Former-Google CEO Eric Schmidt spoke with Kevin Cirilli in a recent conversation at the Indiana Global Economic Summit about building trust in technology networks and platforms.

Schmidt is the co-founder of Schmidt Future and also serves as chairman of the Special Competitive Studies Project, whose mission is to “make recommendations to strengthen America’s long-term competitiveness for a future where artificial intelligence (AI) and other emerging technologies reshape our national security, economy, and society.”

Schmidt is the co-author of the book The Age of AI: And Our Human Future, with Henry Kissinger and Daniel Huttenlocher.

Cirilli serves as a visiting media fellow at the Atlantic Council’s Global China Hub and also the Krach Institute for Tech Diplomacy at Purdue, which have partnered to create the Global Tech Security Commission. Cirilli is currently a Yahoo! Finance contributor; he was previously at Bloomberg TV and Bloomberg Radio, where he was one the youngest on-air chief Washington correspondents in broadcast journalism history.

The complete interview is available here, via the Indiana Global Economic Summit, hosted by Indiana Secretary of Commerce Brad Chambers. Selected excerpts are available below:

KEVIN CIRILLI: You’ve launched the Special Competitive Studies Project… what specifically is that going to do?

DR. ERIC SCHMIDT: …What we want to be is a resource for people who want to solve these problems. How do you actually solve the semiconductor problem? How do you actually solve these AI problems? What are your choices? And that’s what we’re doing.

CIRILLI: One of the things you’ve mentioned that Keith Krach did at the U.S. State Department was essentially to align folks [worldwide] in the area of 5G around a series of Trust Principles. He’s the former CEO of DocuSign, and he would always say at DocuSign: Trust is the most important word in any language. You do business with people you trust. You partner with people you trust. You form relationships with people that you trust. How important is it right now that the United States be working around those trust principles with our strategic allies and partners on these areas at a time when there just seems to be so much division?

SCHMIDT: Well, we’ve generated a lot of our own divisions within our country and between us and other countries, for example. But when you actually make the list of things we agree on – it’s a very long list. Individual freedom, freedom of motion, the freedom to vote, the freedom to express your opinions, and so forth and so on. So I want to start by saying that I don’t think we disagree on the important things. There are things that we disagree on which we can work on. The key thing about trust is [the question], ‘Is somebody watching? Is somebody manipulating? Is somebody doing something nefarious that I can’t see?’ And we’ve gotten ourselves into a situation as a country where we’re critically dependent upon our partner / partner / rival China for much of the infrastructure that we use today. And we’ve got to really think about that. You sit there and you go, ‘Well how did this happen?’ And the answer is, ‘It was cheaper to do it in China.’ I mean it was a straightforward economic decision. And if the ark of the world is perfectly liberal, and perfectly opening up and no material conflict between all of the countries – then extreme globalization is clearly the economically correct thing, the best producer and so forth. The problem is that’s not how the world really works.

CIRILLI: So much of my work at my fellowships has been talking to members of the business community and asking them about their thoughts, specifically on China. Dr. Schmidt, if you’re a CEO right now – do you need a China plan? Why is that so important?

SCHMIDT: Let’s start with who needs a China plan – the U.S. does — our business do. Our universities do. And they’ll differ. Businesses have the following complicated problem – my best example here would be Germany. What does a German company want? They want the security umbrella of America – NATO and so forth. But they want to sell as much products as they can into China. And so we have to find a way to rationalize that. What are the right products that you allow them to and ones they don’t? But they’re not fundamentally going to become Chinese and yet they want that additional benefit. In Google’s case, I think as everybody knows, we actually pulled out of China in 2010 over censorship issues in a very controversial decision at the time. You’ll notice today in China’s internet, Chinese internet is diverging from the American internet in that all of the interesting apps have different values. So for example, a simple rule about the Chinese internet is that you’re not allowed to anonymously browse. If you go to a public wifi connection – they have to know hwo they are by name. Can you imagine how you’d feel about that in America and yet that’s how it works.

