BRIAN LAMB, HOST, Q&A: Ken Auletta, author of ”Googled: The End of the World as We Know It,” why that subtitle?

KEN AULETTA, AUTHOR, ”GOOGLED: THE END OF THE WORLD AS WE KNOW IT”: Because it is the end of the world as we know it.

This is a book about how this company, Google -- which is really a surrogate in many ways for the Internet -- came along in 1998 and started a search engine, and ultimately said, ”Hey, wait a second. The world of media is inefficient.

”Why can’t we digitize books? Why can’t we have Google News and collect and aggregate all the news from newspapers and magazines? Why can’t we have YouTube, do television for free on the Internet? Why can’t we create Android for cell phones, a free cell phone operating system? Why can’t we have cloud computing to take on Microsoft?”

So, suddenly, traditional media, it was the end of their world as they knew it. And they were suddenly confronted, not just by Google, but by the digital world – a world that was much more efficient than theirs and that was really stealing their business.

LAMB: I took this quote out of your book that you got from Tom Curley, who runs the Associated Press – arguably, the most powerful news organization in the world. I’ll ask you about that.

But Tom Curley says, ”They have the greatest business ever invented. They are taking everybody else’s work, and they are figuring out how to do a deal with most other people in which heads they win, and tails, most everybody else loses.”

AULETTA: Well, you know, it’s not everybody else. The customer wins. See, that’s the great dilemma here, that it harms – Google aggregating news – harms the A.P. and newspapers, as does the Internet.

Search harms – you know, if you can search from Pakistan the developments today, and you do a search, you don’t even know where it’s coming from, but you’re getting a lot of information.

But for the public, it’s a wondrous thing. It’s free, and it’s at your fingertips. It’s like having a library on whatever device you’re using.

So, Google is a miraculous service for consumers. The problem is that it hurts a lot of businesses, particularly media companies. And they have to, and have been very slow to, figure out a way to respond to it.

LAMB: Speaking of the Associated Press, why is it the Associated Press almost never gets covered by anybody as an institution?

AULETTA: That’s a good question, actually. It’s a company that’s done very well, even though their newspapers, some of their main clients are faltering and, in fact, cutting back on the fees they pay the Associated Press, and in some cases leaving the Associated Press.

The Associated Press very smartly went into Internet early and went into video early. And so, their services to their member papers and institutions are not just print news, but online news and video news. And they’ve been very successful worldwide.

LAMB: You say you made 13 trips to Silicon Valley where Google’s headquartered and stayed there for 13 weeks. Why?

AULETTA: Well, I was visiting another planet. This is Silicon Valley. I’m from New York. I spent a lot of my time – I mean, I wrote a book on Microsoft, so I spent time out there. But I spent a lot of my time looking at traditional media on the East Coast, Hollywood.

This was a way to visit a world of people, of engineers. And when you spend time out there, you realize it’s a world with a different set of values than you see in most media, traditional media or institutions.

Engineers start from an assumption – and the two founders of Google, Sergey Brin and Larry Page start from the assumption – that most of the way things operate are inefficient. And they are. They’re right. They are inefficient.

But you start from that assumption, and you empower an engineer with that assumption. An engineer asks a simple question: Why?

Why can’t we have free phone service? Why can’t we digitize all the books in print, 20 million of them? Why can’t we just do that? You know, why can’t we put television for free on YouTube?

Why can’t we – you know, why can’t we sell advertising much more cheaply, and tell the customer – or the advertiser – you know, who’s actually watching your ads? And why can’t we just charge them when someone clicks on their ad? As opposed to whether it catches their eye or not, which is the way it’s done in the traditional world.

So, once you start asking those questions, you begin to invade other people’s business. And it’s not good for those businesses.

But what I discovered is that, in this world, the world of Google, the engineer is king, and the engineer is king not only in the sense that they get 20 percent of their time off from Google – every engineer at Google gets 20 percent of their time, one day a week, to work on anything they want. And a lot of the innovations that come out of Google come from that 20 percent time, that freedom, that sense of liberation they convey to their engineers.

But also what happens is that you realize as you spend time – I, this visitor to this other planet, I sit in the Google meetings. I understand maybe half the words. They could have been speaking Swahili. And I had to have it interpreted.

But Larry Page and Sergey Brin, and Eric Schmidt, the CEO, they’re all engineers. They understand every word.

And what you realize – what I came to understand sitting there, a little by osmosis over a period of time – is that, in fact, the engineer is the content creator at Google. They’re the equivalent of the screen writer or the director.

They’re creating content, different kinds of content – YouTube, content – and software that enables you to read or watch or do Google Maps. I mean, that’s content.

LAMB: Some of this stuff in your book is incomprehensible. I’ll give you an example.

You say that – they own YouTube, and they bought it, what, 2006 …

AULETTA: Yes, late ’06.

LAMB: … that every minute, 15 hours of video is uploaded onto the YouTube, whatever, Web site. I mean …

AULETTA: Onto a server …

LAMB: Onto a server, yes.

AULETTA: … that stores it and then pumps it back out.

LAMB: What – I mean, and you say they don’t make any money with YouTube yet.

AULETTA: No. In fact, one of the – there’s an arrogance that you’ll find there, too. And it’s an arrogance based on their own experience, which has been a successful one.

They started in a garage in 1998, and they got funding in 1999. And they got $25 million and they said, ”We’re not going to figure out a way to make money. We’re just going to create a great search engine. And then, at some point, we’ll figure it out.”

Well, by 2001, they still were not making money, but they had built a great search engine. But their venture capitalists were getting a little restive, what’s going to happen.

Then they came up with an advertising system, which when you do Google search, on that right-hand side there’s a gray box, and those are ads.

But what they did which was very clever, they said – they created a Vickrey auction system, which is – they copied it. And it says that, basically, if you want to bid on the word, let’s say, ”sneakers,” well who might be your – a sneaker manufacturer would bid on that.

