchanges

  • makes Alphabet a public company, brings with it a responsibility to shareholders to practice

  • good governance.

  • Shareholders, we urge you to vote for proxy item number 6.

  • >>David Drummond: Thank you very much, Ms. Jack.

  • [ Applause ] The -- thank you.

  • The second stockholder proposal is being brought by Walden Asset Management as the lead filer.

  • They are joined by the Benedictine Sisters of Baltimore, the Benedictine Sisters of Pan

  • de Vida, and other organizations as co-filers.

  • We have today Ms. Meredith Benton, who will be presenting the proposal.

  • Ms. Benton, you have three minutes.

  • >>Meredith Benton: Thank you.

  • My name is Meredith Benton, and I'm here representing Walden Asset Management, the primary sponsor

  • of proposal 7, seeking information on how Alphabet directly and indirectly works to

  • affect legislation and public policy.

  • Walden owns over 160,000 shares of Alphabet.

  • On behalf of Walden and approximately 20 co-filers, I'm pleased to move this resolution.

  • On their behalf, let me start by thanking Alphabet for its steadfast leadership on climate

  • change, both by reducing its greenhouse gas emissions, but also by speaking out to support

  • the Paris Accord and committing to continuing leadership on climate.

  • It is a part of Alphabet's lobbying for positive public policy solutions, and it matters a

  • great deal.

  • Thank you.

  • We understand that corporate lobbying can be a positive force and that transparency

  • is an important part of this.

  • This request for transparency on lobbying has been made to hundreds of companies over

  • the last six years.

  • Lobbying is big for Alphabet.

  • We know that in the last five years, Alphabet spent over $83 million in federal lobbying

  • and has been one of the top five companies lobbying.

  • While Alphabet discloses a summary of their direct federal lobbying on their Web site,

  • with links to a report they provide to the Senate, these Senate quarterly reports are

  • very difficult for investors to navigate.

  • Alphabet also does not disclose meaningful details on dues and grants provided to the

  • over 40 trade groups and advocacy organizations it is a part of, nor how it evaluates whether

  • these lobbying organizations are vetted to be consistent with Alphabet's priorities and

  • values.

  • In order to better understand Alphabet's role in trying to affect legislation and regulation

  • through trade association, additional disclosure is needed for investors.

  • Once again, we want to congratulate Alphabet for the company's public decision several

  • years ago to withdraw from ALEC, a known climate-denying group actively working to combat renewable

  • energy standards.

  • Alphabet acted on its stated values when it withdrew from ALEC, an action we enthusiastically

  • commend.

  • However, there are other trade associations whose actions conflict with Alphabet's values.

  • For example, Alphabet is an active member of the U.S. Chamber of Commerce, a group which

  • has spent over $1.2 billion on lobbying since 1998.

  • This group has been an active force opposing climate change solutions, including suing

  • the EPA to block the EPA's Clean Power Plan to address climate change.

  • Clearly, this creates an outright conflict with our stated environmental position.

  • Apple was so offended by the Chamber's policies and actions that they withdrew membership.

  • We urge Alphabet to seek out challenging the Chamber's actions against climate policies

  • and to lobby inside the Chamber with other companies to change the Chamber's policies.

  • Another item of concern to investors is the Financial Choice Act, which will soon be before

  • the House for a vote.

  • This seeks to eliminate the filing of shareholder resolutions, an important tool for investor

  • communication and trust-building within the financial markets.

  • We urge Alphabet to speak up for the rights of investors to file resolutions.

  • One final point.

  • For several years, investors have written letters to top management and filed resolutions

  • on lobbying disclosure and transparency issues, seeking an opportunity simply to meet and

  • talk.

  • But the letter and calls have gone unanswered.

  • The filers of this resolution are perplexed.

  • Alphabet doesn't have a bad investor relations record in general.

  • So why doesn't the company agree to meet or talk on the phone with investors who want

  • a hearing and to seek a middle ground?

  • Thank you.

  • >>David Drummond: Thank you, Ms. Benton.

  • [ Applause ] The third stockholder proposal is being brought

  • by Clean Yield Asset Management as the lead filer on behalf of John Fedor-Cunningham and

  • David Fedor-Cunningham.

  • And the Benedictine Sisters of Mount St. Scholastica.

  • As the co-filer.

  • Ms. Ivy Jack is back to present this proposal.

  • >>Ivy Jack: Good morning, Mr. Chairman, board of directors, and my fellow shareholders.

  • My name is Ivy Jack, and I have been asked to read the following statement by the filers

  • of this proposal, Clean Yield Asset Management.

  • Our proposal, number 8 on the proxy ballot, calls on Alphabet to fully disclose the extent

  • of its political spending.

  • Specifically, Alphabet has refused calls to disclose what it -- what it contributes to

  • so-called dark money nonprofits, such as trade associations and 501(c)(4)s.

  • These are entities that -- these are entities that can receive payments from corporations

  • but do not have to disclose the source of those contributions.

  • Since 2012, dark money groups spent more than $670 million to influence electoral outcomes.

  • We've been trying to have this conversation with Alphabet for three years and are surprised

  • and disappointed at management's continuing unwillingness to dialogue with us on this

  • matter.

  • At the 2014 shareholder meeting, responding to another shareholder raising questions about

  • political spending, Mr. Schmidt pledged to come back with, quote, some ideas.

  • It's been three years without any ideas.

  • In those three years, the amount of dark money spent in American elections rose by nearly

  • $200 million.

  • Also, in those three years, we have seen an erosion of faith in this country's democratic

  • institutions.

  • The two trends are not unrelated.

  • We'd like to know why it's okay for Alphabet to secretly contribute the company's money

  • to groups that spend it however they wish, even in ways that may conflict with the company's

  • stated values.

  • Nearly one-fifth of the S&P 500 either restrict their payments to 501(C)(4) groups and trade

  • associations or disclose them.

  • Alphabet showed real spine when it quit the American Legislative Exchange Council, an

  • organization that consistently fights legislation to curb climate change.

  • But it still has an expensive political footprint, supporting about 140 trade associations and

  • other nonprofits across the political spectrum.

  • The reputation risks are not hypothetical as Alphabet has come under heavy criticism

  • in the media for its aggressive lobbying of the European Commission.

  • Google users trade away a great deal of privacy for the privilege of using the world's most

  • sophisticated and powerful search engine.

  • This transparency should be a two-way street.

  • As a company with this extraordinary power over its users' personal information, Alphabet

  • has a special obligation to be fully transparent about its policy aims and relationships, which

  • affect so many aspects of our lives and relationships to this company.

  • Fellow shareholders, cast your vote in favor of proposal number 7 to encourage management

  • to stop hiding its political contributions and rise to the best practices of its peers.

  • [ Applause ] >>David Drummond: Thank you, Ms. Jack.

  • The fourth stockholder proposal is being brought by Arjuna, as co-filer on behalf of a client,

  • Eleanor Shorter, and Proxy Impact, as a co-filer on behalf of CB Wealth Generation.

  • Ms. Natasha Lamb, there you are, you'll be presenting the proposal.

  • You have three minutes.

  • >>Natasha Lamb: Thank you.

  • Good morning, Mr. Chairman, Mr. Page, members of the board, and fellow shareholders.

  • My name is Natasha Lamb, and I'm here to move proposal number 9, filed on behalf of Arjuna

  • Capital's client and cofiled by Baldwin Brothers and Proxy Impact.

  • Specifically, we are asking the board to publish a report on gender pay equity.

  • This is the second year that we have submitted this proposal.

  • The median income for women working full-time in the United States is reported to be 79%

  • of that of her male counterparts.

  • And forecasts indicate that women will not reach pay parity until 2059.

  • Of note, the gap for African-American and Latina women is wider, at 60% and 55% respect

  • ill.

  • Gender pay disparity is not only one of the biggest social justice issues of our time.

  • It poses a risk to companies' performance, brand, and investor returns.

  • This issue is particularly salient to the technology industry, which struggles to attract,

  • retain, and move women into positions of leadership.

  • A 2016 Glassdoor study finds an unexplained 5.9% gender pay gap in the information technology

  • industry after statistical controls such as job title and seniority, noting, quote, "Many

  • tech jobs top the list for the largest gender pay gaps."

  • And while Alphabet has not reported its companywide pay gap, PayScale reports the company as a

  • mean pay gap of 13%, over $13,000, and Glassdoor has reported a $25,000 gap at the senior engineering

  • level.

  • I will note, however, that investors should not be reliant on third-party analysis.

  • The onus is on our company to disclose.

  • Of further note, Alphabet is now the subject of an investigation by the Department of Labor,

  • alleging extreme gender pay disparity.

  • Research indicates gender-diverse teams are more productive, innovative, and drive better

  • results.

  • So, clearly, a failure to attract and retain qualified female employees is detrimental

  • to Alphabet's ability to innovate and compete.

  • Alphabet has disclosed that 31% of our company's workforce is female.

  • Yet only 24% of our management team is female.

  • Our company is best served by a proactive approach to address the structural biases,

  • including pay inequities, that prevent women from moving into positions of leadership.

  • So given the material business risks gender inequity presents, investors expensive transparent,

  • honest disclosures and quantitative goals.

