In this era of dynastic transitions and paradigm shifts in the high-tech sector, four Internet giants – Google, Apple, Amazon and Facebook – are dominant and defining the future of mankind. In an interview with CommonWealth Magazine and other reporters in Hong Kong, Google Executive Chairman Eric Schmidt conveyed his vision of the future and offered some advice as to what Taiwan needs to do to prevent losing out amid these epochal changes.

Following are excerpts of the interview.

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Q: What is the New Digital Age? Is this a world where every person, object, and piece of information is connected and how will that change the relationship between people and governments and enterprises?

A: We didn't know quite what we were going to do when we started writing the book. But we concluded that pretty much everything was going to be connected and seven or eight billion people will be online. The last billion may be very hard to get connected, but we're going to go from two and a half billion to seven, in five to 10 years. That is a change of enormous implications.

And many of those people will be coming online in countries that are relatively restrictive of personal freedoms or economic freedoms. And the book, as you know, is about what happens. You start by saying this is a good thing. There are issues, but it's fundamentally going to happen, and it's good, and it's good from the perspective of the individual. If you're poor and you live in a village, this is more important than the arrival of television. It's your medicine, your education, your entertainment and your safety.

We also say for the developed world, which includes Hong Kong and Taiwan, you'll also see amazing improvements, because the network gets that much faster. AI makes the system smarter and ask more intelligent questions. So it's an optimistic book, it addresses a large number of problems, almost all of which have occurred after we wrote the book in one form or another. You know, privacy issues, and terrorism issues, and leaking issues, and I think that will continue.

Defining the Future of Mankind

Q: Perhaps you could talk about innovation. We've seen tech giants come and go. They got complacent and stopped innovating. So can you talk about the logic behind the moonshot projects, Calico and Smart Cars?

A: The logic is we can…Google has a lot of resources. We get excited about an idea, and we see how far we can go. And we can fail too, we're not perfect.

I think if you look at the history of tech, you have a series of – for purposes of argument you can use the Chinese term dynasties – you have a dynastic structure of IBM, Microsoft. Now you have four companies that are really defining the future: Google, Apple, Amazon, and Facebook. Microsoft is not in it. But each of the four I name are doing very well, and they all compete with each other in different ways, and that competition is very healthy.

I think if Apple does something we didn't do on Android, it's our mistake. We do something Apple didn't do, that's their mistake, that's competition. And as long as it remains in that state of competition, we'll be fine. There's a lot of pressure on these companies to grow. And we're so large, growth is hard.

Q: Some people say, is it because Google has too much cash that you're doing some things that are weird?

A: Can I be critical, just for a second? Why don't you just give us the benefit of the doubt? Why do you just say we "might" be successful in improving aging? But seriously, there's sort of this negative tone, you shouldn't do this, why don't you give us the benefit of the doubt and say, we are sincere, we might fail. If it works, you'll benefit from it.

Self-driving cars might work, might not. I think it might work, by the way…There are 30,000 people who die on American highways every year from cars driven by humans. If we can materially change that, you might have a life, you might not be dead in a car accident. These are very real issues to people. So let's give it a try.

The Shadow of the Internet Giant

Q: Aside from safety, what is Google doing to get anybody connected at any place, any time?

A: The serious answer is, we benefit and you benefit from more connectivity. And we benefit from more, faster connectivity. And you and we all benefit by more sophisticated systems, more education, more sophisticated consumers. Everybody benefits. I genuinely believe what we are doing will lead to a more peaceful world, that more education means less violence, more understanding of the rights of men, respect for women, all that sort of thing. So I put it in a moral context: We try to make the world better.

Q: Even with all your resources, there are so many problems in the world. What about democracy, wars, hunger, natural disasters?

A: So let's use two of those. In a democracy, we can clearly help with more information. We can't fix some of the democracies that don't work well. We can at least expose the information that they're rigged, if it's the case. With corruption, we can help a great deal because corruption leaves a trail. The best example is in Greece. They did a satellite survey, and they discovered a very large number of pools and houses that did not have a pool permit. You can see the pools from satellites. That's a simple example.

As for war, one of the causes of war is lack of understanding. I think we can contribute to that. Those are some examples. You know, making people smarter has got to be a good thing…

Q: As more people connect to the internet, people say Google may be the next Kingdom of the World, they are saying it's a monopoly. What do you say to that?

A: Well, we're highly regulated by all the countries we operate in, so I don't agree we are that. The first and most obvious comment is, we're not a significant force in China, because of our market share. So that answer for China is easy. In most of the other countries, we have majority market share. We would argue we got in because we invested heavily in engineering, which is better, we figured it out. And remember, our products are free. So it's very hard to complain… well, you can complain all you want, but the fact is, you use Google, and you don't pay for it.

Q: What about technology-based stuff like energy and health care?

A: The interesting thing about energy is that, the fracking revolution has changed everything. That was not a Google thing, but it's an example of entrepreneurship. In Google's role with energy, it turns out we studied this pretty thoroughly, and if you inform people of their energy usage, they use less. Roughly 10% less. So if you want to conserve 10% of energy, just tell people what they're using. You'll get more than that, but 10% is a lot. That would be energy.

I like to think about them (mobile phones) as supercomputers. And what am I going to do with my health with this? Well, there are patches now I can put on my skin, and WiFi out my body conditions. There are all sorts of diagnostics that can plug in here or the speaker output can do monitoring. Blue Toothing into the phone and then having the phone do medical diagnostics, is a huge, huge business. Billions of dollars, because everyone's affected by it and everyone has a phone.

Taiwan Needs to Shift to Software

Q: It's interesting you mentioned health care services on these little supercomputers. Taiwan's economy was built on manufacturing these devices, but more and more, the devices are not what make money, it's the things on the devices. So what's the role of Taiwanese tech companies now?

A: The interesting thing about the hardware companies in Taiwan is they always operated on very low margins. Part of the secret was the Taiwanese figured out a way to make these incredibly cheaply. The 7-inch tablet we make, which was I think from ASUS, it's $199 list price? How do you make any money from that? It's extraordinary. I don't think this is a new fact. I do think Taiwan and Hong Kong need to invest more in software. I think the shift from hardware to software is a profound one. There will be a lot more profits and money in new services on the software side. And I think it's an important national priority. When I was in Taiwan about a year ago, I said this fairly clearly.

Q: So can you imagine what kind of companies and industries will disappear in the new Digital Age?

A: It's hard to say what will disappear. What is true is everyone is affected by it. Every manufacturing company changes the way it manufactures to manufacture more pertinent, more personal, more specialized things. Every services company tailors its services more to the individual. You reach your consumers online, you do your marketing online, you do your criticism online. Your customers are online.

Xiaomi is an example of a company that essentially does not make any money on the hardware, how will they ever make money? They will have to make it on services of some kind; they can't lose money forever, see what I'm saying? So these kinds of models may become more common.

Q: So if you can't get online, that kind of company will disappear?

A: Or they remain very local. What does a person who lives on a dollar a day do in a corporation? The answer is, they fish. They fish, they are subsistence living, all of that will stay. But it's true that small, local suppliers will either have to get on the internet or be beaten by larger suppliers that have distribution networks.