So, a sneaker manufacturer comes in and says, ”Well, I’d like to – these are the search words, my key search words I’d like bid on – sneakers, playground, basketball, sports – and you come up with a series of key words. And I will bid 50 cents each time that comes.”

And so, let’s say Nike bids 50 cents. And let’s say New Balance bids 25 cents. They don’t know what they’re doing. All of this online.

What the Vickrey auction system did – which is one of the reasons that advertisers loved it – is that it said Nike won with the highest bid, 50 cents. But they didn’t pay 50 cents. They paid a penny more than the second-highest bidder. So, they paid 26 cents. The second-highest bidder paid a penny more than the third bidder.

So, the advertiser said, ”This is great. And not only is it great financially for me, but I only pay if someone clicks on my ad.” And I could tell when they’re clicking on my ad, A. And B, they have a second click, they can actually purchase something, and I can tell that.

So, it’s effective advertising. It’s not a shotgun anymore, it’s a rifle shot.

And then the other thing Google learned from that is that – I’m not a typical Google searcher, in that I don’t really pay attention to the ads. But they found out that almost half the people who do a Google search actually look at the ads, and they treat the ads as information.

So, for Google and for the consumer it’s a win-win. And for the advertisers, it’s a win-win.

LAMB: Let’s talk …

AULETTA: Twenty-two billion dollars a year in revenue comes, 21 of it from those search ads.

LAMB: That’s what I wanted to go to, the numbers, 20,000 employees. Where are they in the world?

AULETTA: Well, there’s a lot at Mountain View. There’s a lot in New York. And they’re in offices all over the world – in China, in Europe, in Asia and South America.

And they have these data centers, which are secret locations in most cases. They don’t talk about them. They’re very secretive about stuff like that. But they have at least two or three dozen of those. The numbers, we don’t know.

LAMB: I saw they announced the big data center at The Dalles in Oregon. And you can see a picture, and all that.

But I got on YouTube. They own it. They’ve tried to find out – get some video. And I want to show you. He’s going to talk for about 20 seconds. But we don’t know where this is, but they try to tell us something about their data centers and their servers. Let’s watch this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: There are slots for over 45,000 servers in the 45 containers housed inside. The data center itself went into service in 2005, and supports 10 megawatts of I.T. equipment load.

It has a trailing 12-month average power utilization effectiveness value of 1.25.

(END VIDEO CLIP)

LAMB: … spend much time on these kind of things. But how many thousands and thousands of servers are there?

AULETTA: Well, their servers – the servers are basically, they’re laptop computers. They take the keyboards out and they stack them – they cool them. There’s a space between each one and they stack them. There are millions of them that they have. And they store and process and index the Internet.

And what they do in a Google search, the average Google search, when you type in words in the Google search box, the average time it takes to get the results back from a Google search is four tenths of a second.

One of the reasons it’s fast, so fast, is that they know where you are physically. And they send your search to the data center nearest physically to you. So, if you’re on the East Coast, you’re going to a data center on the East Coast.

LAMB: Do you have any idea how many different locations they have?

AULETTA: No. And they won’t tell you. And you ask – in fact, Google is so incredibly – they love talking about transparency, but if you ask them how many data centers do you have? Where are they located? ”Sorry, we can’t talk about that for security reasons.”

If you ask them how many employees they have who are from India, ”Sorry, we can’t talk about that for security reasons.”

So, they’re very competitive. And there’s actually a reason for that which is kind of interesting.

Larry Page, the co-founder, read a book as a teenager on Nikolai Tesla, who arguably is the person who really invented electricity. And he was a tragic figure, because he didn’t get the credit for it; Thomas Edison did. And he died destitute and bitter. And one of the reasons that Larry Page is convinced he died destitute and bitter is because he shared his secrets openly.

So, Larry Page, when he went to Google, was determined that Google would not share its secrets openly. So, they’re very paranoid about competitors getting knowledge. I mean, if you ask them, ”The algorithm that determines what ranks highest in the search results, what is it,” they won’t tell you what’s in that black box.

LAMB: We showed the audience a lot more of that inside facility than you would think was necessary, but just to prove that it’s the engineers that are behind all this.

Explain the difference between an engineer and everybody else.

AULETTA: At Google? Or anywhere?

LAMB: Anywhere. I mean, just that engineers are different, as you point out in your book.

AULETTA: An engineer – first of all, they need to quantify everything, which is one of the reasons why Google sometimes gets in trouble, certainly with government in Washington today.

But they want to quantify everything. And they start from a logical premise. They ask you a simple question: Why? Why can’t you do it this way?

If you have digital technology which lets you know who the people are, roughly – more about you than you know from watching a regular television set – and you could actually tell whether someone is watching an ad, and for how long, or what they’re reading, or what they’re searching for, wouldn’t that be incredibly valuable? Why shouldn’t we share that with advertisers, they say.

And if they say, you know, wouldn’t it be wonderful – and it would be – to have all the 20 million books ever published digitized, so you can have access to it in school libraries, or me as an author at home? I mean, it’s fabulous. I love it. And you can buy books, electronic books that way.

I mean, for a consumer, it’s wonderful. Why shouldn’t you make that available to them?

But they don’t ask the question that doesn’t fit into their algorithmic, mathematical model, which is, for instance, books. You know, what do you do about copyright protection? What do you do about privacy with advertising?

And those are questions that are soft questions that engineers tend not to dwell on.

LAMB: Can you define an algorithm, please?

AULETTA: An algorithm is a mathematical formula that says, basically, to someone who’s doing a search – I ask a question of Steve Jobs, and I want to know about Steve Jobs. And it shoots back a list of things.

The algorithm is composed of – we know at least two things that make up an algorithm. An algorithm is composed of the number of times that someone has visited a Web site. So, the most popular Web sites about Steve Jobs would tend to rank higher in the search results, be on that first page of the search results.