  • Employees expect a new level of structural support that addresses root causes and empowers

  • fair negotiation, promotion, and ultimately, equal pay.

  • Implementing the proposal would represent a proactive step toward closing the gender

  • pay gap.

  • We believe the company would benefit from taking a leadership position on this issue,

  • along with technology peers, including Intel, Apple, Expedia, Adobe, Amazon, Microsoft,

  • Go Daddy, and eBay.

  • As research indicates, attracting and retaining diverse teams yields strong financial performance

  • benefits.

  • >>David Drummond: I'll have to ask you to wrap up.

  • >>Natasha Lamb: Thank you.

  • Proxy investor institutional shareholders agrees, stating a vote for this resolution

  • is warranted, as Alphabet lags its peers in addressing gender pay disparity.

  • By not addressing the issue at the same level as its peers, Alphabet is put at a competitive

  • disadvantage in the recruitment of candidates and the retention of employees.

  • Thank you.

  • >>David Drummond: Thanks very much.

  • [ Applause ] The fifth proposal is being brought by The

  • National Center for Public Policy Research as the lead filer.

  • Mr. Justin Danhof is here.

  • Hi, Justin, and he'll be presenting the proposal.

  • Three minutes.

  • >>Justin Danhof: Thanks.

  • Good to see you again, David.

  • The tie looks good.

  • I feel -- >>David Drummond: Thank you.

  • >>Justin Danhof: -- underdressed now.

  • But we're not here -- >>David Drummond: Hey, I'm trying.

  • >>Justin Danhof: -- for fashion.

  • As David said, I'm Justin Danhof, The National Center for Public Policy Research.

  • And I rise today to move proposal 10.

  • Our proposal requests that the board issue a report analyzing the company's charitable

  • activities.

  • The report should list the rationale and benefits to society at large produced through the company's

  • charitable contributions.

  • It should be noted that the report would not change any of the company's policies, goals,

  • or values, or place them in the hands of shareholders.

  • It would simply explain whether management believes that its donations have lived up

  • to the company's goals and values.

  • The company donates to numerous organizations.

  • Some of these organizations may end up using funds provided by the company in unintended

  • and unwanted ways.

  • Donations to controversial groups, particularly political ones, may also eventually result

  • in harm to Alphabet's reputation.

  • For example, the company has donated to the Center for American Progress, known as CAP.

  • CAP is an extreme political group that has been accused of anti-Semitism.

  • In 2010, under the direction of John Podesta, who would go on to become chairman of Hillary

  • Clinton's presidential campaign, CAP actually wrote the blueprint for the Obama administration's

  • expansion of executive power.

  • Even the New York Times towards the end of Mr. Obama's presidency said that he expanded

  • the executive branch power so much more than we had seen in modern times that it would

  • change the presidency for decades to company.

  • Well, we all know presidents change, and now, with President Trump in office, Alphabet has

  • actually lodged complaints about the very same use of executive power that was designed

  • and endorsed because of the company's decision to fund CAP.

  • That's hypocritical.

  • The company has also donated to the Clinton Foundation, which has been under FBI investigation.

  • Media reports strongly imply that parts of the Clinton Foundation may have operated as

  • a pay-for-play scheme whereby individuals and corporations may have sought preferential

  • treatment from government actors in exchange for donations to the foundation.

  • Such speculation is further fueled by the closing of some of the Clinton Foundation

  • operations following her unsuccessful bid for the White House.

  • While liberals in the room may cheer donations to CAP and the Clinton Foundation, just as

  • conservative may bemoan them, there is no question that donations to highly politicized

  • organizations are controversy.

  • The report requested by our proposal would increase transparency and accountability and

  • may also help the company avoid unnecessary controversies.

  • Please join me in supporting proposal 10.

  • Thank you.

  • >>David Drummond: Thank you, Justin.

  • [ Applause ] The sixth proposal is being brought by Holy

  • Land Principles, Inc., as the lead filer, and Azzad Asset Management as the co-filer.

  • Mr. Declan Keough is here to present.

  • Mr. Keogh.

  • >>Declan Keough: Good morning, Mr. Chairman and fellow Google shareholders.

  • My name is Declan Keough.

  • I am here to request that Google adopt the Holy Land Principle resolution.

  • These principles require that companies that do business in Israel and in Palestine have

  • fair employment policies and procedures.

  • Google must have a workforce in Israel that reflects the ethnic diversity in Israel.

  • In Israel, diversity means diversity of religious affiliation.

  • It does not mean skin color.

  • Having a diversive workforce means a workforce that includes Christians and Muslims, who

  • make up more than 20% of the Israeli population.

  • The government of Israel requires that everyone carry an identity cards that color-coded to

  • their religion.

  • It is very easy for anyone to see which religion a person has.

  • American people expect American companies that do business overseas to have employee

  • policies that reflect American values.

  • These -- this includes equal opportunity, equal pay, and no favored group.

  • Google's board has recommended that we stockholders vote against this resolution because they

  • say Google already has an equal opportunity policy in place in Israel.

  • If that is true, then we would like to see the numbers.

  • If Israel is very -- sorry -- in Israel, it is very easy for Google to count how many

  • of its employees are Jewish, how many are Christian, and how many are Muslim.

  • I grew up in Ireland during the Irish troubles, which were caused by the discrimination against

  • Catholics in northern Ireland.

  • The Holy Land Principles are based on the MacBride Principles, which require companies

  • that did business in Northern Ireland to be fair in their hiring policies.

  • I know firsthand what discrimination can do to a nation.

  • By definition, Israel is an apartheid state, where Christians and Muslims are subjected

  • to institutionalized discrimination.

  • Google must oppose Israel's apartheid laws and take whatever steps it can to provide

  • a safe and fair work environment for all of its employees.

  • Apartheid is glaringly obvious in Israel's illegal settlements in Palestine.

  • To employ Jewish Israelis that live in illegal settlements and not to employ Christian and

  • Muslim Palestinians that live in Palestine is a flagrantly discriminatory practice.

  • Google's credibility in the Arab world is at risk.

  • Without a verifiable policy that provides proof of their fair employment, Google will

  • be seen to have its own unofficial version of Donald Trump's Muslim ban.

  • In the words of Archbishop Desmond Tutu, apartheid is both intrinsically evil and morally reprehensible.

  • Please remember, Google's motto is, "Don't be evil."

  • Thank you.

  • [ Applause ] >>David Drummond: Thank you, Mr. Keogh.

  • So our final stockholder proposal is being brought also by Arjuna Capital, on behalf

  • of its clients Susanna L. Hoffs and Matthew Joseph Roach.

  • Ms. Lamb is back to present this proposal.

  • >>Natasha Lamb: Good morning.

  • Again, my name is Natasha Lamb, and I'm here to move proposal number 12 on behalf of Arjuna

  • Capital's clients, asking the board to publish a report on public policy issues associated

  • with managing fake news and associated hate speech, including the impact on the democratic

  • process, free speech, and a cohesive society.

  • To be clear, we are talking about content posted and disseminated with the intent to

  • mislead, not the mainstream media, which the president refers to as fake news.

  • Of note, research has shown that fake news has affected elections in the U.K., France,

  • and the U.S.

  • And PEW confirms broad misperception caused by fake news, noting 64% of U.S. adults say

  • fabricated news stories cause a great deal of confusion about the basic facts of current

  • issues and events.

  • That confusion cuts across political lines.

  • And there's a study that just came out this morning that shows that the same number, 64%

  • of Americans, now trust content on the Internet less than they did one year ago.

  • Fake news is not about spin or confirmation bias.

  • It's about fabrication.

  • And when fabrication is disseminated so easily at scale, the way we have seen through Google's

  • AdSense platform, it represents a threat to our democracy.

  • Google has faced sharp criticism for providing a financial mechanism supporting fabricated

  • content on the Internet as fake news promoters hack their way to visibility and revenue through

  • strategically gaming ad buys and algorithms.

  • Hate speech is a related concern.

  • A number of major advertisers have suspended advertising on Google platforms for fear of

  • being associated with objectionable content.

  • And one prominent Wall Street firm estimates Google lost $750 million in advertising revenue

  • for this very reason.

  • Alphabet is highly vulnerable for its apparent mismanagement of the issue.

  • And while our company has recently announced some steps to deal with these problems, they

  • are too little and too late.

  • Indeed, Alphabet's challenge is how to address fake news and hate speech without curbing

  • freedom of expression for billions of users.

  • And a lack of self-regulation could invite government regulation.

  • So investors seek assurance that fake news, fabricated content, and hate speech is being

  • handled responsibly over time.

  • We do not expect it will be solved through a simple algorithm tweak or better user education,

  • although those are important pieces of a larger puzzle.

  • Fake news is a complex issue that needs to be managed systematically, and investors expect

  • transparency and accountability so we may understand the full scope of the issue.

  • We expect annual reporting on public policy risk, impacts on free speech, and analysis

  • on how fake news is impacting a cornerstone of our democracy, an informed electorate.

  • Thank you.

  • >>David Drummond: Thank you very much, Ms. Lamb.

  • [ Applause ] So that concludes the proposals and the formal

  • business for the meeting.

