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Exclusive: Sundar Pichai's Plan To Keep Google Almighty

This article is more than 9 years old.

If it works, do it again. And again.

That’s Sundar Pichai’s approach as he steps up efforts to monetize the hundreds of millions people around the globe who use Android phones amid growing investor concern that Google ’s core business is slowing down.

In an exclusive, wide-ranging interview with Forbes, the first since he became Google’s product czar in October, Pichai said that Google will begin showing ads for apps alongside searches on the Google Play store. (You can read a transcript of the interview here.)

“Users are trying to discover apps, we are trying to improve the app discovery process, and developers are trying to reach users,” said Pichai, 42, whose official title is senior vice president of products.  “If you step back, it’s a problem we solved with search and ads in search. Users are looking for information, we provide them with organic information, but at the same time we allow companies to use sponsored ads to reach users too. We think the same model works very well for Play.”

Pichai also said that Android, which has long been seen by developers as lagging far behind the iPhone in terms of monetization, is closing the gap with iOS. Pichai said that in the past 12 months, Google paid $7 billion to developers whose apps were sold in the Play store. By comparison, Apple said it paid $10 billion to developers during 2014.

“We see a lot of momentum,” Pichai said. “We are able to monetize it effectively for developers. It’s not just applications; the content ecosystem is getting built up.”

Search advertising has been the most profitable big business in the history of the Internet, generating billions in annual revenue and income for Google. After applying it to Web search, Google expanded it to queries made on YouTube. Pichai said that by using the same model on Google Play, the company will capitalize on the app store’s growing momentum.

Over the past year, Google has been unable to quell investor fear that the shift to mobile computing is hurting the company. Google shares have dropped about 2% from a year ago, as the Nasdaq composite rose 15%.  The company’s core search advertising business has proved far more lucrative on desktop PCs than on mobile devices. Investors worry that as the overall time people spend on the their PCs declines so will Google’s revenue and new mobile revenue won’t be sufficient to offset that decline.

Some tech insiders believe that Google Play search ads could provide a sizable revenue boost to Google. Pichai declined to say how many searches users conduct on the Play store. Earlier this month, however, famed venture investor Bill Gurley, tweeted:

For now, the search ads on Google Play will be limited to a small number of developers and will be shown to a subset of Android users. If successful, Google will roll out the program more broadly.

Pichai said that while monetization of Google’s mobile users is one of his top priorities, the company takes a long view of the transition to mobile. “Is it an important shift for us?” he asked “Yes. Are we doing it well? There are many indications that yes we are. When you look at all our core products, they do well in mobile. Even our mobile monetization, Overall, I think there are a lot of things which work well for us on mobile.”

The soft-spoken and well-liked Pichai joined Google in 2004. As a product manager, he assumed responsibility for little known, but important product, the Google "toolbar," which helped the company distribute its search service on Web browsers like Internet Explorer and Firefox. Pichai later led the development of Google’ Chrome browser and parlayed its success into a dizzying rise through executive ranks at the company. He became a vice president, and later a senior vice president with oversight for Chrome, Chrome OS and apps. In 2013, Page added Android to Pichai’s portfolio, and in October, he handed Pichai responsibility over vast swaths of the Google empire, including search, maps, commerce, social, advertising products and infrastructure.

While Page, who has a close relationship with Pichai, remains involved in important product decisions, the shakeup was meant to allow him to spend more time on long-term project and strategic initiatives. Pichai said his appointment did not signal a shift in direction for Google’s products.

“Larry and I are very aligned on how we think about these things,” Pichai said. He said his three main areas of focus are search, computing platforms like Chrome and Android and monetization.

While Google routinely reviews products and culls its portfolio, Pichai said he didn’t expect any of Google’s major products to disappear. But he suggested that Google+, the company’s much maligned social network, may over time be broken up into components. Most outsiders believe that Google+ has been a flop, but Pichai disputes that notion.

“Google+ has always meant two things for us,” Pichai said. “There’s the stream in the product that you see." But Google+ also provided a way for the company to ensure users were signed in to its services with "a common identity across our products," he said. "The second part was in many ways even more important than the first part. That part has worked really well for us.”

But Pichai said that two important parts of Google+, Photos and Hangouts, may soon be separated from the main product. “I think increasingly you’ll see us focus on communications, photos and the Google+ Stream as three important areas, rather than being thought of as one area,” he said.

Pichai also touched on the complicated relationship between Google and Apple. Analysts have been wondering whether Apple, which replaced Google Maps on iOS devices in favor of its own maps in 2012, might ditch Google search as the default on iOS and the Safari browser. Pichai said the best way for Google to avoid being sidelined is to continue innovating in search. “If we are building something that users need and there is a lot of value we are driving, I think how search manifests in iOS will work out just fine,” he said.

Pichai said Google planned to make a renewed push in areas like payments, commerce and enterprise apps this year, and he suggested that Google would welcome the opportunity enter the Chinese market again. Google exited China in 2010, amid growing concerns about censorship and government sponsored spying into its services. Since then, Google services are largely blocked in the country. While millions of people in China have bought Android phones, those phones are not equipped with Google’s mobile services, like Gmail, Maps and the Play Store.

“We have seen a lot of interest from Chinese developers on Google Play, because the extent to which Android is use,” Pichai said. “If we can figure out a model by which we can serve those users, it would be a privilege to do so. So I don’t think of China as a black hole. I see it as a huge opportunity in which we are playing as an enabling platform today and hopefully we have a chance to offer other services in the future.”