They also have – I know from reporting the book that they added a qualitative piece to the algorithm, though they won’t tell you how much it is. That is to say, if an article is in the ”New York Times,” it tends to get a boost in the rankings. That’s also part of the algorithmic design.

But it’s basically a mathematical formula that’s secret, that Google ranks where a search result should go.

LAMB: Do they put – do they determine that a ”New York Times” article will rank higher?

AULETTA: Yes.

LAMB: Well, this is interesting to me. If you put almost anybody’s name in, including Ken Auletta, you’ll get Wikipedia in the first two or three. But if you put Google in, you won’t get Wikipedia till the third page.

AULETTA: Is that right? What do you get – that’s an interesting …

LAMB: You get all kinds of Google stuff before you get to Wikipedia’s explanation on what Google is.

AULETTA: That’s surprising to me. I didn’t know that. Because Wikipedia, as you said, is almost always in that first page. And that’s really the wisdom of crowds approach, that basically, most people are going to Wikipedia, so it ranks high.

And it’s actually a credit to Google that it does rank high, because Google has a competing Wikipedia-like service, which is not done very well.

LAMB: You say that there is an organization and organizations that actually can be paid to try to get your name higher whenever they’re going in for any particular subject. And how does that work?

AULETTA: Well, it’s one of the reasons why Google keeps the algorithm a secret. They don’t want these people to know how to game the system.

And these are search engine optimizers, and they’re people who basically are – they’re marketing consultants. And they basically tell someone, a business, ”We can figure out how to make you rank higher in the search results of Google.” And some of that is witchcraft, and some of that is probably real.

But Google is constantly changing and tinkering with its algorithms in order to fight off those people.

One of the reasons they don’t allow advertisers, for instance, to pay to be ranked higher in search results – or people to pay – is because they want to keep it pure. And that’s to their credit. It’s a very noble – in many ways, they do very many noble things.

LAMB: The morning line is that the stock on this Thursday as we’re recording this for Sunday night, is $540. The market cap is $171 billion. And you say in your book that, at the start of the public part of this, when they became a public corporation in 2004, seven billionaires were made.

Who are they?

AULETTA: Well, they’re the two founders. And they’re the two venture capitalists. And there’s Ram Shriram who is a venture capitalist who put them together with the other capitalists. And there’s Omid Kordestani, who is the senior vice president, who they hired from Netscape in ’99, and Eric Schmidt, the CEO. Those are the seven.

LAMB: You said that you did 11 interviews with Eric Schmidt. And we have some video of you talking to Eric Schmidt at some forum. What’s this man like?

AULETTA: He is very understated, smoother than the two founders.

LAMB: You remember that?

AULETTA: Oh, I do. Yes. It was a New Yorker, Newhouse School interview I did with him in San Francisco.

LAMB: How old a man is he?

AULETTA: He’s 53.

LAMB: Why did they pick him?

AULETTA: Well, they actually didn’t want to pick anyone. They wanted to run it themselves, but they were under pressure from the venture capitalists to bring in an experienced manager. He was. He had been at Sun Microsystems and another software company.

And he was someone that – he was an engineer like them, Ph.D. And so, he was someone that they thought was not a suit. He was not someone that would stifle the creativity and the sense of chaos that they felt Google needed. And he hasn’t.

He has a wonderful relationship with them. He defers to them on many things, but they basically have an agreement that the three of them on major issues have to agree.

LAMB: He’s the CEO. And Sergey Brin and Larry Page are presidents?

AULETTA: They’re presidents, one of technology, one of consumer – you know, the affect on consumers and …

LAMB: What kind of engineers are they?

AULETTA: Well, they never got their Ph.D.s. They left Stanford for Google. They were at Stanford, and they were using the Stanford computer system to create their search engine. And they had so many searchers coming on to do a Google search that the system crashed.

So, the academic people at Stanford said, ”This is wonderful what you guys are doing. Maybe you want to start a business.” They were doing it in their dorm rooms.

And so, they rented space. They left school. Some of their professors invested in them, some of them became consultants – and made a lot of money, by the way. And they started up in a garage in Menlo Park. And they had a hand-written sign out front, ”Google Worldwide Headquarters.”

LAMB: Why did they put – I think it’s in 2004 – the president of Stanford on their board?

AULETTA: Well, he was the former head of the computer science department, so he’s a man who understood their language. He didn’t need a translator, as I did. And he’s Stanford. Stanford’s a major – Stanford owns more than one percent of Google’s stock, so they reap a nice benefit from Google, as they do from Yahoo! and other companies that were farmed out of Stanford.

And he is a smart man, and they respect him. And, you know, that’s why he’s on the board.

LAMB: Sergey Brin. Where’s he from? How old is he?

AULETTA: He was born in the former Soviet Union. He’s 35. His parents are Jewish, and they felt discriminated against – scientists.

LAMB: That’s in Maryland, by the way, where he’s giving that speech.

AULETTA: And they live in Maryland. His father teaches at the university there. His mother no longer teaches, but she was – she, too, was a science person. They immigrated when he was not yet a teenager, came here very poor.

He was a terrific student, got a scholarship to Stanford. He was closer to the faculty members at college in Maryland than he was to – at Johns Hopkins – than he was to fellow students. Went to Stanford and was a bit of a cut-up. And he still is a bit of a cut-up. He’ll come into meetings, you know, rollerblading in and with his tee-shirt. They both wear tee-shirts all the time. And they’re both the same age, 35.

Both – Sergey Brin became a dad for the first time earlier this year, and Larry Page is about to become a dad this fall.

LAMB: What’s Larry Page like? And where is he from?

AULETTA: Page is from Michigan. His father was – like Sergey, parents both scientists. His father was a professor at the University of Michigan.

He is someone who is less affable than Sergey. He tends to, when he talks to you, to look down and not look at you. He is brilliant, as is Sergey.

The ranking system is called PageRank, which is named after him, in the search results.

LAMB: PageRank.