  • So most stockholders have voted in advance of the meeting via proxy.

  • But we do want to give folks an opportunity who have not voted, or those who want to change

  • votes the opportunity to do that at the meeting.

  • So if -- you don't need to do anything if you don't want to change your vote.

  • But we have ballots available if you don't have them already.

  • And if you do, you can hand them to the folks roving the room here.

  • We've received sufficient proxies before the meeting to know that the proposals we discussed

  • today will pass or fail in accordance with the recommendations made by our board of directors

  • as laid out in the proxy statement.

  • But we do want to make sure everybody has the opportunity to vote or change a vote if

  • you so desire.

  • So we'll pause for another few moments and then proceed.

  • Okay.

  • Thanks very much.

  • There seems to be a couple more left.

  • Okay.

  • So I'll now declare that the polls for each matter that's being voted upon at the meeting

  • are now closed, and directing the Inspector of Elections to collect any other ballots

  • that are still out there.

  • If you do have one, please hold up your hand.

  • It looks like we got everybody.

  • There's one more.

  • Two more.

  • All right.

  • So let's get to the results.

  • I've been advised by the Inspector of Elections that the nominees for election to the board

  • of directors have been duly elected.

  • I've also been advised that a majority of the shares of our Class A and Class B common

  • entitled to vote and are present in the meeting in person or by proxy have voted in favor

  • of the ratification of and appointment of Ernst & Young to act as our independent registered

  • public accounting firm for 2017.

  • As well as the approval of an amendment to our 2012 Stock Plan, the approval of compensation

  • awarded to our named executive officers, and the proposal that every three years, we have

  • a stockholder advisory vote on compensation awarded to our named executive officers.

  • So, therefore, each of these proposals has been approved by our stockholders.

  • I've also been advised by the Inspector of Elections that a majority of the shares of

  • the Class A and Class B common stock and entitled to vote and are present here in person or

  • by proxy have voted against the stockholder proposal regarding equal voting, the stockholder

  • proposal regarding a lobbying report, the proposal regarding a political contributions

  • report, the proposal regarding a report on gender pay, the proposal regarding a charitable

  • contributions report, the proposal regarding the implementation of Holy Land Principles,

  • and, finally, the stockholder proposal regarding a report on fake news.

  • So therefore, each of those proposals has not been approved by our stockholders.

  • As soon as possible after the meeting, we will complete the final vote tabulations incorporating

  • everything we've received today, and we'll provide a final vote tally, those results

  • on our investor relations Web site.

  • We also will be filing those with the SEC.

  • So that ends the official business of the meeting.

  • And I declare the formal portion of the meeting adjourned.

  • Eric will now come up and make a few remarks, and then we'll go to Q&A.

  • Eric.

  • >>Eric Schmidt: Let's have our video.

  • Thank you, David, very much.

  • [ Video ] >>> Hey, Google.

  • >>> Hey, Google.

  • >>> Hey, Google.

  • >>> Okay, Google.

  • [ Music ] >>> Play some dance music.

  • >>Google: Sure.

  • [ Music ] >>> This is fresh air.

  • My guest will be -- >>> Kimmy Schmidt on Netflix.

  • >>> Okay, Google, count to 100.

  • >>Google: Sure.

  • One, two, three -- >>> Play vacuum harmonica on my TV.

  • >>> 71, 72, 73.

  • >>> Play the Wonder Woman trailer.

  • >>> Hey, Google, talk to Domino's.

  • >>> Talk to Lonely Planet.

  • >>> Talk to Quora.

  • >>> Show me my photos from last weekend.

  • [ Screaming ] >>> Your car is parked at 22b.

  • Today in the news.

  • >>> Turn the living room lights on.

  • >>Google: Okay.

  • Turning on the lights.

  • >>> I'm back, baby.

  • >>> Hey, Google, drop a beat.

  • >>> Flip a coin.

  • >>> Call Jill.

  • >>> Set a timer.

  • >>> Talk to Headspace.

  • >>> And then just for a moment, I'd like you to let go of any focus at all.

  • Just let your mind do whatever it wants to do.

  • >>Google: Done.

  • >>> Hey, Google, good night.

  • >>Google: Turning off all the things.

  • See you tomorrow.

  • [ Video concludes ] >>Eric Schmidt: I love that video, because

  • I think it shows you where your company is headed.

  • And where we're headed is to help people live their lives.

  • I don't know that that was the original idea that Larry and Sergey had when they founded

  • the company.

  • But it now informs and drives everything that we think about.

  • And that's what I want to talk about for a few minutes and review a little bit of the

  • things that have happened in what has been an exceptional year for the corporation.

  • We had this sort of notion that we would give people the answers that they needed whenever

  • they wanted.

  • But we then added this notion of trying to address the life challenges of literally billions

  • of people.

  • And you see this in everything we do.

  • And what's happened is that the company has become this sort of source of optimism in

  • an otherwise difficult world or challenging world, at least as I perceive it.

  • Because it's a natural consequence of wanting to help people and help people make their

  • lives better.

  • When I think about my own beliefs, for example, I believe very strongly that science and critical

  • thinking matter, right, that it's important that we state those principles right up-front,

  • and that it is possible today, because of the technologies I'm going to highlight, to

  • invent things that will substantially change the world for the better.

  • Right?

  • Not in small ways, but in extraordinary ways.

  • And I think that they are very much coming.

  • It's sort of defined as limitless imagination because of the technological opportunity.

  • And we're in an era of almost limitless communications and information, which is a huge change for

  • all of us in our lifetimes.

  • And I think as a result, we can solve some very, very profound problems.

  • And there's no industry in the world that is as brutally competitive and brutally dynamic

  • as the technological industry globally.

  • And we're in the middle of this.

  • And we're -- we win some, and we lose some; right?

  • But the important point is that that competition, sort of the raw capitalistic competition,

  • along with the innovation, is driving these platforms, these inventions, these things

  • which solve people's problems, and, of course, ultimately, deliver shareholder value.

  • To me, the most undertold story is the story of the genesis of Alphabet.

  • We've deliberately focused on the companies rather than Alphabet.

  • And I wanted to spend at least a minute telling you about Alphabet.

  • I felt so strongly about this that in the new version of How Google Works, we added

  • a whole chapter on how Alphabet works, right, available for $9.99 from your favorite online

  • bookstore using Google Play.

  • The -- In August, it's two years since we adopted Alphabet.

  • And to me, the genesis of Alphabet is a meeting that Larry and Sergey and I had about a decade

  • ago where we flew -- technically, I flew them -- shocking -- to Omaha, and we visited with

  • Warren Buffett.

  • And I remember sitting on, I think, the 14th floor and being struck by the extraordinary

  • success of his model with one floor.

  • Right?

  • That he had figured out a problem that had bedeviled all of us in our industry for years,

  • which was how to establish scalability.

  • Right?

  • And he had a particular formula, which was the independence of the companies, strong

  • CEOs, independent operation, and strong branding of those corporations.

  • So two to three years ago, when it was clear that the company's ambitions were well beyond

  • the traditional definition of Google, we kept going back and back and back to this sort

  • of principle that you need genuine autonomy.

  • And Larry would say over and over again, let's think about how do we solve this in a structural

  • way.

  • All of these things that companies do are -- they're sort of half solutions.

  • But there is one solution that we know works well in capitalism, which is boards, shareholders,

  • CEOs, and independent.

  • And you see that in capitalism today.

  • So what's interesting is that with this -- with this idea, right, formed a decade ago, we

  • started with Alphabet.

  • And we began the process of creating these corporations.

  • And this structure, I think, is at the beginning.

  • And I am convinced that the structure that Larry and Sergey adopted, right, as the sort

  • of next structure of the company that they founded, where a small team has helped architect,

  • in particular, Ruth and David working with them, has really built a sort of a corporation

  • scaling mechanism that we've never seen in the world.

  • So my bet is that the traditional lessons of business organization will in fact result

  • in success at Alphabet over time and to the benefit of all of us.

  • And the reasons why this structure is likely to work.

  • And it starts with the fact that we're trying -- that we're focused on finding solutions

  • to big problems with the applications of science and technology.

  • Right?

  • Again, it goes back to that fact that science matters and that facts matter and that technology

  • matters.

  • And that this structure that's -- that I'll highlight is helping the entrepreneurs that

  • we've either promoted or brought in to create these corporations with the kind of global

  • impact that Google had in its early years.

  • And we're beginning to see that.

  • It's tantalizing to me.

  • But in order to really make that happen, we had to have a strong leader and a strong structure

  • for Google.

  • And, indeed, that person is Sundar.

  • And I think we don't need to go on and on about how successful Google as a corporation

  • has been over the last year under his leadership.

  • But let me give you some examples of things that we've recently announced.

  • You saw a lot of innovation at I/O.

  • The Assistant, the ability to do it across devices and surfaces in ways that you do it.

  • A product called Google Lens, which is a new way for the computers to sort of see what's

  • going on, again, with your permission, that you can then use to understand things going

  • on around you.

  • When you use Google Home, right, this interesting little device, you're using a supercomputer

  • of analysis and knowledge around -- about the world around you.

  • And this is version 1.

