“If you’re a famous television producer, you’ll build a show on the Internet first ….”

Schmidt told the crowd that Google’s top engineers now build services primarily to work on mobile devices; PC browsers are more of an afterthought. Mobile is a huge, exciting category where Google can reach a new audience. Similarly, he suggested that TV producers should soon begin releasing shows online before they appear on TV. Why? Not because the online audience is more lucrative than TV – it’s not – but because the Internet provides a test bed where content creators can find out what will resonate with an audience.

“Advertising that is more targeted is worth more money. … Eventually, the revenue in the digital world should be higher.”

Not just higher than it is now, but higher than it was in the analog world, Schmidt said. For newspapers, magazines and broadcasters who are watching revenues drop in their legacy businesses, this sounds like wishful thinking. But the Google chief maintained that because digital advertising should allow marketers to tailor their message to the audience, it will be more effective and brands will spend more money. He didn’t say how much of that money Google would pocket, and how much would be left for content creators.

“Would you prefer someone else?”

In one of the sharper exchanges of the afternoon, a questioner challenged Schmidt with the fact that Google is collecting a staggering amount of information about who we are, what we’re thinking, and even where we are. “All this information that you have about us: where does it go? Who has access to that?” (Google servers and Google employees, under careful rules, Schmidt said.) “Does that scare everyone in this room?” The questioner asked, to applause. “Would you prefer someone else?” Schmidt shot back – to laughter and even greater applause. “Is there a government that you would prefer to be in charge of this?” It was quite the effective moment that showed we still trust government less than we trust Google. But should we trust either?

“There are many, many things that Google could do, that we chose not to do.”

Just moments after he skillfully parried the “scary Google” crowd, Schmidt fanned the flames a little. “One day we had a conversation where we figured we could just try to predict the stock market,” he said. “And then we decided it was illegal. So we stopped doing that.” On the one hand, it’s reassuring to know that we have Google to save us from … Google. On the other hand, it’s discomfiting that the main check on Google’s ego is its own superego.

“Google sees itself really differently from other companies ….”

Schmidt said that because of Google’s ownership structure – he and the company’s founders hold the majority voting power – the company isn’t beholden to the whims of the market. “We see ourselves as a company with a mission about information,” he said, “and not a mission about revenue or profits.” It’s something that he has said many times before, but it took on a new cast in light of recent events like the Google Buzz privacy dustup. Will Google’s sense of exceptionalism give it an enduring moral compass? Or just a dangerous culture of self-righteousness? We’ll find out soon enough.