AULETTA: PageRank. That’s – the algorithms come in – they call it PageRank system that ranks where in the search results you are.

LAMB: What did he have to do with Google, going to the University of Michigan, to digitize all their books in the library?

AULETTA: A lot. What happened was, you know, Larry – I describe this scene in my book where Eric Schmidt, the CEO, walks into Larry’s office in 2002, and Larry Page has a Lego set, and he’s creating this scanner to – and Eric Schmidt says to him, ”What are you doing, Larry?”

He says, ”I’m creating a scanner. We’re going to scan all the world’s books.”

He says, ”How are you going to – Larry, how are you going to scan all those?”

”Well, we’re going to – you know, we’ll go to colleges. We’ll go to colleges. I’ll go to Michigan and I’ll talk to the library.”

And he did. And they got Al Gore to talk to the Library of Congress, and then they went to – they talked to other libraries, and they got them on board. But they never thought to get the publishers and the authors on board, so they got a lawsuit instead. And again, it was a copyright issue.

LAMB: You say they paid them $125 million, the copyright owners.

AULETTA: They settled with the publishers and with the Authors Guild. They agreed to pay $125 million over the years. And in return, they got the right to digitize all the books in print, and ultimately to sell books, electronic books, online – and compete against Microsoft – I mean, against Amazon.

LAMB: If you get on Google Books, though, a tremendous number of them have very limited amount of a book.

AULETTA: That’s right. Because here you get into the law. The law – there’s an issue of fair use, and there’s the issue of copyright.

The law says, fair use allows you to quote a minimal amount. They never define in the law what a minimal amount is. But this was part of the battle.

Google’s definition of fair use was much broader. They assumed that they could take much more out of a book than the authors and the publishers did.

And, for instance, if you’re an author of a cookbook, if they could take your whole recipe for chicken or desserts, then, you know, they’ve really destroyed the value of your book. And a book like mine, I don’t care if they take a paragraph out of it, but do they want to take more than a paragraph out of it? Do they want to take chapters out of it? That I would object to.

LAMB: Was it Larry Page or Sergey Brin that suggested to you that you ought to put this free out on the Internet?

AULETTA: It was Sergey Brin, and I came – this was our second or third interview, and he came in late on his rollerblades. His hair was all spiked up. He had just come out of the shower.

And he plopped his bag down, and he said, ”I don’t understand.” He said, ”Why don’t you just publish your book for free on the Internet? Many more people will see it than actually read the book. Wouldn’t that be great?”

LAMB: Did he mean that, by the way?

AULETTA: Yes. Oh, of course he meant it.

LAMB: I mean, did he really – my reaction when I read it was, what planet is he on? You can’t …

AULETTA: But actually, there’s, I think, a learning experience in this, in the anecdote. And let me just go through it, and try and fill that out.

I said to him, ”You mean” – I said, ”Well, let me ask you a couple of questions, Sergey.” I said, ”If I put my book online, who’s going to pay me to come out here 13 times, and live out here, and pay for the hotel and the meals and the interview time, and the airplane flights. Who’s going to pay for that?”

He said, ”Oh.”

I said, ”Well, let me ask you another question. Who’s going to edit my book? Who’s going to market my book? Who’s going to do the index? Who’s going to legally vet it for me? Who’s going to pay for all that?”

And by that time he wanted to change the subject.

But I think what the insight I took away from that was twofold. One is, he’s flying a – he’s an engineer asking logical questions at 30,000 feet. Everything looks the same. He has a very simplistic view of the publishing process and what it’s like to actually write a book.

And how I’m dependent on writing a book – that’s my income. It’s not like I’m doing this for fun. I mean, that’s how I make a living.

And the other thing it teaches you is his view of copyright law, that has a very expansive view of copyright law, which is, just put it out there, you know.

And if you’re an author, or you’re a director, or you’re a screen writer, if that’s the way you make your living, you don’t want to give it away. You want to be sure you can earn some money.

LAMB: You say that you interviewed him three times. How many times did you interview Larry Page?

AULETTA: I interviewed Larry Page one long interview, three with Sergey, 12 with Schmidt. But I sat in meetings. I watched them in meetings many, many times.

LAMB: And did you want to interview them more than you did?

AULETTA: I did. I wanted to interview Larry one more time, and I wanted to interview Sergey one more time. Eric, I got a full complement of interviews.

They decided at the end not to do it, even though Larry had said he would do one more interview with me, because I wanted to talk about the early days of Google, which I saved my first hour-and-half or almost two-hour meeting with them. I held that off and I would do it the second interview. And then he changed his mind and didn’t want to do a second one.

But I had total access to everyone at Google. It was no – and they were very cooperative. I can’t – I don’t begrudge them.

LAMB: You know that this is the sixth corporate biography of Google published in the last four years. What did you do differently? And did you read the other six?

AULETTA: I did. I don’t think it was six.

The first book written about Google was called ”Search,” and it was John Battelle’s book. It was really – Google was part of it, but it was really about search. And it’s a wonderful book by a serious guy.

The second book was by David Vise and Mark Malseed, which was, I think, called ”The Google Story.” And it had a lot of good information and reporting in that.

And then you had another book by a fellow who writes a column for the ”New York Times,” who teaches at San Jose.

And then you had Jeff Jarvis who wrote a book, ”What Would Google Do?” The Jarvis book is not reporting. It’s just, you know, thinking. And he’s funny, and he’s a good observer. But he would do things, like he would ask, what would Google do if it owned General Motors.

This is the most cooperation they’ve ever granted to anyone for a book. So, I think the story in this book of Google’s, who they were, is fresh. There’s a lot of new information.

But also, the conflict in the book, the narrative conflict in this book is how traditional media – be it advertising, or telephone, or television, or newspapers or magazines, or Microsoft – how slow they were to wake up to the fact that Google was a bear coming at them.

And Google didn’t start out – it wasn’t their intent to take over the world of media. But with the engineer question, which is why, or why not.

