Dogfight: How Apple and Google Went to War and Started a Revolution

by Vogelstein, Fred

  All these fears and frustrations were top of the mind for Page when he agreed to meet with Rubin in early 2005 in the first-floor conference room of Google’s Building 43. Back then, Page’s office was on the second floor overlooking Google’s main courtyard. He and Brin shared it and continued that setup until Page became CEO in 2011. The space looked more like the dorm room of two engineering students than anything you would expect to see in a major corporation. You had to work to see their two desks and computers because the room was so jammed with their latest electronic-gadget passions—cameras typically for Page, along with Brin’s radio-controlled planes and cars and his roller-hockey gear. When Brin and Page were not there, the office was often filled with other programmers, who felt free to take it over. Rubin had reached out to Page because Rubin had started Android the year before and had enough software written to show potential customers such as carriers. He thought some kind of sign from Google—such as an email from Page saying that Android was doing interesting work—would help Rubin raise more money to keep going and give his sales pitch more zing.

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  Few people can just email Larry Page directly and successfully ask for a meeting, but back then Rubin was one of them. Three years earlier, when Google was still scrabbling for users, attention, and revenue, Rubin had made Google the default search engine on the T-Mobile Sidekick, the device Rubin designed and built when he ran Danger. Page remembered the gesture not just because Google had desperately needed search traffic at the time, but also because he thought the Sidekick was one of best-engineered mobile devices he’d ever seen.

  The Sidekick was odd looking—shaped like a bar of soap with a screen in the middle. To operate it, one flipped up the screen, rotating it 180 degrees, and typed on the keyboard underneath. Its nonstandard looks and a nonexistent marketing budget kept it from being a hit product. But it had a cult following among two groups: savvy high school and college students and Silicon Valley engineers. Students liked that it was the first mobile device to have instant-messaging software built in. Engineers such as Page loved that it was the first mobile device to allow users to surf the Internet the same way as on their office computers. BlackBerry had mobile email down to a science, and everyone at Google had a BlackBerry. But the Internet browsers on it and other mobile devices were terrible. To deal with smaller bandwidth back then, browsers were designed to show only the bare bones of a web page’s content—typically just text. But that also made the browsing experience all but useless for businesses. One of the things that wouldn’t work in these crippled browsers were Google search ads. You couldn’t click on them. Soon Page and Brin were walking around with Sidekicks themselves, enthralling their friends and colleagues with a mobile device that nearly replaced their laptops.

  According to Wired, when Page arrived for the meeting, late as usual, Rubin jumped to the whiteboard to begin his pitch: phones with computer capabilities, not laptops or desktops, were the future of technology. It was a huge market, Rubin said. More than 700 million cell phones were sold worldwide every year, compared to 200 million computers, and that gap was widening. But the phone business was stuck in the dark ages. Android would fix that problem by convincing carriers and phone makers that they didn’t need to spend money on their own proprietary software. Frustrated consumers would flock to phones that worked better. Software developers would rush to write software for a platform in such demand. A self-reinforcing software ecosystem would be born.

  Page listened gamely. He looked at the prototype Rubin had brought with him. But Page had pretty much decided what he was going to do before the meeting even started: What if Google just bought Android? he asked. He later told Steven Levy, the author of In the Plex, “We had that vision [about what the future of mobile should look like], and Andy came along and we were like ‘Yeah we should do it. He’s the guy.’” Google bought Android for about $50 million plus incentives, and by July 2005 Rubin and his seven other Android cofounders were sharing their vision of the world with the rest of Google’s management team.

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  Rubin was surprised and thrilled about Google’s decision to buy his company. “At Danger we had a great niche product [the Sidekick] that everyone loved. But I wanted to get beyond niche and make a mass-market product,” he said. And no company was more mass-market than Google. When reflecting on those days, he likes to tell a before-and-after story about a presentation he gave to phone maker Samsung in Seoul:

  I walk into the boardroom with my entire team—me and six people. Then twenty executives walk in and stand on the other side of the table in the boardroom. We’re sitting down because I wasn’t accustomed to Asian culture and whatnot at the time. Their CEO walks in. Everyone sits only after he sits, like a military tribunal. Then I go into pitch mode. I pitch the whole Android vision to them like they are a venture capitalist. And at the end and I am out of breath, with the whole thing laid out … there is silence. Literally silence, like there are crickets in the room. Then I hear whispering in a nonnative language, and one of the lieutenants, having whispered with the CEO, says, “Are you dreaming?” The whole vision that I presented, their response was “You and what army are going to go and create this? You have six people. Are you high?” is basically what they said. They laughed me out of the boardroom. This happened two weeks before Google acquired us. The next day [after the acquisition was announced] a very nervous lieutenant of the CEO calls me up and says, “I demand we meet immediately to discuss your very, very interesting proposal that you gave us [when you were in Seoul].”

  Because of Google, Rubin no longer had to worry about running out of money and having potential vendors and customers not return his calls. But after the euphoria of the acquisition wore off, it became clear that even at Google getting Android off the ground was going to be one of the hardest things Rubin had undertaken in his life. Just navigating Google itself was initially a challenge for Rubin and his team. There was no hard-and-fast org chart, as in other companies. Every employee seemed right out of college. And the Google culture, with its famous “Don’t be evil” and “That’s not Googley” sanctimony, seemed weird for someone such as Rubin, who had already been in the workplace twenty years. He couldn’t even drive his car to work because it was too fancy for the Google parking lot. Google was by then filled with millionaires who had gotten rich on the 2004 IPO. But in an effort to preserve Google’s brand as a revolutionary company with a revolutionary product—the anti-Microsoft—all cars fancier than a 3 Series BMW were banned. During this period Brin and Page—now worth more than $5 billion apiece—famously drove Priuses to work. That meant Rubin’s Ferrari was not allowed.

  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 th
e 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.

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  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 b
illion 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.”

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  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.