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Eric Schmidt on privacy, platforms, and big data business opportunities

Google's executive chairman suggested a common problem is that government regulators want to put restrictions on "the mechanism, not the outcome."
Written by Rachel King, Contributor

SAN FRANCISCO -- Big data will definitely change the face of business, but it's virtually impossible to predict how the digital landscape will look within the next few years, based on comments made by Google executive chairman Eric Schmidt.

Speaking at The Economist's 2013 Information Forum on Tuesday morning, Schmidt recalled that five years ago, no one would have predicted that every company would be so interested in big data now.

"The real value is created by innovators that come up with algorithms that do something surprisingly useful," the former Novell CEO remarked.

Schmidt cited that one of the core problems discovered with government systems, in particular, is that "our wasted is someone else's revenue."

The question to ask then, he continued, is whether or not someone wants to fix it.

Looking forward, Schmidt predicted business opportunities around mobile healthcare apps -- especially affecting (and changing) where the costs are.

Schmidt argued further that the core costs of healthcare are still related to "overbilling and the last six months of life," which he posited are tied to political problems still.

"Platforms are where the aggregated value occurs," Schmidt said. "The way the industry creates wealth is creating platforms."

During the discussion with McKinsey Global Institute director James Manyika, Schmidt was asked about a number of issues covered in his recently published book, The New Digital Age: Reshaping the Future of People, Nations and Business, co-penned with Jared Cohen.

Describing that he has been on a book tour for the last two months, Schmidt suggested a "reasonable data approach" to selling books in which the exact right number of books are shipped to bookstores based on simple factors such as weather, geography, customer buying patterns, and more.

He also quipped that the publishing industry apparently "has no concept of doing this" -- at least not yet.

Nevertheless, Schmidt concluded, "If you apply that model, it's true for every business."

The key to getting there, Schmidt hinted, is building the right platforms to make use of this unstructured data.

"Platforms are where the aggregated value occurs," Schmidt said. "The way the industry creates wealth is creating platforms."

He defined these platforms will consist of common APIs and collaboration among industry leaders.

Naturally, there are some considerable roadblocks still.

Schmidt explained that there is this concept that everything in digital "has to talk to each other," but that the backend infrastructures to enable this haven't caught up yet.

He posited that eventually these systems will be standardized, "probably companies that have not yet been founded."

For example, Schmidt admitted that most use cases for Google's mobile operating system, Android, are ones that "we don't even know about yet," adding that it is hard to know what those platforms will look like.

Another ubiquitous debate centers around privacy.

On this hot topic that surrounds nearly every Google product, Schmidt summed up, "You're going to fight for it or you're going to lose it."

Schmidt's nugget of advice on privacy: "Regulate the outcome and let the industry innovate to find those solutions."

Schmidt argued that Europe is actually at the "leading edge" of the privacy debate.

"In the fight for users, the small companies are willing to push the edge of what is appropriate," Schmidt said. "Larger companies are subject to good judgment and government policy."

However, Schmidt asserted that the common problem is that regulators often want to put restrictions on "the mechanism, not the outcome," stipulating this prohibits future innovation.

To counter this strategy, Schmidt highlighted handling copyright issues on YouTube as an example, noting advancements that Google has made in tackling illegally uploaded content.

Schmidt explained that he was worried regulators wouldn't let Google solve the problem, but he seemed supportive of how that particular issue has been put to rest.

Schmidt's nugget of advice on privacy: "Regulate the outcome and let the industry innovate to find those solutions."

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