As you start asking that as you’re growing, you realize, oh, my God. We can grow from just being a search engine to YouTube, which is a television, and we can grow to Android, which is a telephone operating, a mobile operating system. And we can go to cloud computing, which really says, why do you need to pay software fees to Microsoft for packaged software? Store everything in our portable cloud.

So, they just – the world began to open up for them, and it opened up the reality of what Google was up to. The traditional media was very late to understand.

LAMB: Every time you mention cloud computing, or whatever it is, it always comes back to that server. And why is it they make their own servers? And does anybody else in the business do that? And when did they decide to do that?

AULETTA: Well, other people do make their own servers. And there are a lot of businesses that are competing in cloud computing. Microsoft is trying to get into cloud computing. Amazon is in cloud computing. Apple’s in cloud computing.

LAMB: How does that work? Explain how cloud computing works.

AULETTA: Cloud computing is basically – it’s not in a cloud. It’s in a server, in those server centers you showed earlier on the program. It’s a series of computers and servers that store information.

Think of it this way. When you do your e-mail, that e-mail is in a cloud. It’s in a server. And it’s waiting there for you. You pull it down, and you open it up. But it stays there. But it allows you, no matter where you are and whatever device you’re working on – be it your BlackBerry or your iPhone or your laptop, or your, you know, your work station at home, or in the office – that cloud follows you around, or you follow it around. That’s what cloud computing is.

What Google is saying is, instead of just doing e-mail in the cloud, and instead of paying $300 or so for Microsoft 7, Word, we’ll charge you much less. It may even be free, and we’ll figure out some other way to pay for it. All your apps will be there – your word processing programs, the other applications that you like to use. We’ll just store them on our servers, which we call the cloud, and you can access them anywhere you want.

For instance, I had an experience. I use something called Dropbox, which is a way of storing documents, so I can use them – I don’t have to make backup copies. I store them, and then I save them on my hard drive.

Well, my computer died last week. And I said, ”Oh, my God.” Thank God I had Dropbox, because I then could take my laptop out, put it on my desk, right, and go up to the cloud and get my Dropbox and the document I was working on, which happens to be a New Yorker story.

But had I not, how could I have extracted it from my dead computer?

LAMB: In your book you say they’ve spent $3 billion on servers. And you also said they want, basically, an infinite capacity for all this information. How far can they go with this?

AULETTA: Well, what they’ve realized is that they have – one of the incentives for these companies to do cloud computing is that they’ve spent all this money on infrastructure. Amazon spends all this money for, you know, books and – but have excess capacity. So they say, well, why don’t we just branch out and do cloud computing, and offer services to companies?

And if a company is potentially very attractive – not just for individuals. It’s much more lucrative for companies, when you think of it, as a customer.

Of course, they’ll say to the company, ”Why do you need your own I.T. department? Why do you need to spend all this money on computers yourself? Farm it out, outsource it to us. We’ll do it much more cheaply. And you can still have your experts to evaluate that it’s a good service, but you’ll save a lot of money.”

And you do, potentially. You also lose control.

LAMB: Go back to the numbers of roughly $22 billion in revenues for 2009, and they’re revenues are up seven percent, I guess, the last quarter.

They make $4 billion and don’t pay a dime in dividends. Why?

AULETTA: They don’t pay. Because these two young men – one of the things that is extraordinary about these two founders, and about this company, despite the fact that they were in their 20s when they started this company – and they’re only 35 today – they have such clarity of thought about some things. And one of them was that they would not do a regular IPO and …

LAMB: What’s an IPO?

AULETTA: Initial public overture, or investment. So, in other words, when you go public, when you go on the stock market, become a public company, not a private company, which happened in 2004 for them.

They said, ”We are going to control the majority of the voting stock, like the ’New York Times’ or the ’Washington Post’ does, or Warren Buffett does. And we’re not going to – even though we don’t own a majority of the stock, we’re going to own the majority and the voting control, because we want to assure that we will make decisions for the long-rage interests of Google.”

And one of the other things they did, they said, ”We’re not going to give dividends, because we don’t want to create a kind of a culture here among our investors that expects always to have rapid growth every quarter. We want them to look long term. And if it means that we want to make an investment in servers for cloud computing, let’s say, that will cut into our profitability this quarter or this year, we’re going to do it, because we want to focus on long-term growth.”

And that was an extraordinary amount of clarity for young men to have. And they were just insistent on it. And they wrote a letter to shareholders at the time they went public in 2004, telling them all this.

So, ”We want to be transparent,” they said. ”We want you to know our philosophy. If you don’t want to invest in this philosophy, don’t invest in Google.”

LAMB: Do they have any debt?

AULETTA: None. They have cash. They have …

LAMB: Do you know how much cash they have on hand?

AULETTA: Well, it’s probably in the $20, $25 billion range.

LAMB: The one thing in your book you pick up is all these connections out there where people were on each other’s boards, and all that. And I assume that maybe it wasn’t known before, but Jeff Bezos was the fourth man to sign a check for them?

AULETTA: It was not known before. It’s actually fascinating.

He was introduced by Ram Shriram.

LAMB: He’s with – he started Amazon.

AULETTA: He started Amazon. And he sent down to see them in ’98, and liked them so much. And he was one of the four initial investors who put roughly $250,000 each into. But he was the one investor that no one knew who it was. He was the mystery investor.

And he won’t tell me, Bezos, nor will Google – and you can’t find out from the SEC, because he didn’t own 10 percent, or over five percent – but he would never tell me whether he sold his stock or held onto it. But if he held onto his stock today, it’d be worth over $1 billion.

LAMB: And he won’t tell you whether …

AULETTA: And now they’re competitors – major competitors.

LAMB: Al Gore is a connecting point with this organization and Apple?

AULETTA: Yes. Several people are.

