Schmidt: We Worry More About Microsoft Than Facebook

schmidt zuckerberg photoshop

In an interview with Fortune’s Adam Lashinsky, Google CEO Eric Schmidt said that Microsoft is Google’s top competitor, and questioned why everybody is so obsessed with Facebook and Google.

Schmidt, who is stepping down from the CEO spot in April to focus on the company’s relationships with partners and regulators, told Lashinsky “Microsoft has more cash, more engineers, more global reach. We see competition from Microsoft every day.” He also noted that Facebook has never stated ambitions to get into search, and that Facebook ads don’t displace Google’s ads.

He’s right in a narrow sense: Microsoft is the only company powerful enough (or perhaps crazy enough) to take on Google’s core search business.

But Facebook is stealing talent from Google, and it’s becoming influential in guiding the flow of Internet traffic. Right now, the advertising industry is still in the middle of a big shift from offline to online, and there’s plenty of money in that shift for both companies. But Internet advertising budgets aren’t infinite, and as the shift is completed over the next five years, advertisers will follow the users.

That’s why everybody’s so obsessed with Facebook.