Dogfight: How Apple and Google Went to War and Started a Revolution (8 page)

Rubin also had to adjust to no longer being the boss. He ran Google’s Android division, but even by the end of 2005 that was only about a dozen people in a corporation with fifty-seven hundred. But Google clearly didn’t treat Android like any of its many other small acquisitions. In those the founders rarely stayed, quickly discovering that actually working at Google was frustrating. Google often bought companies just to test out a new technology and/or hire talented engineers, but without a clear game plan. Page didn’t want Rubin to become frustrated like that, and he specifically tasked executives such as Alan Eustace—who helped Page negotiate the purchase of Android—to make sure Rubin felt that he had the access to the people and resources he needed. Google immediately opened its wallet to the tune of $10 million to help Rubin buy necessary software licenses. Schmidt personally helped negotiate some of them. To ensure the secrecy of their project, the Android team was allowed to keep its software code separate from the rest of Google, and inaccessible to anyone without Rubin’s permission. Page gave Rubin the rare privilege of being able to hire his own staff, instead of going through Google’s famously rigorous and lengthy hiring process.

But all this attention didn’t spare Rubin from having to navigate Google’s wacky politics. For starters, it wasn’t clear to him for a while who Google’s ultimate boss was. Eric Schmidt was the CEO and played a critical role in helping Google deal with its hypergrowth back then. He was also the public face of the company, which he did well and which Page and Brin had much less interest in doing. He had been a CEO before—at Novell—and an executive at Sun Microsystems for fourteen years before that. But Schmidt, who joined Google in 2001, was not a founder as were Page and Brin, which made his true role slightly murkier.

Officially, the three ran Google as a triumvirate, but Google employees debated about how much power Schmidt actually had—whether Brin and Page called the shots, with Schmidt filling a largely ceremonial role, providing “adult supervision” in Silicon Valley parlance. Schmidt didn’t help with this confusion by describing his job the way a chief operating officer would, not a CEO. In an interview with me in 2004 he said,

My primary responsibility is making the trains run on time, so I try to make sure that the meetings happen, that all of the functions of a properly running company are in place and people are paying attention. Larry and Sergey have driven the top-level strategy and much of the technology strategy. I contribute by organizing the strategy process, but it’s really their strategy and their technology strategy. And if there is a disagreement among the three of us … we’ll have a significant conversation, and somebody will eventually say yes. A few months later somebody, one of the three, will say, ‘Well, maybe the other guy was actually right.’ So there’s a very healthy respect now between the three of us and it’s a wonderful thing. We’re best friends and we’re very good colleagues.

Rubin also noted to colleagues that it seemed to him as if Page and Schmidt didn’t completely agree on what Android should become. Schmidt wanted Android to be software only, and for a while he wondered if it should just be low-level software, without fancy graphics or animations. This was Rubin’s original vision: give phone makers and carriers code that runs all phones and applications the same way, but allows them to decide things such as what the opening screen would look like, and what kinds of graphic flourishes each phone would have. Page, however, was more interested in having Google build a phone. “I remember talking to Andy about this,” one Android executive told me. “He said he always made sure never to demonstrate an Android feature to Page without a prototype of the actual hardware it would run on.”

Then there were legal issues. Most of Android was open-source software, meaning no one owned it, and the code could be modified by anyone in any way. But not all of it was open source, and Google negotiated licenses for those portions for tens of millions of dollars. Rubin hoped a big chunk of licensed code would come from Sun Microsystems, makers of Java. Sun had spent ten years building Java as an alternative to Microsoft’s Windows. It typically gave the software away for free, on the condition the user didn’t modify it in a major way. Rubin used it for the operating system on the Sidekick, and it was, back then, a widely used language by engineers coming out of top universities. But Android wanted to modify Java more than Sun would allow. No amount of money seemed able to move Sun from this view. Payments as high as $35 million were discussed. This created two problems for Rubin: Without the Java code, Rubin had to spend months of extra time creating a work-around. Second, it infuriated Sun, which believed Google had copied portions of Java to build the work-around. It ultimately became the focus of a messy lawsuit that went to trial in 2012. Google was not held liable, but Sun, now owned by Oracle, is appealing that decision.