Al Gore joined the – is on the Apple board and is close to Steve Jobs. He was retained as a consultant by Google in 2001, late 2001, after he left the vice presidency. They asked him to join the board, and he refused. But he’s an advisor. He’s helped them on a number of things, particularly international things. And he helped them on digitizing books with the Library of Congress and others.

But he’s less involved with Google than he is with Apple.

LAMB: What about Eric Schmidt’s connections with other companies?

AULETTA: Eric Schmidt is on the board of – was on the board – of Apple, stepped down in August of this year.

LAMB: This coming from the government?

AULETTA: Well, the government is investigating. I think it came from Jobs. I mean, I had asked Eric back over a year ago, a year-and-a-half ago, could he stay on the Apple board, because you increasingly were bumping up against Apple as a competitor, Google was.

And he said, ”Yes, I think I can.”

And by late spring and early summer, it was obvious he couldn’t. And the tensions between Apple and Google have grown exponentially, as they compete in cell phones and cloud computing and other things.

LAMB: There’s a front page piece in today’s ”New York Times,” which is Thursday, October 29th. It’s below the fold. ”Hurting Rivals, Google Unveils Free GPS.”

And this has something to do with the Android system that they have invented. And are they now going to compete directly with Apple with that system?

AULETTA: They compete with Apple. They compete with Verizon. They compete with AT&T. They compete with every – you know, Nokia.

I mean, Google is – if you go out there, and if you interviewed the public, and there are survey research that shows this, Google is one of the most popular companies in the world. How can you beat free? Everything’s for free. It’s wonderful. You love it. And it’s efficient. So, Google has very good standing with the public.

If you go out, on the other hand, and you talk to, as I did, the leading executives of phone companies, cable companies, movie companies, you know, Microsoft, newspapers, magazines, books, Google is not in good order. They fear them. In fact, they dread them.

LAMB: How are they politically with Barack Obama?

AULETTA: Well, you know, Eric Schmidt was one of his economic advisors. David Drummond, the counsel, chief council, and a very important man at Google, was an early and fervent supporter. They were supporters of Obama.

And they like – Obama spoke of Google in 2007, and talked about an open net, and more broadband and more investment in infrastructure, and supporting the entrepreneurship of places like Silicon Valley, which is music to the ears of the Google people.

But the reality is that engineers are brilliant at understanding science and mathematical formulas, but they often lack emotional intelligence, that’s to say, a feel for what’s going on.

I saw this when I did a book on events leading to the Microsoft trial in ’99 and 2000. I went out and interviewed Bill Gates in ’98 for my book. And Gates was just enraged that the government would question his motives.

He thought he was doing good. He thought he was creating an operating system that was almost universal. Wasn’t that wonderful that everyone had the same system? You didn’t have to build, like, two sets of railroad tracks around the country. But the government sued him for antitrust violations.

What Gates couldn’t understand was fear, that people would fear a monopoly, people would fear a concentration of power. And Google has that same blind spot. They have trouble understanding that.

And now they’ve got powerful forces that are appearing in Washington, and lobbying the government, as powerful forces did against Microsoft. But Microsoft now is on the other side, lobbying the government to rein in Google, saying Google has – over two-thirds of all the searches in the United States Google controls. That’s too much. Google has too much sway over advertisers. Google has too much sway over digitizing all the 20 million books.

So, you have a lot of people who have an interest in assuring competition – the same kind of people who had an interest in assuring competition in operating systems for Microsoft 10 years ago.

LAMB: Check this figure. I think you said there’s $172 billion spent on ads, advertising in this country. And they have $20 billion of that?

AULETTA: They have $21 billion of that. Of the $22 billion in revenue, they get 21 – roughly 21 is advertising.

LAMB: After only being in business 11 years.

AULETTA: And, by the way, to put this in context, that’s roughly the same amount of ad dollars that consumer magazines in the entire United States bring in.

LAMB: And these are just these little ads off to the right-hand side on the pages.

AULETTA: And it’s two-thirds of what all the newspapers in the United States bring in.

LAMB: Let me read you a quote, and you can tell me where this came from. I wrote if from your book. I couldn’t find it this morning when I went back. Talking about Sergey Brin and Larry Page.

”Two billionaires, who imbibe their antiestablishment rectitude straight from Burning Man, its pseudo-altruistic quest to offer all the world’s information for free, while selling all the world’s advertising at a hefty profit.”

Do you remember, was that you? It was from your book.

AULETTA: That’s me.

LAMB: What is Burning Man?

(LAUGHTER)

It’s all over YouTube. You can find it there.

AULETTA: You can. It’s a retreat in – it’s kind of like a Woodstock retreat in Utah, in the desert. And it’s in late august. And people from all over the world come to it, and with music, some with drugs. And it’s a communal experience for a week. And people hug and exhibit art and music, and stuff.

And Sergey Brin and Larry Page always go – or had gone. Now that they’re married, I’m not sure they went this year. But they always went and loved it. And loved that sense of liberation that Burning Man represented.

And one of the reasons that they were attracted to Eric Schmidt, and were convinced he was not a suit, not a straight-laced businessman, was that he also went to Burning Man. And in the interview they said, ”Did you go to Burning Man?”

And he said, ”Oh, I go all the time.”

They loved that.

LAMB: So, would you ever go to Burning Man?

AULETTA: No.

LAMB: Why not?

AULETTA: Well, I wouldn’t go to Bohemian Grove either. I have no interest in doing that.

LAMB: But what goes on at Bohemian Grove?

AULETTA: Well, Bohemian Grove is just a bunch of wealthy people who walk around and use open urinals. And who knows what else they do? But it’s not something that would interest me.

And Burning Man, you know, I’m not interested in going around hugging people.

LAMB: Why do you think people go to things like Burning Man? What kind of a person goes there? And are the people that go to Bohemian Grove the same kind of people who are basically those who go to Burning Man?

