If Google (GOOGL) wants a chance to dominate the ongoing AI arms race between Big Tech and startups, it needs to change its remote work policies, according to the company’s former CEO, Eric Schmidt. “Google has decided that work-life balance, going home early and working from home are more important than winning,” Schmidt said during a recent lecture at Stanford University.

“If you want to compete with the other startups, you’re not going to let your employees work from home and only have them come in one day a week,” said Schmidt, who was CEO and chairman of Google from 2001 to 2011, during a talk at Stanford in April that was released by the university yesterday (Aug. 13).

Not only Google needs to change its work culture, but the US needs to too, he added, describing a recent visit to TSMC in Taiwan, where he learned that physics novices were working in the basement of the company’s factory. “Can you imagine getting American physicists with PhDs to do this? Highly unlikely.”

Despite Schmidt’s claims that Google lags behind startup employees who “work like the devil,” Google’s office policies are not much different from those of its AI competitors, including OpenAI and Anthropic. As of 2022, most Google employees are required to report to corporate offices at least three days a week. Last year, the company even began tracking office badge attendance and reportedly includes attendance in employee performance reviews, according to CNBC.

Current job postings at Anthropic, meanwhile, say the company expects employees to work in its offices “at least 25 percent of the time.” And although OpenAI CEO Sam Altman has previously called remote work “one of the tech industry’s worst mistakes,” the AI ​​company’s job postings boast a hybrid work model that requires spending three days a week in the office.

Why are Google’s AI ambitions falling behind?

Schmidt may be right, though. Although Google has been investing resources in AI for years, the company has failed to establish itself as the current technology leader, even as competitors like Microsoft (MSFT) are rapidly evolving. Microsoft’s strategic partnership with OpenAI has catapulted the company’s market capitalization to $3.09 trillion. “There’s a long tradition in our industry of companies that have succeeded in really creative ways and really dominated one area without taking the next step,” Schmidt said.

After OpenAI brought generative AI to the forefront with the release of ChatGPT in November 2022, Google encountered a number of stumbles trying to catch up. The unveiling of Bard in February 2023 was problematic: The chatbot answered a question incorrectly during a demonstration video, driving Alphabet’s stock price down and causing the company’s market value to plummet by $100 billion. The subsequent release of the image editing tool Gemini also caused controversy after it was found to produce historically inaccurate representations and exhibit bias – flaws that Google CEO Sundar Pichai later called “completely unacceptable.”

To make matters worse, Google is now facing a potential breakup of the company. Following a court ruling earlier this month that found Google violated antitrust laws by monopolizing internet search, Justice Department officials are reportedly mulling a potential breakup of Google that could result in the Android operating system and Chrome web browser being split into separate companies. Without Android and Chrome, which are installed on billions of devices worldwide, Google’s access to AI training data could be severely limited.

Schmidt believes a breakup is unlikely because of his own extensive experience in antitrust matters involving major technology companies. He testified against Microsoft in 2000 when a government was considering breaking up the company, and later defended Google against its own antitrust investigations while working for the company. “I helped Microsoft get broken up and it didn’t get broken up, and I fought to keep Google from being broken up and it didn’t get broken up. So to me it looks like the trend is not toward breakup,” he said during the Stanford talk. “I don’t think governments are going to act.”