Finally, Rubin had the enormous task of just doing what he’d promised to do: build a mobile phone operating system that carriers and manufacturers would want to use and that software developers in addition to Google would want to write programs for. There certainly was precedent for it. It’s what Bill Gates did to transform the PC industry and become the world’s richest man. Most of us now just assume that any PC we buy will run Microsoft Windows or Apple OS X, and that it will have an Intel processor running on a certain kind of circuit board that connects to every printer, mouse, keyboard, monitor, and almost every other electronic device. But in the 1980s, the PC industry was just like the mobile industry in 2005. Not until Gates came along and used MS-DOS and Windows to create a platform for developers to write to did the PC application business take off. “I remember at the time telling Andy, ‘This is going to be really hard, really, really difficult. I don’t want you to get discouraged, but I think the chances are low on this,’” said Alan Eustace, Google’s head of engineering and Rubin’s boss at the time. “And then he and I would laugh about that because he was a true believer. It wasn’t that I was a skeptic. I supported the project all the time. It’s just that we both knew it was going to be hard.”

Some of the issues in building Android were similar to the ones Apple faced. Few people had put an operating system as sophisticated as Android on a phone chip. Meanwhile, all the testing had to be done on simulators because the actual chips and displays Rubin wanted to put on the Dream phone weren’t going to be manufactured for another year. But Google was in an even worse position than Apple to take on these challenges. At Apple the iPhone had nearly brought the company to its knees, but at least Apple was used to building things that consumers wanted to buy. Google had no such experience. Google made money selling advertising. Everything else it built—web software—it gave away for free. It had no fancy industrial-design division comparable to Apple’s. Indeed, the idea of a finished product of any sort was anathema to Googlers. To them the beauty of building web software was that it was
never
finished. When a feature was mostly done, Google would release it, then refine it over time based on consumer usage with updates to their servers.

Google also viewed marketing with the kind of contempt only an engineer could muster. If a product was good, word of mouth on the web would get people to use it. If it was not good, people would not use it. The idea that Google might be selling more than just a cool phone, but amorphous feelings of satisfaction and self-confidence—the way Jobs sold Apple’s devices—seemed silly. This thinking was firmly rooted in Google’s DNA as a corporation. In Google’s early years executives had hired the famed consultant Sergio Zyman—the former head of marketing for Coca-Cola—to draw up a plan to get the world excited about their new company. After he spent months working on a plan, the founders rejected the whole marketing concept and did not renew Zyman’s contract. They believed—correctly—that Google’s search engine would sell itself. Google didn’t even have a director-of-marketing position until 2001.

*   *   *

Rubin and the Android team believed they could compensate for these deficits by partnering with wireless carriers and phone makers. That was the whole point of Android, after all: everyone would do what they did best. Google would write software, manufacturers would make phones, and carriers would supply bandwidth and sales and marketing heft. HTC and T-Mobile were committed to the project. They had helped Rubin build the Sidekick when he was at Danger.

Rubin’s problem was that T-Mobile wasn’t a big enough carrier in the United States to get Android on enough phones, and the two other big US wireless carriers, AT&T and Verizon, were deeply suspicious of anyone from Google interested in a business deal. For all Android’s promise and Rubin’s ability to sell that promise, by the end of 2006 the rest of Google was starting to scare people, telecom companies in particular. Google had clearly created a new and incredibly profitable form of advertising, and it was recording profits and amassing cash at astonishing rates. In 2003 it had seemed like a friendly, plucky start-up. By the end of 2006 it was a colossus with nearly eleven thousand employees, $3 billion in profits, and more than 60 percent market share in search advertising. Would Google soon replace Microsoft as the big bad monopoly in tech? some started to ask.