(LAUGHTER)

AULETTA: No. Bohemian Grove is Henry Kissinger and the CEOs of a lot of major companies, and there’s a lot of hobnobbing. It’s how networking relationships are strengthened and built. I think Burning Man – and I don’t cast aspersions on either one. I’m just saying, I would not do it.

Burning Man is a much freer sense. And I think people go there and come away with a different feeling than they would if they went to Bohemian Grove. I think at Burning Man, many people who go come away feeling wonderful, and feeling rejuvenated with a sense of optimism about the human species.

LAMB: Book number 11?

AULETTA: Yes.

LAMB: How does this rank with the other books in terms of time spent, necessary hard work that you put into this stuff? I mean, give us some feeling as to how it relates to the others.

AULETTA: It was two-and-a-half years in the making. It started as a New Yorker piece on Google. I’ve been on leave from the New Yorker for a year-and-a-half to do it.

And it was hard in the sense that I was visiting another planet that was strange to me. I had to try and understand engineers. I had to try and penetrate and understand the Google culture. I had to try and understand, what is it about them that makes them an entrepreneurial company. Are there cultural traits? Are there intellectual traits?

And I had to learn a new language, and that’s very exciting. It’s one of the great things about journalism.

I mean, you and I have done interviews before, and I always compare what I do to visiting other planets. I’m not going back there. I’m not – I don’t have to worry that – or pulling my punches, because I need to go back and talk to Google or anyone else.

I mean, I visited the planet. I tried to understand it. And then I come back to my earth, and I write about it.

LAMB: You dedicated this book for Kate and Mike?

AULETTA: Our daughter, who married Mike this summer.

LAMB: And she’s with the ”Wall Street Journal?”

AULETTA: She works for the ”Wall Street Journal” magazine. She’s an editor, yes.

LAMB: What’s she do?

AULETTA: She’s an editor.

LAMB: Where did she get this?

AULETTA: Oh, she was – oh, I have no idea. Just kidding.

She worked for House and Garden, and it closed. And it was one of the shocks of her young life. She just turned 27.

And so, she – the editor of House and Garden recommended her – was a consultant for the new magazine the ”Wall Street Journal” was setting up – recommended her, and so she works there. She’s an editor.

LAMB: Amanda Burden?

AULETTA: No, Urban.

LAMB: Urban.

AULETTA: Often confused.

LAMB: I know. I …

AULETTA: Amanda is my …

LAMB: It’s hard to keep track …

AULETTA: I know.

LAMB: … with New York socializing.

AULETTA: I don’t have a hard time – right.

(LAUGHTER)

But Amanda Burden is the city planning commissioner, and a very good one.

LAMB: Amanda Urban.

AULETTA: Amanda Urban, my wife, is called Binky. That’s her nickname. And even I call her Binky, even though I love the name Amanda. And she’s a literary agent, a very successful one.

LAMB: Where does she work?

AULETTA: ICM, International Creative Management.

LAMB: And do you do business with them, for your …

AULETTA: They are my agent, but she’s not. She is my – she is the first reader of all my books, and I have the scars to prove it.

LAMB: Do you already have another book?

AULETTA: No, no. A book is like a marriage, Brian. You’re marrying something, and you want to be sure you’re in love. And so, you don’t jump – I don’t jump into a book fast.

I’m actually jumping back into writing my New Yorker pieces, covering the media for the New Yorker, which I love. And I won’t even think about a book for a while.

LAMB: How much of a book tour will you do in this environment, compared to what you would have in your first book?

AULETTA: That’s a good question. It’s very different. My book tour starts here. And, you know, the month of November I’ve given to my publisher. ”You schedule it,” I said. ”Outside of Thanksgiving, I won’t schedule anything. You decide.”

So, they have free rein. And I’ve got, you know, a good schedule, but it’s a different schedule. For instance, we don’t go to Chicago anymore. It used to be that newspapers would interview you. They don’t do books as much. A lot of book reviews are closed, including the ”Washington Post.”

And so, the world has changed dramatically. I mean, you do a lot more interviews online. And you didn’t do that with some of my earlier books.

So, it’s a very different world for books. Book tours – for instance, I go to Seattle – I never went to Seattle before – you know, on this trip. So, it changes.

LAMB: Also, a lot of bookstores aren’t doing the book events that they used to do.

AULETTA: Bookstores don’t do that as much, and there are fewer bookstores, particularly independent bookstores, which used to love to have authors come and read or talk and answer questions.

LAMB: You say that you recorded 150 interviews for this.

AULETTA: No, 300 – 150 with Google.

LAMB: Oh, just at Google. But you recorded them, is my point.

AULETTA: I record all of them.

LAMB: What do you record them on?

AULETTA: I have a digital recorder, a Sony digital recorder, and with a memory stick. And what I do is, when I come back from a trip – a memory stick holds 22 or 45 hours of interviews. When you come back – and I always carry a couple with me. And I come in and I set up the software program on my computer and a little translation box. And you put the memory stick in, and up pops all the interview stuff.

And I name them, who I interviewed, and the date. And then I burn it to a CD. And then I delete the memory stick, because I’ve got it all, and I’ve listened to make sure it’s all there. And I now have a CD of it. And I’ve got a stack of CDs this wide of all the interviews marked.

LAMB: Do you do voice recognition on the …

AULETTA: No, I don’t, because – it’s available, but I don’t trust it. And the reason – and as a journalist, you know, if it doesn’t recognize the right word, or it gets it wrong, then I’ve misquoted someone. And the only way to do it efficiently would be to have the voice recognition type out the whole thing, and then I have to read it.

What I actually do – the system I have – and, you know, everyone has their own system – I take voluminous notes. My wife calls me anal, and I plead guilty to that. And I take notes.

And what I do is, as I’m writing, I’m looking at my notebook, and I can tell if this is page four of an eight-page interview with Sergey Brin. I then put up on my screen – I split the screen. I have a track ball, and I can move it to roughly half-way, press play and listen to it, and then on the split screen type in the quote I want.