  • Imagine what version 2 will be and version 3 will be as we get more and more capable

  • of making your lives more powerful.

  • So all sorts of new hardware devices.

  • We are very excited about all the Pixel products that we announced.

  • And we have more than 2 billion monthly active devices at Android.

  • Right?

  • So gives you a sense of the scale and touch and reach that Google now has with Android.

  • On the machine learning side -- and when Sundar came in, he took the older phrase, my phrase,

  • mobile first, and he said, the new phrase is, AI first.

  • He said, let's use machine learning and intelligence to make our systems smarter throughout.

  • And over and over again, he said, let's be the world's leader in the most emerging technology

  • in computer science in 50 years, speaking as a computer scientist who's been doing it

  • for about 50 years.

  • It's that important.

  • We recently announced something called Auto ML.

  • One of the problems with machine learning is that it's a very complicated thing to understand.

  • It's hard for me to even understand, and I have a Ph.D. in this area.

  • But by building tools that generate neural networks automatically, the sort of more traditional

  • person, the more traditional person just trying to solve a problem, can find these models

  • generated for them automatically.

  • This requires invention and investment in computation and algorithms at a scale that's

  • hard to describe.

  • But this is where your shareholder investment in capital and those data centers is allowing

  • us to literally have neural networks design other neural networks.

  • This auto generation is a core part of a strategy that we talk about internally called learning

  • to learn.

  • How do you learn how to think?

  • Well, can the computer help you in -- at the scale that we're doing it?

  • In translation, we used neural machine translation and had a huge improvement in entire sentences

  • rather than just in phrases.

  • We're working with Stanford to use TensorFlow, which is the underlying open source platform

  • for this -- it runs on all the interesting hardware, including our competitors' -- to

  • detect skin cancer as well as or better than dermatologists.

  • So, again, in the future, when you go to the dermatologist, your dermatologist will have

  • something to make sure that they're giving you the right diagnosis.

  • Might be slightly better than he or she.

  • You take a look at YouTube, more than a billion hours of watch time per day.

  • We launched YouTube TV for the people who don't have traditional television service

  • but they have an Internet.

  • They can now watch the majority of television programs on top of their Internet connection.

  • It's the next step in over the top.

  • It's interesting.

  • We used machine learning -- there we are again, AI first, thanks to Sundar -- to automatically

  • caption over a billion videos in ten languages, making them accessible to the more than 300

  • million people who are deaf or hard of hearing.

  • Again, think about it from their perspective, how we changed their lives.

  • I could not be prouder of the impact that we have had on that.

  • Think about Google Photos, my current obsession, uploading all my pictures and videos of my

  • life.

  • We have more than 500 million users of Google Photos now, and we're uploading more than

  • a billion photos per day.

  • And I predict that number will only go up.

  • In Cloud, we've decided to make a major investment in Cloud.

  • Cloud is important to us for many, many reasons, both strategically as well as business and

  • competitive and so forth in that marketplace.

  • But, for example, we hired a -- an incredible computer scientist named Fei-Fei Li to lead

  • our AI machine learning for cloud.

  • That will be one of our great differentiators.

  • We're doing all sorts of interesting APIs.

  • We designed these hardware accelerators, they're called cloud TPUs.

  • Think of it as a specialized computer that can do this computation incredibly fast.

  • And when I say "incredibly fast," I mean much, much faster than the fastest computers that

  • have been available today.

  • Let's have a -- so just to finish on Google, Google has had an extraordinary year since

  • we met.

  • And I think a lot of that has to do with the coalescing around the missions that I just

  • described.

  • And I am sure that it will continue to do well.

  • Let's switch, let me show you a video about Loon.

  • We've talked about Loon before.

  • [ Video ] [ Music ]

  • >>> This is the first time Loon has tried to deploy in a disaster scenario.

  • We know that Loon has tremendous advantages for these types of settings, but we haven't

  • had an opportunity to go out and make a difference in a disaster.

  • [ Video concludes ] >>Eric Schmidt: This is a very good example

  • -- [ Applause ]

  • Thank you very much.

  • This is a very good example of Googlers who just saw a problem, saw a technological solution,

  • and saw a way to make some progress on something that will affect a lot of us.

  • Loon is now operational and running well in those areas.

  • And it's a good example of how nobody else could solve the problem and this new technology

  • could do so.

  • We are, of course, as a result, getting a great deal of learning as we learn how to

  • fly around Peru in terms of balloon-to-balloon communication and those sorts of things that

  • will continue.

  • Let me mention -- I'll mention a few more, and then we'll go ahead to questions.

  • Waymo.

  • Waymo graduated from X in December.

  • We have one of the cars outside.

  • It's a rare event for people in California to see these cars, for various boring legal

  • reasons.

  • So I encourage you to go take a look at it.

  • We did this huge partnership with Fiat Chrysler, we have another 500 Pacifica minivans, for

  • a total of 600.

  • And we have done more than 3 million miles of full autonomous driving as of May.

  • We have this incredibly entertaining program called the Early Rider Program in Phoenix,

  • where we picked a set of families and we provide them essentially automatic -- automatic driving

  • to watch how families actually use cars, right, on the theory that we should do some beta

  • testing with actual families, in Arizona.

  • And we'll see how that goes.

  • So far, they're doing well.

  • And we've done a big partnership with Lyft as our next (indiscernible).

  • Much more to come in the next relatively short period of time.

  • Verily, our life science business, we're doing a baseline study of human health.

  • It's important to remember that we're all the same, as a medical matter.

  • And the baseline study of how people's health, both sort of locally as well as with disease

  • and so forth and so on, varies over time.

  • We're doing that with Stanford and Duke to map the health of 10,000 individuals to, again,

  • build the data to begin to do the machine learning to do the kind of prediction that's

  • now possible.

  • Again, there's that AI-first principle.

  • We're doing something with Nikon around retinal images of diabetes-related eye disease, diabetic

  • retinopathy.

  • It's a disease that affects a lot of people in the developing world.

  • Literally, many, many millions of people go blind because of this.

  • We think we can detect it just like that.

  • Wow.

  • That's amazing.

  • With Sanofi, we've announced -- diabetes, of course, can be a huge problem globally,

  • not just in the U.S., but around the world.

  • For example, 51% of the people in China are thought to be prediabetic at this point.

  • So we've got a national, globally health problem.

  • There's a big opportunity to solve problems and build a business there.

  • With GSK, we announced a joint venture called Galvani to help develop bioelectronic medicine

  • where we use electronic detection of certain kinds of things that are going on to, again,

  • detect early kinds of diseases in your body.

  • They will do well, in my opinion.

  • Nest has, of course, just announced Nest Cam IQ, which is a piece of software with Nest

  • to wear that can apply facial recognition that can help you understand if there's someone

  • unwelcome in your home.

  • Probably a pretty good and useful technique for all of us.

  • Over and over again, Calico, Sidewalk Labs, the Fiber projects are all basically working

  • on this core principle of excelling technical innovation.

  • If you think of Alphabet as innovation through business organization, an important bet, which

  • I think will ultimately serve as a marker for the next 100 years in how corporations

  • at scale should operate, you're also going to see the innovation in each of the corporations.

  • You have invested, in my view, in a truly revolutionary company in the form of Alphabet.

  • If I go back to the 2013 founders' letter, Larry and Sergey wrote that, "Incrementalism

  • in technology leads to irrelevance over time, because change tends to be revolutionary,

  • not evolutionary."

  • We have taken the position that with this structure, and with this kind of innovation,

  • we can bring revolutionary benefits to billions of people globally.

  • I am so proud to be in front of you to represent the many people and companies that are part

  • of the Alphabet who I can tell you are all committed to this broad mission.

  • Our goal remains the same: Serve billions of people and help them live better.

  • I've been privileged to be here as part of 16 years.

  • The company is 18 years old.

  • We're tackling the most important and hardest problems, the most impossible problems that

  • you can imagine, to have the greatest impact and the greatest number of people.

  • I want to thank you all for your support to make the impossible possible.

  • And thank you very much.

  • [ Applause ] We have a good amount of time, and I always

  • look forward to your comments, questions, thoughts.

  • It is my privilege to -- let's see.

  • We have Ruth Porat, who I think everybody knows, senior vice president and chief financial

  • officer.

  • David I've already introduced.

  • And Kent Walker, who's the general counsel and many other functions, including all of

  • PR and policy in Google.

  • So I think between the four of us, we can probably answer questions or comments.

  • Yes, sir.

  • Why don't you go in the beginning.

  • >>> Yes.

  • Good morning, and thank you guys for the great work you are doing.

  • I'm a new shareholder.

  • My name is Bill Preston with Rosa and Raymond Parks Institute for Self Development out of

  • Detroit, Michigan.

  • My comment is in the area of Alzheimer's.

  • I've been caring for a loved one for over a decade.

  • I'm just hoping that, you know, really, in the scientific side -- I come from a big Pharma

  • background.

  • We've had so many setbacks, the biggest one obviously coming with the one from Eli Lilly

  • back at the end of November.

  • And it was really hard.

  • So it's the sixth leading cause of death.

  • I'm just praying that you guys will partner with big Pharma.

  • We've got to come up with a solution by 2025.