Executives at companies such as Verizon had experienced Microsoft’s aggressive behavior firsthand in the 1990s as Gates started trying to leverage his desktop monopoly into adjacent industries. Convinced that Windows would soon become the hub for the convergence of our PCs and TVs, Microsoft invested $1 billion in Comcast, $5 billion in AT&T, and another $500 million in smaller cable and telephone companies. Carriers worried that Gates didn’t just want to speed the adoption of broadband Internet and install Windows on every cable set-top box. They believed he wanted to make phone companies irrelevant.

Google, if anything, made the telecom industry
more
jumpy than Microsoft. For years Schmidt, Page, and Brin had had a team of engineers doing nothing but experimenting with ways to route around the telecom industry. As Google quickly became the most powerful company on the web, powerful enough to control the search-advertising business and spend $1.65 billion to buy YouTube in 2006, the telecom companies worried that Google might soon announce that it was becoming a carrier itself. By the spring of 2007, when Google announced it was buying online ad firm DoubleClick, these worries had crept into executive suites worldwide as well as into the halls of antitrust regulators in Washington and the European Union. “Google’s vision of Android is Microsoft’s vision of owning the operating system of every PC,” a platform monopoly, former Verizon CEO Ivan Seidenberg told author Ken Auletta. “Guys like me want to make sure that there is a distribution of platforms and devices. Is it in Google’s interest to disintermediate us? Yeah.”

*   *   *

When Rubin and the Android team were done dealing with the initial shock of how good the iPhone was, little drama surrounded what needed to be done.

Rubin is at his core a start-up CEO—messianically convinced that his path is the best one regardless of whether people and circumstance agree with him. He was used to setbacks. The iPhone was good, but what he was doing was going to be different—and better. It would be technically superior to the iPhone and more widely distributed. Rubin believed that all the software engineers at carriers and phone makers added 20 percent to the cost of a phone. With Android, they wouldn’t need that infrastructure and would be able to sell their phones for less. And the iPhone would help focus Google’s attention on the Android project. When the iPhone was announced, Rubin had about four dozen people. Two years later he’d have more than a hundred.

In retrospect, having the iPhone beat the first Android phones to market was arguably a
good
thing, some at Google have told me. Apple spent tens of millions of dollars educating consumers about how to use these new devices with a touchscreen. By the time Android phones started to arrive two years later, the iPhone had become hugely popular. That meant that those carriers who didn’t have the iPhone—which was everyone but AT&T at the time—were looking for an alternative. This wasn’t a short-term problem. AT&T’s contract with Apple gave them exclusive rights in the United States for four years. “They [the carriers and manufacturers] saw the writing on the wall, and that definitively helped Android. It helped cause people to sit up and take notice and take Android seriously,” Eustace said.

For Rubin and the Android team, the more complicated issue to emerge from the iPhone’s unveiling was their own company’s involvement in the iPhone’s project. Google, they learned, was Apple’s key partner in the venture. While Google’s top executives had been backing Android for two years, they had also tasked another team to work secretly with Apple to get Google’s search, Maps, and YouTube software on Jobs’s new device. Indeed, Jobs had made the inclusion of Google software one of the iPhone’s selling points during his unveiling. He said the iPhone was the “Internet in your pocket for the first time ever” and “You can’t think about the Internet without thinking about Google.” Google CEO Eric Schmidt had joined Jobs onstage during the unveiling to reinforce the depth of their partnership. “Steve, my congratulations to you. This product is going to be hot,” Schmidt said during three minutes of remarks.

The Android team knew Schmidt was on the Apple board. What they didn’t know was how tight the companies had become. While they were developing Android, a handful of engineers in another building a few hundred yards away had almost become an Apple satellite operation, with more knowledge about the iPhone project than all but a few dozen Apple employees. Inside Apple, Jobs strictly controlled and siloed access to the various portions of the iPhone project. At Google, some members of the team developing Maps, search, and YouTube for the iPhone had seen almost everything—the chips Apple was using, the touchscreen, the software. A few had even seen the most recent prototypes and used the phone before the announcement. “Apple particularly wanted the Google Maps product,” said one of the engineers. “Steve, I think, personally liked it a lot and wanted to make sure it was integrated into the iPhone. So we knew the iPhone was coming.”