So, I don’t transcribe the entire interview, but I know what I’m looking for, and I go and I transcribe it as I’m writing. So, it’s right there.

But what I do – and sometimes when I don’t want to transcribe it, I’ll say, ”Ken? Check quote.” And then I’ll write ”Notebook H, page 24.”

So, I’ll know that when I put that on, I’ll go to notebook H, page 24.

LAMB: There’s a word that you use to define someone in your book that I want to ask you about. And it’s the publisher of the ”New York Times,” Arthur Sulzberger.

You’ve called him – you said he could be supercilious.

What did you mean by that?

AULETTA: He’s a man who, even though he’s in his mid-50s, he oftentimes can act very young. And he’ll say things that are silly. And people are shocked that the publisher of the ”New York Times” would say something silly, particularly when they knew his dad, let’s say.

And on the other hand, I also say in the book about him, he is a man who cares passionately about journalism. And in that newsroom, even though he’s now announced another 100 employees that are going to have to be severed from the company, he’s respected as someone who is trying to preserve the quality of the ”New York Times.” And that’s to his credit. And that’s to the Sulzberger family’s credit.

But he often is stunningly supercilious and silly. And I give an anecdote in there of how he confronted Eric Schmidt at the Davos World Economic Forum. And people were just stunned at how he, you know, called him a skunk at our party in this roomful of 200 or so people. And the person who told me this story, Andrew Lack, on the record.

I then went to Eric Schmidt, and he confirmed it, on the record, that that’s exactly what happened. And when I called – when I talked to Sulzberger, he said, ”Well, I’m not going to confirm. But if Eric Schmidt confirms, then it’s true.”

Eric Schmidt did confirm it, so …

LAMB: By the way, Andrew Lack was with Sony Music when you talked to him. He’s now at Bloomberg, running that. And there had been a couple of articles that Bloomberg is pumping a lot of money into their media operation.

What do you think of what you know of that organization now? And let me expand that beyond that.

What do you personally think about where all this is going?

AULETTA: Boy, small question.

Bloomberg is very aggressive in television. You’re absolutely right.

When I was at the White House recently, Andy Lack was there, and they had an interview with his team, television team, with Bloomberg. They’re trying to do what the A.P. and Reuters have successfully done, expand their video operation and make it a real, major center of profitability.

And that happens as you see the networks cut back on overseas bureaus. There’s a real opportunity for Bloomberg and A.P. and Reuters to step in and provide them with footage and with video.

Where is it all going? Do you mean for all traditional media? Or …

LAMB: Well, a lot of copy is being written and read by journalists, who mourn the passing of journalism as we knew it. And there’s this whole new world. The younger people don’t pay any attention to the old world.

And is it better for us? Or what’s your own take on it?

AULETTA: My own take, one of the things I take away from this two-and-a-half year visit to another planet, including visiting back with traditional media companies, is that I am harsher on the traditional media companies than I am on Google, though I’m sure people at Google will think I’m too critical of them on some things. And I am critical of them on some things.

But what really bugged me about the time I spent with traditional media – well, a couple of things. One is how late they were to understand the new digital world and how the Internet changed the game. And they had to change and play a new game, and they weren’t doing that.

The book you interviewed me once that I wrote called ”Three Blind Mice,” was about how the television, the three television networks, which were dominant, missed the cable threat – the threat from the new technology, which, in the ’80s and early ’90s, was cable. And they missed that, and they were late. They could have invested in cable, owned cable. They didn’t do it. They were afraid of the cost – short-term thinking.

And the same thing happened here with traditional media – didn’t invest, didn’t plunge into that digital world and the Internet world the way they should have. And they waited too long.

And I came away with a sense, when I hear people in traditional media today whine about, ”Oh, woe is me. They’re doing these terrible things,” I have no sympathy for that at all.

I mean, I come away thinking, you’ve got to – someone, the head of Nielsen Company said to me – the former GE executive, who is now the CEO of Nielsen. And he said to me, ”There are two types of people in this world. There are people who lean forward, and there are people who lean back.”

And the people in traditional media were leaning back. And in this new world, which is changing so fast, you’ve got to lean forward.

And the other thing I learned, and I write about at some length in this book, there’s a conceit that people in Silicon Valley have, that the Internet is the most transformative technology that the world has ever seen. That’s crap. It’s not the most transformative. Electricity was much more transformative. In fact, you wouldn’t have an Internet without electricity, if you think about it. It powers everything, including the Internet, and our laptops and everything else.

But what’s different about this period of change than any other period of change is the speed of change. It is all happening in an eye blink. And that creates an enormous amount of insecurity in the executive offices, and it should. People are terrified. And why shouldn’t they be?

LAMB: Do you believe their motto of ”Don’t be evil?”

AULETTA: I believe they believe it. And I believe that they are not like Microsoft was a decade ago.

Microsoft was a – were cold businessmen. They were out to harm Netscape, to harm Sun, to harm Apple, to harm their competitors, and to build a giant, dominant company.

Google people are cold, but they’re cold engineers, not cold businessmen – and again, the cold engineer who asked the question: Why?

LAMB: The last very quick question. Where did the name Google come from?

AULETTA: It’s a mathematical phrase, googled. And they couldn’t use it for copyright reasons, so they came up with Google. But it literally is a play on an old mathematical formula.

LAMB: And if they had stuck with their original name, what would it have been called?

AULETTA: Well, they were talking about – actually, I’m forgetting the name, but they thought it sounded pornographic. Something with box in it. It’s in my book, but I don’t remember what.

Sergey liked this name, but then he said it would sound too much like …

LAMB: A what box? The what box?

AULETTA: No, wet box, I think it was.

LAMB: Oh, I remember reading that.

AULETTA: And he said, ”It would sound too much like a pornographic site, so we dropped that name.”

LAMB: Thank you, Ken Auletta. And the name of your books is ”Googled: The End of the World as We Know It.”

AULETTA: Thank you.