  • Otherwise, it's going to break Medicare.

  • So this is a major public health problem not only in the U.S., but globally.

  • So I pray that you guys will look in that area and look for somebody to partner with

  • and make a difference.

  • God bless you all, and continued success.

  • Thank you.

  • >>Eric Schmidt: Okay.

  • Thank you.

  • If you look at Verily, its core strategy is to do precisely what you described.

  • What Verily is trying to do is trying to invent some new technological solutions and apply

  • them in the medical industry, which has not had access to machine learning and so forth.

  • The research I read in, for example, autism and Alzheimer's all have the property that

  • it looks like machine learning could make health care progress there.

  • And those diseases, in particular, Alzheimer's, is a trillion-dollar industry, right, negatively,

  • it's a trillion dollars of cost to our society if we cannot fix it.

  • Right?

  • It's crucial.

  • And it's one of the things that we're thinking about.

  • Yes, sir.

  • >>> Good morning, fellow shareholders.

  • I'm John Simpson.

  • I'm a shareholder.

  • And I should also say I'm a privacy project director for Consumer Watchdog.

  • I'm asking this question on behalf of Nicole S., whose story was featured in the film "I

  • am Jane Doe," about online child sex trafficking and the legal shield that protects it.

  • She could not be here today.

  • Good morning, Dr. Schmidt, Alphabet, Inc., and Google executives, board members, and

  • shareholders.

  • I'm reading her question.

  • I am Nicole S. I hope you have seen "I Am Jane Doe."

  • It is available on Google Play and Netflix.

  • It documents how my 15-year-old daughter was sold repeatedly for sex through the notorious

  • Web site, backpage.com.

  • Consumer Watchdog's recent report, "How Google's Backing of Backpage Protects Child Sex Trafficking,"

  • details how Alphabet, Inc.'s Google has funded nonprofit groups and legal scholars who continue

  • to defend Backpage in the name of Internet freedom.

  • Internet freedom can't be about helping sell children for sex.

  • That's got to end.

  • Will you stop funding groups in their misguided effort to defend Backpage, no matter what

  • harm it causes?

  • And more importantly, perhaps, going forward, will you support a narrow amendment to section

  • 230 of the Communications Decency Act that would allow victims like my daughter and me

  • to hold Backpage accountable for facilitating child sex trafficking?

  • >>Kent Walker: Let me take that one.

  • Welcome back, John.

  • Obviously, the topic is a very important one.

  • We take the issue of human sex trafficking very seriously, as we do the abuse of our

  • systems with child sexual abuse imagery.

  • We've taken a variety of steps to try and combat this problem throughout society.

  • We've investor and funded a number of groups that are working on the problem.

  • We've hired people at Google to work on the question of human rights advocacy.

  • And our engineers have actually worked with the National Center for Missing and Exploited

  • Children and other groups around the world to develop tools and technologies to identify

  • and help them combat and get to the root of some of these rings that are at the center

  • of this.

  • Now, when you raise the question of section 230, we think that the congress, when it formed

  • 230, was actually striking a blow in favor of the ability of Good Samaritan review by

  • Internet platforms.

  • You don't want to create liability for review of platforms.

  • And we think congress got that balance right.

  • We continue to think it's a robust platform for the kind of innovative stuff we've been

  • able to do on top of our platforms and what other Internet companies --

  • >>> So you won't support an amendment?

  • >>Kent Walker: We think that the section 230 as it stands has actually been a great thing

  • for both the ability of companies to be able to review their platforms and to preserve

  • their right for free expression and free speech --

  • >>> Before -- have you seen the movie I Am Jane Doe?

  • >>Eric Schmidt: I have.

  • >>> We sent you a letter, by the way, with our report.

  • Have you received our report?

  • >>Eric Schmidt: Sir, this is not actually a debate.

  • >>> I'm not going to debate you.

  • >>Eric Schmidt: I have seen it -- I have seen -- sir, we have given you the response.

  • >>> Have you seen the report?

  • >>Eric Schmidt: Yes.

  • Thank you.

  • >>> You have?

  • >>Eric Schmidt: I have.

  • >>> I will give you a copy.

  • >>Eric Schmidt: You may give me another copy, if you wish.

  • >>> I will do that.

  • >>Eric Schmidt: Yes, sir.

  • >>> Good morning.

  • My name is Eric Sprague, I'm a shareholder from the Sacramento area.

  • And I'm wondering about your plans in the online travel space for the next few years.

  • I think Oliver Heckmann at the Skift forums has said that you don't plan on becoming an

  • online travel agency in the near future.

  • But as you enter spaces directly, it would affect some of your biggest customers, like

  • The Priceline Group, where I'm also a shareholder.

  • And also, as you enter new spaces, it's a balance of organizing information, but there

  • was a recent Reuters story about what might be an upcoming fine from the E.U. in the shopping

  • space.

  • So I was wondering, with spaces like travel, as you think about entering them more directly,

  • how you calibrate all of these factors.

  • >>Kent Walker: So as you allude to the question of some of the antitrust investigations that

  • are going on, let me take that one.

  • I think our general policy has been to try and look for areas where we can deliver the

  • most benefit to the most number of consumers around the world.

  • We try and provide streamlined experiences that are faster and more comprehensive.

  • Travel is one area where Google Flight Search has delivered phenomenal value to consumers.

  • We continue to look for opportunities to do that.

  • And we think that we are in an extraordinarily competitive market with a number of large

  • and small platforms in the U.S. and around the world, and that we've actually been remarkably

  • successful over the last decade reducing consumer prices, improving the quality of offerings,

  • and improving consumer choice.

  • So that's been a dramatic improvement in social welfare.

  • So we think that's been a very good thing.

  • >>> So do you see yourselves getting involved more directly, like, with Google trips app

  • and those types of tools?

  • >>Kent Walker: We can't preannounce product decisions.

  • But I think we continue to be looking for ways to benefit consumers.

  • >>Eric Schmidt: Thank you very much.

  • Yes, sir.

  • >>> Hi.

  • Good morning.

  • I'll still Justin Danhof, still from the National Center.

  • I'd be remiss if I didn't say your tie looks very nice, too, Mr. Schmidt.

  • I have a quick question about the company's diversity and inclusiveness initiatives.

  • When the company takes public policy positions, does it consider all of its employees?

  • What I mean by that is, when, for example, the company publicly opposed President Trump's

  • position on immigration, right, the company opposed the President's decision to withdraw

  • from the Paris Accord, quite publicly.

  • The company also recently opposed decency legislation in the state of Texas.

  • While the executive suite likely consists largely of more of the liberal elite mindset,

  • surely the company employs a few conservatives who would rightfully view all of these actions

  • as offending their world view and their public policy positions.

  • So when you take these publicly -- these very public positions, are you concerned that conservative

  • employees here or libertarian-minded employees here at Alphabet and Google, that they don't

  • feel that this is an inclusive environment for their opinions because they know that

  • the hierarchy doesn't share their values?

  • >>Eric Schmidt: I would start with my answer, which is, we start from the principles of

  • science at Google and at Alphabet.

  • >>Kent Walker: And, in general, the filter we use for a lot of these issues are, do questions

  • affect our business operations and the -- for example, we are a significant consumer of

  • green power and so have a business interest in getting that right -- or does it affect

  • our relationships with our employees, in the way we are able to provide employee benefit

  • programs, for example.

  • We do take lots of perspectives into account.

  • We value all kinds of ideas and diversity of every flavor at Google, including diversity

  • of perspective and ideas.

  • >>Eric Schmidt: David.

  • >>David Drummond: Yeah, I would just say that these positions that we're taking are not

  • -- these are not partisan positions.

  • We're not in the middle of the political fray.

  • These have to do with principles that we've long held at the company.

  • And we've got folks of various political stripes who believe in those principles.

  • And so I think what you see is not our attempt to jump on the scales for one political party

  • or another, but to express things that are very deeply -- very important to the company,

  • whether it's free expression or whether it's the openness of -- you know, we have lots

  • of folks at Google from all over the world.

  • And we took a stand to protect them.

  • Many of them were personally affected by what was going on with that policy that you -- I

  • think you referred to.

  • And so I think our employees were very strongly behind taking these positions, because they

  • reflect a principle, not partisanship.

  • >>> I just want to make sure you don't red-line the fact I work in the D.C. conservative circles

  • and your applications for your public policy teams, many conservatives in D.C. would never

  • even consider applying to this company because they wouldn't feel welcome.

  • I just know that as -- >>Eric Schmidt: I'm happy to have that discussion

  • some other time.

  • I will tell you that we operate the company under the principles that David and Kent and

  • I have outlined.

  • We're not going to change that.

  • The company was founded under the principles of freedom of expression, diversity, inclusiveness,

  • and science-based thinking.

  • You'll also find that all of the other companies in our industry agree with us.

  • Yes, sir.

  • >>> My name is Tom (saying name).

  • I'm an ex-Google employee.

  • [ Applause ] >>Eric Schmidt: Go ahead.

  • Yes, sir.

  • >>> Yeah, ex-Google employee and also an immigrant from China.

  • I'm impressed of the video you played, the Google Alphabet new mission is to help people

  • live better.

