Ben Parr's Entrepreneurial Musings

The rapid rise of the web has created two parallel yet distinct worlds in the physical and digital realms, Google Executive Chairman Eric Schmidt claims.

Schmidt took the stage at LeWeb 2011 on Wednesday and, after an extensive demonstration of Android Ice Cream Sandwich, decided to put on his philosophy cap and discuss some of the fundamental issues affecting the web.

One of the topics that piqued my interest was his argument that the proliferation of the web has created two separate worlds, governed by separate rules. The first is the “real world” — the physical realm that is bound by the rules of governments. The second is the “cyber world” — a new world with its own distinct culture and rules.

Because the two worlds are separate, Schmidt argues that the happenings in one world doesn’t always reflect what happens in the other. His example was the European financial crisis, an issue that is slowing down economic growth worldwide and has the unfortunate potential of plunging the real world into recession.

Schmidt claims that the financial crisis isn’t having the same effect on the cyber world, though. The cyber world is booming, Schmidt says, due to the web’s open nature and the growth of entrepreneurship and innovation in the tech sector over the last few years.

While Schmidt believes the two worlds are currently separate, he does claim that they will eventually merge and integrate.

“My conclusion, by the way, is that each of these two worlds merge in an equilibrium that improve each other,” Google’s Chairman said on stage.

From what I can gather, Schmidt is arguing that the cyber world has grown so fast and independent of the influence of world governments and the real world that it has developed a culture, identity and economy of its own. The result is that it’s partially insulated from what happens in the real world.

That won’t last, though. Governments are trying to influence and tax the web more and more. But while governments try to reign in the wild west that is the world wide web, the cyber world’s emphasis on openness and free speech will permeate throughout the real world. We’ve seen this phenomenon with the Egyptian and Tunsinian revolutions.

Schmidt is right: the real world and the cyber world are merging, and the end result will be a better society. But before that happens, there are going to be a lot more struggles, growing pains and revolutions.

The $400 million Google-Admeld deal has closed, giving Google even greater power and reach in the display ad business.

From the Google Blog:

“In June, we announced that we are acquiring Admeld, a New York-based company that helps large publishers (also known as the “sell-side” by people, like me, who live and breathe display advertising) maximize their revenues from online advertising. We’re pleased that the U.S. Department of Justice has today cleared this deal. We’ll close the acquisition in the coming days and then start the real work—building improved products and services that help our publisher partners to make more informed decisions across all their ad space, and to grow their revenues.”

Essentially, Google now controls one of the major systems advertisers use to choose where to place their ads. Expect the search giant to link AdMeld’s technology to DoubleClick, making Google an even bigger force in web advertising. With competition like AOL and Yahoo, it won’t be long until Google dominates display advertising, too.