BARTIROMO: Yes, that's what Mary Meeker was saying. She's saying, `Look, it could be that they're actually benefiting from a recession because they're monetizing the ads better.'

Dr. SCHMIDT: There's been--you you know, if you were running a business today, you would be looking very carefully at where is your marketing spend going? And we think that you'll choose to put your marketing spend on the thing that's most measurable, the thing that's most, you know--because you can always defer a branding campaign that may or may not work, but you want to get those customers and those leads right now, and that's what we do.

BARTIROMO: Let's talk about DoubleClick. You acquired the company. How's the integration going?

Dr. SCHMIDT: Well, it just started. It started about three weeks ago. And what we're doing is we're taking their products and our products and integrating them so that people have better tools, advertisers have more, literally, ads, and publishers have more spots that they can publish information into. So it's the combination of all that that we've been waiting for so long, and it's under way. It takes six months to get all the products together.

BARTIROMO: So you think that the integration process will take about six months?

Dr. SCHMIDT: It's on the order of that. And, of course, at Google, everything is a try. We try this, we try that, we see what works. The early indications are that we'll be largely complete within that period.

BARTIROMO: It's no secret that Google owns search, but what about the display ads? Is it--is it fair to say that's sort of up for grabs? You know, you've got DoubleClick, Microsoft has aQuantis. It's up for--up for grabs, that part of the business.

Dr. SCHMIDT: Well, it's fair to say that that Google is not the leader in display ads, but our customers want to be able to purchase text ads and display ads and other advertising in one purchasing bundle, and the combination of the tools that we're developing, plus the DoubleClick integration acquisition and so forth, allows us to offer a single product for those advertisers. So we think that will help us with our display ads competitiveness. We think our technology is better. And so really now it's a question of earning those customers' respect and knowledge.

BARTIROMO: So how do you ensure that that was actually the right acquisition and not just go it alone, do it on your own?

Dr. SCHMIDT: Well, we had tried that. But the customers really liked the DoubleClick product, and in our surveys we concluded that in one of these--this was one of those cases where another company had simply built a better product, which is why we went forward with the acquisition.

BARTIROMO: Tell me what you're doing with Yahoo! in terms of testing. On the earnings call last time, you said you're setting up ads there. How's it going? What's involved?

Dr. SCHMIDT: Well, the long and short of it is that we did a test for about two weeks, which has since ended, where Yahoo! took a small percentage of their ads and replaced them by ours. We did this as part of a commercial conversation, which I obviously cannot go into, but it's one of the strategic options that we believe Yahoo! is considering at this time.

BARTIROMO: Now, of course, after that, I guess the Department of Justice announces that it's, you know, doing an inquiry about this. Have you heard from the Department of Justice on this?

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