Adult supervision over: Schmidt yields back to Google co-founder Page

January 20, 2011: 9:00 PM ET
Incoming CEO Larry Page with outgoing chief Eric Schmidt

Incoming CEO Larry Page with outgoing chief Eric Schmidt

Larry Page, the original Google CEO, gets his job back.

No one saw it coming. Sure the Google board, Larry Page, Sergey Brin and Eric Schmidt knew about  the executive change-up bomb they were about to drop Thursday, but for most everyone else within Google (GOOG) and without, the news of Schmidt's departure as CEO came as a complete surprise. So was it a pleasant surprise?

The short answer is, not exactly. Schmidt did the job he was hired to do a decade ago fantastically. His departure from the day-to-day is a loss for Google, and people close to Google have expressed as much. The triumvirate of Page, Brin and Schmidt -- all with equal say on key decisions  --  slow though it may have been at times, worked extremely well over the years as Google was becoming a huge public company. All three men claim that relationship will continue, but how can it not be dramatically weakened, if not over?

Schmidt will be off in the role of statesman/engineer that he seems to increasingly enjoy. Brin will be off working on future products and services under the simplified title of "co-founder." Page will be running the show, something he has always shown interest in (and Googlers will tell you he is the better choice of the two founders for CEO). But now that he has the job under a new streamlined chain of command, if things go wrong at Google, a financial quarter gets blown, or a new product of service flops, it will be Page's neck that gets wrung.

Schmidt and Page explained that this new executive set up, with clearer lines of responsibility will lead to more efficient decision making. That is likely one outcome of the new arrangement, which is necessary as Google goes toe-to-toe with multiple companies including Apple (AAPL), Microsoft (MSFT) and Facebook among others. Competition is fierce and the faster Google is able to move the better. But it won't just be the speed with which decisions are made that changes at Google, it is likely to be the decisions themselves.

Google under Page will act differently than with Schmidt as CEO. In the past, from the outside at least, it often seemed that Page and Brin would be of one mind, and Schmidt of another. Getting them to come together on one decision, one strategy, wasn't always easy. Take the China imbroglio of last year. It was clear that Brin and Page backing him up wanted to pull out of China rather than give into censorship under the Chinese government. Later it seemed that Schmidt's desire to stay in China at all costs won the day. The executive trio found a middle ground, but it whipsawed around and left many Google fans wondering whether the "do no evil" motto of Google's founding was a thing of the past. Page occupies that middle ground,  with Schmidt the most conservative and Brin the most liberal of the three. Google under Page is likely to be more of the "do no evil" company that won over people in the past. Will he swing as far as Brin might like on occasion? Probably not, but he will offer more surprises than Schmidt did and maybe win back some of the good will Google has lost among a certain set of Google loyalists. None of that means necessarily that Google performs better as a company, but it will be more exciting to watch its next act. For all his time as one of Google's golden boys Page has kept a low public profile, Schmidt took on much of the public face of Google. That public role will fall to Page, and it will be interesting to see if he can develop a taste for it in the way that someone like Steve Jobs has.

Schmidt said during Thursday's call that being CEO of a large public company for a decade is a very long time. He is correct, and he isn't blowing smoke when he says he is looking forward to a change, to tackling things that interest him. He might be looking forward to disengaging from the triumvirate, flying solo for a bit, without having to convince two headstrong co-founders that he is right all the time. Whether he was encouraged to leave his CEO post by Page and Brin or not, his pleasure in taking on a new role seems genuine.

Schmidt is also correct in describing what lies ahead of Google as its next phase. It's going to be a tough one.Thanks to the iPhone, Facebook and Twitter technology has marched well  beyond the brilliant search engine that Google launched in 1997. Google is playing in every leading edge technology out there, mobile with Android, operating systems in the cloud with Chrome, the media world with YouTube, location services, even driverless cars. Page is taking over a much more complex and far-flung company than Schmidt did when he was made CEO in 2001. Page's job will be harder.

Can Page pickup where Schmidt left off?  Will he be able to grow Android and YouTube into Google's next engines of growth? Can he successfully navigate one of the largest and most influential technology companies through an increasingly complex and crowded competitive landscape? We shall see. Page has certainly been trained by a master in Schmidt. But make no mistake: Whether Schmidt is there to act as some Yoda to Page or not, whether Brin is by is side or not, it's Page's company now. Google's success or failure lies with him.

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About This Author
Michael Copeland
Michael Copeland

Michael V. Copeland joined FORTUNE as a senior writer in September 2007. Copeland has covered everything from electric cars to e-readers. He is a creator of Tech Mate, an irreverent video series in which he debates (and skewers) digital issues of the day. Before joining FORTUNE, Copeland was a senior writer at Business 2.0. Copeland graduated from the University of Pennsylvania.

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