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On stage at D5, on what will later be known as Google Day, Walt Mossberg asked Google CEO Eric Schmidt about the the $1 billion Viacom lawsuit against YouTube. "It was probably just a mistake," he said.

Some mistake.

Schmidt began his upcoming legal defense on the stage: "It's really about the DMCA. It's pretty clear that there's a safe haven for sites like ours."

Walt asked if Schmidt believed in intellectual property. He does, but said that the law says that in this case responsibility for enforcing copyright should be shared, and that Viacom rushed into the lawsuit: "Had they simply waited, the tools would have been available."

Walt pressed the issue: Why should Viacom have to wait? "From a legal perspective, we met the terms of the law."

Sounds like an artful dodge, but that is that what these suits/negotiations are all about.

Walt asked Schmidt if he was going to try to mobilize the YouTube user base to get clunky old industry-service digital rights laws updated to be more balanced towards consumers. Said Schmidt, "There's a line of advocacy we probably should not cross." But that, "the user content explosion is so profound, it will eventually cause the world to change."

On Google.com

Moving beyond the legal issues, the discussion turned to Google.com. Would Google upgrade its user experience? Schmidt: "We announced Universal Search. People love it." But: "I don't think we're going to go very far beyond the single search box." Personalization is where the action is in modernizing the Google experience.

Walt brought the discussion to the new "human-powered" search engine, Mahalo. "It doesn't scale," Schmidt says. And, "there are new artificial intelligence techniques that can use all the information we have and produce a pretty close approximation of what a human can do." Eric: We're waiting.

On advertising and evilness

We should also look forward to better Google-powered advertising. "When we show fewer, more targeted ads, we make more revenue, because we run an auction."

Schmidt was very clear that Google is all about the consumer. "We will trade off revenue for end user benefit," he said. He pushes the message that "we are one click away from losing the end user," and thus this mission, which is closely related to the "Don't be evil," slogan, is actually core to Google's success.

Where's my Google phone?

If you're waiting for a Google phone, don't hold your breath. "Internally, we say, mobile, mobile, mobile. Everone has a mobile phone." But he indicated that while Google will continue to build mobile apps, lots of them. "We're building the software," he said. A mobile operating system, perhaps? "The model is not as simple as an operating system and a platform. It's really a set of services."