January 20, 2011, 8:47 PM — With not a single rumor to foretell the news, Google shocked the tech world Thursday by announcing that Chief Executive Eric Schmidt will step down to a smaller role of executive chairman. Co-founder Larry Page is the new CEO, and Sergey Brin's official title will be Co-Founder.
Now, management shakeups usually don't have a direct, immediate impact on consumers. I'd put them just ahead mergers and acquisitions on the spectrum of boring-yet-important tech news.
But Schmidt's stepping down is big news, and it's going to have a major impact on how Google evolves in the next few years. To get a sense of this, let's consider some of the biggest challenges Google is facing now:
Search: Google's been taking some heat lately over the quality of its search results. Spam abounds, and last December, Google had to tweak its algorithm to stop shady business owners who were feeding on negative reviews to boost their search rankings. Search is Google's core product, so any lack of faith in search results is a big deal, and needs to be addressed in earnest.
Social: Related to Google's search problems is Facebook's ascent to more than 500 million users. People use Facebook to share links and recommend products -- essentially, the same services Google offers -- and the results are inherently more trustworthy because they come from people you know, rather than computer algorithms. With Orkut and Buzz, Google has failed to create a legitimate Facebook rival. A third attempt, known in rumors as Google Me, is reportedly in the works. Google can't afford to strike out on social.