  • I remember the old mission is organize the world's information and make it accessible

  • to everyone.

  • So the population -- So Google's new mission will make millions of people's lives better.

  • I assume that you're also including the Chinese, because Chinese -- number of Chinese users

  • is double the U.S. population.

  • So my question is, some of the Chinese cannot use Google services and products.

  • So any ideas or any initiatives to make the same products and services available in China?

  • >>Kent Walker: We continue to express the thought that we would like to be able to serve

  • the citizens of China with our services.

  • It's a complex area and it's one we continue to explore.

  • >>Eric Schmidt: I was in China this past week as part of our AlphaGo tournament, where we

  • had a joint program around man versus machine in the Go game, which was successful, I think,

  • on all parts.

  • And we also did a great deal of education on AI.

  • Yes, ma'am.

  • I didn't realize you guys had separate -- my error.

  • I apologize.

  • Sir.

  • Yes, sir, in the back.

  • >>> No problem.

  • No offense taken.

  • I just wanted to ask, my name is Tony Lavia (phonetic), and I'm a stockholder.

  • I wanted to ask about the area of augmented reality.

  • I didn't hear very much, if anything, about that.

  • And I wondered, you know, it seems to be a fairly promising area with a lot of people

  • competing.

  • So, number one, what is the strategy for making products in that area?

  • What do you see maybe as some of the high-running ones that we might see that aren't just going

  • to be Pokemon games.

  • And, two, how will you compete against, say, Apple, who controls both the platform and

  • the software, which Google does not do so far?

  • >>Eric Schmidt: Ruth.

  • >>Ruth Porat: So our augmented reality area is part of the virtual reality area.

  • And going back to Eric's opening comments, I think one of the very fascinating elements

  • of innovation at Google, now Alphabet, started with what we called the 20% time.

  • And the first virtual reality effort came out of that in Cardboard.

  • And that has grown into our virtual reality/augmented reality effort.

  • We're really excited about the direction it's taking.

  • You're absolutely right, it's not just about games.

  • We think there's a broader set of applications.

  • And at this point, there's -- we're not going into detail on what the products are, but

  • have it under a terrific leader, Clay Bavor, and are excited about the direction we are

  • taking.

  • We agree with you; it's an important area.

  • >>> Can you say whether Google glasses is going to play a major part again?

  • Because that seems to have gone -- >>Ruth Porat: That is not part of -- That's

  • a different effort.

  • >>Eric Schmidt: In the back.

  • And I apologize for not seeing you guys as a separate mic.

  • >>> Not a problem.

  • My name is Brad Bates.

  • I'm from Turlock.

  • I have been a fortunate shareholder since the IPO.

  • And congratulations on joining the four-digit club of stock.

  • So now go chase down Berkshire.

  • A few years ago, an interesting question was asked, and I thought it had an interesting

  • answer.

  • And the question was, if Google were a person, in terms of development, what grade would

  • that person be in?

  • And the answer, I believe, that came from one of the founders was the third grade.

  • And I thought, that's -- That's a pretty precocious eight-year-old.

  • So as you're beginning to enter your third decade as a public company, I would ask that

  • same question again.

  • If Alphabet were a person, what grade would we, or would that person be in?

  • >>Eric Schmidt: This is a Ruth question.

  • [ Laughter ] >>Ruth Porat: I would say we maybe are now

  • in fourth grade.

  • >>David Drummond: Exactly.

  • >>Ruth Porat: But we're still very, very early.

  • And that's what's so extraordinary.

  • When you look at Google, I'm often asked what's my biggest surprise coming here, having been

  • here two years, and the answer is how early we still are.

  • Eric talked a lot about machine learning and how important it is.

  • You saw on the video what the Assistant will be doing for us, opening up ways of query

  • that we didn't have before.

  • And the opportunity to provide more effective responses, to use recommendation engines with

  • YouTube, to help us as we're moving into the cloud and the opportunity there, all that

  • we're doing with hardware, all that we're doing with YouTube subscriptions suggests

  • that Google has quite a long runway ahead of it.

  • I often describe it as three arcs.

  • You know, we've got all that's going on in ads, and then we're adding on with Cloud,

  • hardware, and YouTube subscriptions, and then all of the magical things coming out of the

  • other bets, whether it's self-driving cars or transforming cities or Life Sciences or

  • Loon.

  • And so I've given us one year 'cause I couldn't say we stalled in third grade.

  • But I'd say fourth grade.

  • >>> Well, save some money for college.

  • [ Laughter ] >>> Thank you.

  • >>Eric Schmidt: Thank you.

  • Yes, sir.

  • >>> My name is George Bayon (phonetic), Bayon Capital Partners, private equity.

  • And my question is, with the new administration offering to repatriate capital back to the

  • U.S., what is Google or Alphabet's stance on that since they have $50 billion plus in

  • capital?

  • And -- well, I have another.

  • >>Ruth Porat: So one of the key questions, I think, when we look at cash is, what's the

  • most effective use of that cash for shareholders.

  • And as we look at it, we go back to our core principles from day one, which is, we have

  • been and remain committed to long-term growth.

  • And the most exciting opportunity, really, building off of the prior question, is all

  • of the areas in which we can invest.

  • And so we're first looking at the organic investment opportunities.

  • We also have a great history of acquisitions, things like YouTube or DoubleClick, Maps,

  • where we've really done things which at the time seemed crazy, but have worked out quite

  • well for everyone.

  • And so that is another area where we're considering uses of cash.

  • And when we look at the overall potential requirements, we then ask the question, what

  • else might be available with cash?

  • And we were pleased to have been able to start, you know, doing the modest share repurchase

  • program.

  • But when we look at globally that cash, it doesn't change the overarching objective,

  • which is investing in the business, investing in the growth opportunities, whether that's

  • organic or through acquisition, to enable us to continue driving the types of growth

  • that you've seen.

  • There's too many opportunities out there.

  • And so where it actually is has not been really the constraint.

  • It's really what's the opportunity set.

  • >>> And would Google ever consider one share of Google for one share of Apple, since Apple

  • does have $250 billion at -- capital that could be repatriated?

  • >>Ruth Porat: I'm sorry?

  • >>> Would you consider -- >>Eric Schmidt: Are you suggesting we do a

  • stock swap?

  • >>Ruth Porat: A stock swap.

  • Interesting.

  • >>Eric Schmidt: I think Apple would have to want to do that.

  • >>> It's called a bear hug.

  • >>Eric Schmidt: Go ahead.

  • >>Ruth Porat: I'll leave that one to you.

  • >>Eric Schmidt: Not in your current list?

  • >>Ruth Porat: Yes.

  • >>David Drummond: Probably not.

  • >>Ruth Porat: Did not -- >>Eric Schmidt: Did I hear a no and a no?

  • >>Ruth Porat: A no and a no and a no.

  • >>Eric Schmidt: I think it's a no.

  • Yes, ma'am.

  • >>> Hi.

  • Natasha Lamb, with Arjuna Capital.

  • The company's paid lip service to the gender pay gap, says that it's not an issue, but

  • it's been unwilling to give a quantitative disclosure to give that number that so many

  • of Google's and Alphabet's peers have given.

  • It -- the company's also been unwilling to dialogue with us since last year, when we

  • had begun what we thought was a productive dialogue, so the company has gone quiet, despite

  • the fact that last year's vote on this proposal from non-insider -- from the non-insider voting

  • bloc was 48%, which I think is pretty remarkable for outside shareholders from a voting standpoint.

  • So, you know, I -- one, I would ask that we continue the dialogue.

  • And, two, I'm curious if Google is willing to join its peers in providing those transparent,

  • quantitative disclosures.

  • And, you know, if this is not an issue, if the issue is moot and, you know, women are

  • paid 100% of what men are paid, then can you say 100%?

  • Because, you know, what investors are looking for are those transparent, quantitative numbers

  • that we've seen your peers give as well.

  • Thank you.

  • >>Kent Walker: As you probably have seen, we're currently in litigation with the Department

  • of Labor over some issues related to this.

  • We feel very strongly that gender pay equity is an important principle at Google.

  • We run internal surveys on a regular basis.

  • And we do believe we pay equally across genders throughout the company.

  • So we're continuing to make progress on that.

  • We've said that publicly.

  • So that is, in itself, a form of disclosure of where we think we are.

  • But we're always happy to talk more, and happy to chat after the meeting to continue that

  • dialogue.

  • >>> Thank you.

  • And I appreciate that.

  • I mean, last year, certainly, you weren't under investigation by the Department of Labor,

  • and our dialogue went quiet.

  • So I would appreciate that continued conversation.

  • Thank you.

  • >>Eric Schmidt: One of our traditions is we produce the actual expert when a hard question

  • is asked.

  • This is Prasad.

  • >>Prasad Setty: Good morning.

  • I'm Prasad Setty.

  • I'm a vice president in our People Operations organization, and one of the functions that

  • I have responsibility for is compensation.

  • Pay equity is one of our most important tenets that we look into when we think about compensation.

  • And all of our pay practices are designed such that no demographic information is ever

  • taken into account.

  • It's all about skills and capabilities.

  • But, in addition to that, we also go through a rigorous analysis every year to make sure

  • that we are living up to the principles that we hold very dear.