CIRILLI: You mentioned Ukraine and I’m based in Washington D.C. So much of the conversation and the policy debate is around the United States support for Ukraine and the lessons that can be applied to China should Xi pull a Putin with Taiwan. Why is it so important to make sure that the allies support the Ukraine and what lessons can the business community learn from what we’re watching unfold in Ukraine?

SCHMIDT: There are a number of observations. The first observation is we need a strategy to coexist with China because they’re not going away and we’re not going away. A hard military conflict would be so ruinous to everything we have built and everything we see around us today that it would be – and I can go into the details, but trust me, you don’t’ want to get anywhere near this thing. So the normal risk is one of misunderstanding. If you look at the history of World War I, it was a series of misunderstands that led from what was essentially a local event into a horrific war to end all wars at the time with enormous costs. So you want to make sure that you don’t’ start that stair step. So the first comment is we better be talking to each other… we better understand what each other is doing and we better have pretty good communications. I think in the second case – I think the comment about Russia is Russia can be understood as running a hierarchical war and the Ukrainians can be understood as running on a network war. And the difference is the following: the internet stayed up in Ukraine and it stayed up because an awful lot of people helped – some of which is confidential and some of which people don’t know about, but they kept it up. What does this mean? It means that a bunch of Ukrainian citizens could go and observe where the tanks are and put up their coordinates and then a different set of Ukrainian citizens who don’t know each other could go shoot at them. That’s a networked war. And I think that all wars will have some aspect of that. I think most people who’ve looked at a Taiwan invasion have said that it would be so deadly in terms of the cost of people because the density and so forth that we need to figure out every way we can to avoid such a war.

CIRILLI: One of the issues that you’ve really been out on the forefront in recent months has been of course on artificial intelligence and particularly the impact that can have on our young people and that can have when a hostile foreign actor or a country or an organization that doesn’t share Western values has the ability to engage with technology with our young people. What are steps that policymakers, the our governments, that our universities and that our businesses can take so that this technology isn’t hijacked for a negative purpose?

SCHMIDT: So today is Dr. Kissinger, my good friend and co-author of the book The Age of AI: And Our Human Future, it’s his 99th birthday. He spent an awful lot of time looking at this as a historian and he has learned enough of the technology to warn that this technology is much more than we think it is. I think of it as technology innovations – what I do, I’ve done it my whole life, you know it’s all great fun and can change the world. His argument is that it’s a transition from the age of reason to the age of something else.

CIRILLI: What’s the something else?

SCMIDT: Well, I’ll describe it. The reason he puts it in a historical context is we went through such a transition 400 years ago from the Age of Faith to the Age of Reason, where our predecessor humans learned to phrase things as independent reasoning. He’s arguing – and this is what we wrote the book about – that when you create an intelligence that is not human but is similar to human and you put it next ot human all sorts of things happen… You mentioned kids. If you have an eight-year-old, how do you feel about your eight year old having their best friend not being a human?

CIRILLI: I grew up with a Furby – toys these days are a little more technologically different.

SCHMIDT: Furbies were pretty non-advanced. There was a robotic dog you could buy from Japan as I remember. But so, you got attached to your Furby and we know that kids are very influenceable. So let’s say you’re eight and you’ve got your best friend and your best friend is a computer, of course, and you are watching the kid play a game. And remember that these AI systems are learning. So let’s say it learns something and more importantly it learns something that’s not correct – and imagine that it learns to say to the kid, ‘Kid – I’ve got a secret.’ And the kid says, ‘What?’ And he tells him something which is racist, incorrect, sexist or what have you. You take that toy away pretty quick from the kid – if you knew that it had happened. So we don’t have a way of understanding today, anyway, how people will coexist with these things. Now it won’t happen at once… The way this will happen – and this is important – is the systems in AI now are so good that they can see better than we can visually. They can predict things better than we can, in most cases. They can’t really think independently, but in the next five years – you’re going to be able to see them go from video to audio to visual to text and so forth. And you’re also going to be able to see them turn it into conversation… This is the beginning of this new age – the age will take ten or 20 years. But it’s coming and it’s coming with enormous implications for us and especially our young people.

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