Perhaps no journalist is in a better position to answer that question than Ken Auletta, who literally wrote the book on Google. He says the decision might date back to Schmidt's losing battle to keep Google Search in China. Schmidt was overruled by the other two members of his triumvirate, newbie CEO Larry Page and co-founder Sergey Brin...
How many successful organizations have a troika making decisions? Schmidt, according to associates, lost some energy and focus after losing the China decision. At the same time, Google was becoming defensive. All of their social-network efforts had faltered. Facebook had replaced them as the hot tech company, the place vital engineers wanted to work. Complaints about Google bureaucracy intensified. Governments around the world were lobbing grenades at Google over privacy, copyright, and size issues. The "don't be evil" brand was getting tarnished, and the founders were restive. Schmidt started to think of departing. Nudged by a board-member friend and an outside advisor that he had to re-energize himself, he decided after Labor Day that he could reboot.
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