  • And last year, around this time, we published externally that our aggregate analysis showed

  • that there is no gender pay gap.

  • At the ends of last year, after the completion of our annual pay planning cycle, we went

  • into in-depth analysis of 52 different jobs at Google, went into really, really gory detail

  • out there, and found that for every one of those, again, we did not see any gender pay

  • gap, which Eileen Naughton, published in an external blog post.

  • So we feel we are committed to this and confident in our processes.

  • >>> Thank you.

  • We're looking for a number.

  • So if it's 100%, please say that.

  • Thanks.

  • >>Eric Schmidt: Thank you, Prasad.

  • Let's see.

  • Continuing to add, in my -- correct from my error.

  • Yes, sir.

  • >>> Hi.

  • I'm Dan Gluesenkamp.

  • I'm the executive director of the California Native Plant Society.

  • I'm a shareholder.

  • And you might recognize CNPS, the Native Plant Society.

  • We've designed the native plant palette for the landscaping that's coming in here for

  • the pollinator gardens.

  • That was one of our local chapter projects.

  • We've got 35 chapters covering California and Baja California.

  • And I just want to talk a little bit about kind of the great repository of information

  • that is untapped in California, this biodiversity hot spot we all saw with super bloom.

  • The plants and animals that have evolved in California, if you can imagine the Alphabet

  • going on for a billion years instead of a decade or so, the information that is coded

  • in there, the ability to survive various challenges, is absolutely priceless.

  • And as we move toward an era where we can lasso asteroids and drop the price of gold,

  • as we can do anything, the one thing that we will not be able to do is to develop the

  • information, the codes, the genes that those things hold that provide engineering feedstock

  • for what we will need to do on this planet in the future.

  • And I want to thank you guys, I want to thank Google, for all of the tools that have been

  • developed that have helped conservationists to try and save some of those species.

  • It's a globally significant biodiversity hot spot.

  • We're really blessed here.

  • The mapping applications you've built, the Google Earth outreach to put it into the hands

  • of people have really transformed our ability to first figure out what we have and then

  • to figure out how everything is connected.

  • What I want to ask is, I want to encourage Alphabet to look at this as an incredible

  • resource, a great opportunity, both a business opportunity to capture the most valuable information

  • on a planet, extremely inaccessible, coded in a language that we are only just learning

  • how to read, and yet there, free for the taking, with many people excited to work on it.

  • Being paid low wages for the price of one stabilizing spoon, we could probably map the

  • entire flora.

  • And I know that individuals in the leadership -- Eric, Diane -- are very interested in saving

  • this stuff, individually, personally committed.

  • It would be revolutionary if the organization took advantage of this opportunity that is

  • left lying on the table and actually focused on it in a way to develop specific tools to

  • help us understand what biodiversity we have, to try and map it so that we understand where

  • the important plant areas are, for example, so we don't accidentally bulldoze something

  • that has a cure for something in the future, and get some really positive press for it

  • and potentially start a revolution that bumps us out of this slow evolution we're facing.

  • >>Eric Schmidt: So thank you.

  • We have actually had over the last decade a number of projects to provide underlying

  • tools to such research projects.

  • These are generally known as the Code for Life projects.

  • Because we need to understand the biodiversity not just at the plant level, but at sort of

  • nature's level.

  • And it advances science in really fundamental ways.

  • We have not made the vertical tools that you're describing, but I think it's a good idea for

  • both us and also for private philanthropists.

  • >>> I know there's been involvement in New York botanical garden.

  • >>Eric Schmidt: Yes, of course.

  • >>> California has more plants than any state in the union.

  • We have more rare plants than any state in the union.

  • And if you see an opportunity to connect with CNPS, I'm Dan@CNPS.org, to really focus on

  • the California treasure, we'd be excited to partner.

  • >>Eric Schmidt: Thank you very much.

  • Yes, sir.

  • >>> Good morning, my name is Juan Cortes, I'm a relatively new shareholder.

  • And I don't know what the world would look like without Alphabet and all of the value

  • it's created for billions of people.

  • But what do you think are some of the negative societal drawbacks and consequences of creating

  • such a powerful and omnipresent corporation?

  • >>Kent Walker: So there's been a lot of talk about sort of the rise of tech platforms generally.

  • We think it's actually, on balance, been a remarkable opportunity for people to have

  • access to information that they never would have had access to before -- typically, for

  • free in many of the services and products that we provide -- and has opened up new opportunities

  • for competitive marketplaces at the same time, empowering not just consumers, but small businesses,

  • to be able to come on and sell their goods and services around the world.

  • So that, on balance, has been a really powerful and positive development.

  • We take the responsibilities seriously, and we're recognizing, you know, some of the issues

  • that have been discussed today and elsewhere, and we do an awful lot as a company to try

  • and invest in making sure that the Internet is a positive and constructive place and that

  • the work that Google does outside of the Internet is also sort of investing in the larger benefit

  • of society and the community.

  • >>Eric Schmidt: We're running -- sort of running out of time.

  • But I want to make sure we get everybody's questions.

  • So we'll need to accelerate the Q&A process.

  • Yes, sir.

  • >>> Good morning.

  • My name is Andre Crandall.

  • I'm a junior at Berkeley High School and a shareholder.

  • In your annual report, you stated that 80% of your profits come from advertising.

  • You also said that a risk to this company is online blocking software.

  • What do you plan -- how do you plan on combating this issue?

  • >>Kent Walker: So we recently announced an effort to use Google Chrome to address some

  • of the concerns that many consumers have about annoying ads, targeting a small number of

  • ads that are disruptive to the consumer experience that are leading some people to actually using

  • broader kinds of ad-blocking software.

  • We think that's a very positive development.

  • We're working together with partners across the publishing industry, the advertising industry,

  • because it's not a problem that any given company can solve on its own.

  • It really is making sure that the ecosystem is moving in a positive direction so that

  • the online browsing experience for consumers is better and they don't see a need for online

  • blocking software.

  • >>Eric Schmidt: And thank you for being one of our youngest shareholders.

  • >>> Thank you.

  • >>Eric Schmidt: That's good.

  • [ Applause ] Quickly, yes, ma'am.

  • >>> Meredith Benton.

  • I wanted to speak in support of the request around increased transparency around the gender

  • data, but beyond that, racial, ethnic, and religious.

  • Google works in so many different parts of the world where we know there's entrenched

  • discrimination.

  • And the ability of this company to address those problems through its data and through

  • its desire to make the world a better place, to report back to the community at large over

  • what initiatives it's taking internally make a difference, how they've made a differentiation,

  • what hasn't worked.

  • It's just the possibility for the positive benefit that could be made is extraordinary,

  • not just for the world at large, but also for your existing and potential employees.

  • >>Eric Schmidt: Ruth?

  • Would you like -- >>Prasad Setty: I can take this one as well.

  • As you all recall, three years back, we were one of the first companies in the tech industry

  • to report on our diversity demographics.

  • And we are continuing with that practice.

  • And we are glad to see that the rest of the tech industry is following suit as well.

  • And so that shows you our commitment, and certainly internally as well.

  • We have lots and lots of dialogue around diversity and inclusion.

  • And so we want to make sure that our workplace is one that has a tremendous amount of respect

  • for everyone and that we are the champions of diversity and inclusion throughout.

  • So we are certainly continuing in that quest.

  • >>Eric Schmidt: Thank you.

  • Yes, sir.

  • >>> Hi, my name is Scott chapman.

  • And thank you very much for all the great work you're doing.

  • I have a financial question to elaborate a little bit more on capital allocation, Ruth.

  • Earlier, Eric, you alluded to your influential meeting with Warren Buffett and Berkshire

  • Hathaway.

  • One of the things that Buffett does so ingeniously is come up with the right incentive systems

  • for all of the autonomous units to incent them to allocate capital, excess capital back

  • to headquarters so he can reinvest that.

  • When you have cash flow generates and cash users within the organization, can you share

  • with us, Ruth, a little bit about how -- what you've brought to the table here in your way

  • of thinking about doing the similar parallel type of thing with capital allocation, allocating

  • cost of capital to the divisions and how they are incented to bring back capital and how

  • you prioritize that capital at headquarters.

  • Thank you.

  • >>Ruth Porat: I think one of the many benefits of the move to the Alphabet structure was

  • that we got focused within Google, as Eric described, and then across these -- this portfolio

  • of other bet companies.

  • And what we've done is really push expenses down to the business level, so business leaders

  • have much greater sense of -- much greater visibility about all the resources that they're

  • using within any particular effort.

  • And quoting also from Eric's book, where he says anchor everything in data and the rest

  • will follow, that's what we're doing.

  • And it's provided a level of transparency about how much is being used, what does it

  • look like over a multiyear period.

  • And we've been working tightly with our leaders on how do you stack rank the opportunity so

  • you can identify, where are there places where maybe we -- we've overinvested, should scale

  • back in order to put more weight behind some of the big new opportunities.

  • But it really -- it starts with data.

  • We announced, as some of you may have seen, within the last year that we moved from what

  • was called non-GAAP to GAAP.

  • It was really profound internally.

  • We heard a lot of positive feedback from investors.

  • But the beauty of it internally is we're giving great leaders more visibility about how they're

  • using resources and so they can stack rank where they want to apply those resources.

  • That's true across Alphabet.

  • What's been really extraordinary with -- with this move as well as is the opportunity to

  • work so closely with the founders, looking at how much is needed within each one of the

  • other bets, how do we shape it so we set it up to be as nimble and potent as possible,

  • with very much a philosophy that overresourcing can be as counterproductive as underresourcing.

  • So it's a lot of iterative work.

  • It's different type of businesses than in the Berkshire family of companies.

  • And it really goes very much to what -- who's the leader, what's the mission, what's the

  • scale of opportunity, and what are the milestones along the way to achieve it and how do we

  • make sure we're giving them that runway.

  • And so it has been, I think, a very productive process.

  • >>> Great.

  • Thank you.

  • >>Eric Schmidt: David?

  • >>David Drummond: I would just join to say unlike Berkshire Hathaway, we're mostly dealing

  • with tech startups.

  • So we're trying to replicate that experience for the great -- the talented technical people

  • and great businesspeople that we're recruiting.

  • And an important part of that is setting up sort of incentive programs that -- where people

  • get -- if they perform in -- in the other bet, they do very well, as opposed to being,

  • you know, sort of attached to the overall Google or Alphabet compensation plan.

  • So I think we're trying to replicate that startup feel as a way to really get the kind

  • of innovation and great business creation that you see out in the world here in the

  • Valley.

  • >>Eric Schmidt: And a lot of the success we're seeing in Alphabet has been because Ruth and

  • David have spent the majority of their time trying to get the structure right.

  • And so they, in my view, are the real heroes of the implementation of this truly brilliant

  • idea.

  • Let's go.

  • Yes, sir.

  • And we'll need to pick it up even quicker.

  • >>> My name is Tom Chen.

  • I take Google Maps to here.

  • It saved me a couple minutes.

  • >>Eric Schmidt: Good.

  • >>> And I am an environmentally concerned person.

  • Can Google tell me which way is more green?

  • >>Eric Schmidt: Is more green?

  • >>> Yeah.

  • Less CO2.

  • >>Eric Schmidt: Yes, in many, many ways.

  • >>David Drummond: That's interesting.

  • >>Eric Schmidt: Yeah, in many, many ways.

  • >>Ruth Porat: Well, I would say that it does tell you the time to walk and the best route

  • or the time to bike.

  • So that's one part of the answer.

  • And I think it's a great question, something we will keep looking at.

  • >>Eric Schmidt: Maybe we should highlight --

  • >>David Drummond: It's a good product suggestion.

  • >>> What mileage and want less consume gas or something.

  • Thank you.

  • >>Eric Schmidt: Thank you very much.

  • Let's do these two folks at the microphone.

  • So yes, sir.

  • >>> My name is Deepak Kumar.

  • I am a shareholder.

  • So, first of all, I would like to thank you to making the whole world so closer and connected.

  • When I came in '94, it was so difficult to talk to the back home.

  • And we are holding all the Triple A maps, everything.

  • So I really like to thank you for making all our lives so easy and productive.

  • So I would like everybody to have a big applause for this achievement.

  • [ Applause ] >>Eric Schmidt: Thank you.

  • >>> And so my main question is for the job.

  • So like, 'cause this is, like, a very star company, and everybody would like to help

  • the company to move to the new direction.

  • Right now, it's very difficult to apply for, like, Google and all these things, like the

  • recruiter.

  • You will be very lucky to get a chance to return back.

  • Otherwise, they just hanging around.

  • So what is the best way to connect to the company so that the bright people in the industry,

  • they can get a chance to talk with you and get -- show their ability to see that, oh,

  • we are the one who can help the company also.

  • >>Eric Schmidt: I think we're going to make Prasad a permanent member of our panel here.

  • >>Prasad Setty: Thank you for that question.

  • We're always looking for the most amazing talent.

  • Right?

  • Like, you know, all the innovations that Eric and Ruth and Kent and David have talked about

  • would not come alive if it were not for the people that we have out here.

  • As you know, we have been recognized as the number one best place to work in the U.S.

  • for seven years in a row.

  • That wouldn't happen if we didn't place this kind of a commitment on finding and developing

  • and retaining our talent.

  • We get 3 million applications every year, and we hire a few thousand people.

  • So we are more selective than pretty much any educational institution you can think

  • of.

  • And that does provide its own challenges.

  • On the one hand, we are blessed that we have such a popular organization that everyone

  • wants to work.

  • But it does make it difficult for us to go back and talk to everyone about their applications.

  • Rest assured, though, that with our people, our machine learning technology, all of that,

  • we're always looking for who are the best people that should be part of this organization.

  • So (indiscernible).

  • >>> Basically, I face the problem with one of the recruiter, like, they just quiet and

  • they're not updating.

  • So I was just lucky to get the call.

  • But, actually, it was not well, professionally way to move forward.

  • >>Eric Schmidt: Why don't you give that feedback to Prasad offstage.

  • I will tell you, by the way, that Prasad is the architect of why we have such extraordinary

  • talent in this organization.

  • Thank you very much.

  • >>> Thank you so much.

  • >>Eric Schmidt: Next question.

  • >>> Tom Kane from Menlo Park.

  • Warren Buffett's famous for running the entire -- his entire corporation with that staff

  • that fits on one floor in Omaha.

  • Is the top Alphabet staff of the same scale?

  • Are you that lean?

  • How do you do it?

  • >>Eric Schmidt: I think it's smaller.

  • >>David Drummond: Actually, I think it's maybe a quarter of the floor, a few offices.

  • We're actually -- Ruth and I have visited the headquarters several months ago in Omaha.

  • And we realized that our Alphabet staff was actually much, much smaller than Berkshire

  • Hathaway's.

  • >>Eric Schmidt: By the way, this is not a goal.

  • [ Laughter ] Yes, sir.

  • Okay.

  • We have -- sir, it looks like you have the honor of the -- oh, we have -- we have -- would

  • you like one more question?

  • >>> Mine will be quick.

  • >>Eric Schmidt: Okay.

  • So we'll have -- we'll have -- I'm sorry.

  • Do we have somebody on the last?

  • Yeah, we have -- yes.

  • So we'll have you, you, and then you'll have a quick question.

  • Yes, sir.

  • >>> Barry Wood, Washington, D.C.

  • Following from the last question and from Mr. Chapman's questions about what you said,

  • Mr. Schmidt, about scalability from the Warren Buffett model, yes, there's only a few people

  • in that.

  • But this is -- Berkshire is a very diversified, almost 100 different companies spread all

  • over the planet, mostly in the U.S.

  • You're operating here from one -- essentially, one big campus.

  • I don't understand what you really mean by "scalability."

  • I don't think most people who are not shareholders understand the difference between the two

  • types of shares or what Alphabet is vis-à-vis the company and also the question of aren't

  • you just one big company with several divisions?

  • >>Eric Schmidt: Well, again, I can assure you, in the spirit of a quick answer, that

  • we created Alphabet because we needed at least 26 letters.

  • Right?

  • And that each of those letters in the form of corporations will really be quite independent.

  • And that's my core message, is that they'll have clear, distinct, different ownership,

  • leadership, the possibility for partial investment -- we've already done that with Verily -- different

  • kinds of incentive programs, different kind of compensation programs, different branding,

  • different cost structures.

  • Ruth and David have architected that, so that scalability is possible.

  • I believe that that will be what Alphabet will look like in five or ten years.

  • That is my opinion.

  • Let's see.

  • We have a -- yes, ma'am.

  • Come on up.

  • >>> My name is Marion Lowe (phonetic) from Salinas, California.

  • And it's about Alphabet, the name "Alphabet."

  • Many wonder, why Google to Alphabet?

  • Well, I read about it, how the board chose and why and how it did.

  • And it's the most refreshing enlightenment.

  • Anyway, there are many reasons, but I chose this one, which is pertinent to my nephew

  • and me.

  • And it's coined "Alpha, hyphen, Bet."

  • "Alpha" means investment return above benchmark.

  • And that's what I liked about it.

  • Thank you.

  • >>Eric Schmidt: Thank you very much.

  • And thank you for asking your question.

  • [ Applause ] Ruth, would you like to comment?

  • >>Ruth Porat: Just to say thank you.

  • >>Eric Schmidt: Okay.

  • Excellent.

  • And, sir, a quick final comment.

  • >>> Thank you.

  • Michael Walsh.

  • I'm a stockholder.

  • I live in Beverly Hills.

  • Ruth, can you give us any color, are auditors carrying any items on the -- our unadjusted

  • error schedule and anything significant with that?

  • >>Ruth Porat: We're very comfortable.

  • They're here.

  • We have a very strong relationship with them and encourage them to push us as hard as possible

  • and feel very good about where we are.

  • >>Eric Schmidt: On behalf of the corporation, the board of directors, the senior leadership,

  • and Prasad, our newest member, thank you very, very much for staying for our shareholder

  • meeting.

  • We'll see you in one year, same place.

  • Thank you very much.

  • [ Applause ]

>>Eric Schmidt: It's a great pleasure to invite all of you back.

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