We hear that Rachel Whetstone, Google's European communications director, will replace Elliot Schrage as the company's top flack after Schrage left for Facebook. Her background may make her a perfect fit, in more ways than Google would like you to know. Unlike Schrage, Whetstone has some experience with rough-and-tumble politics, having served as chief of staff to British Conservative party leader Michael Howard. She also may be better suited to dealing with CEO Eric Schmidt's periodic outings with mistresses: She herself had an affair with Viscount Astor, a top Tory official, which scuppered her political career and led to her joining Google.

Yahoo shares are hovering around $25 because investors hope major Yahoo shareholders can still force a deal with Microsoft at $33 per share or more. But at Google's annual shareholder meeting yesterday, cofounder Sergey Brin and CEO Eric Schmidt tried their best to destroy those hopes, amping up talk of a deal that would outsource Yahoo's search advertising to Google and make Yahoo unattractive to Microsoft. Brin said the deal is designed to keep Microsoft at bay. "[Yahoo was] under a hostile attack and we wanted to make sure they had as many options as possible," Brin said.

Already "walled off" from any discussion of Apple's iPhone, Google CEO Eric Schmidt could see his role on Apple's board of directors further diminish. Google's interest in wireless hardware powered by Android software and its investment in Clearwire's WiMax network pose apparent conflicts with Apple's interest in 3G iPhones. [BusinessWeek] (Photo AP/Michel Euler)

Are Elliot Schrage and Sheryl Sandberg about to stage a policy-wonk reunion in Palo Alto? When she worked at Google, Sandberg, now Facebook's COO, helped recruit Schrage from the Council on Foreign Relations. Having taken charge of Facebook PR, Sandberg is looking to hire a VP of communications with experience in public policy. Since most Valley flacks are weak in knowing the ways of D.C., that job description is tailor-made for Schrage. Sources tell us he has already interviewed at Facebook. And we hear he's more than ready to leave Google, chiefly because of its philanderrific CEO, Eric Schmidt.

As it stands, a producer can contract with a liquor distributor to produce a commercial at a profit, and then distribute the commercial on YouTube without paying a dime — even reaching underage audiences. Or he can get paid to place brands in the hands of sketch-comedy players. Again, he makes the money, not YouTube. I'm not sure that "innovation" is required so much as doing what television has been doing for generations, which is charging advertisers to distribute their commercial content.

Engineers hate it when suits put them on public deadlines, because they then can't spend months twiddling code to perfection. That's exactly what Google CEO Eric Schmidt did yesterday when he told CNBC's Maria Bartiromo that the integration of DoubleClick's ad-serving platform into Google's AdWords would take six months. Better get cracking, boys.

In this excerpt from Eric Schmidt's interview with CNBC's Maria Bartiromo, the Google CEO explains that a Microsoft-Yahoo merger would "eliminate consumer choice, particularly in electronic mail, instant messaging — things where they would have 80 or 90 percent market share." As an alternative, Google has proposed the idea of serving its ads against Yahoo's search, giving it control over 80 percent of the search advertising market. But that would eliminate advertisers' choice, not consumers'. So it's cool.

The Justice Department has begun an antitrust investigation into Yahoo's test of Google's search advertising technology according to an anonymous source cited by Reuters:

Last year, Google placated privacy-minded opponents of its DoubleClick acquisition with promises to create a new kind of Web browser "cookie," a file which keeps personally identifiable information about a website's users. Now that Google has swallowed DoubleClick, the online advertising company seems to have lost its interest in developing these so-called "crumbled cookies," the Financial Times reports. Google CEO Eric Schmidt that's because cookies are too complex for Google to deal with. "What we've discovered about cookies is that every question leads to a one-hour conversation," Schmidt said. Please, folks, be a little more understanding: It's not that Google doesn't want to answer difficult questions about privacy. They're just too busy.

Shareholders will likely be relieved by Google's standout performance in the first quarter. The stock, which had been sinking like a rock, will almost certainly rebound. And Google's self-satisfied executive team will congratulate themselves once again. Hubris, reinforced by the numbers, reigns at the Googleplex.

Pessimism has been replaced by optimism: After Google shares traded down 1.2 percent today, traders responded to the release of Google's first-quarter earnings by sending the shares up nearly 12 percent in after-hours trading, crossing $500. Fear, in short, has been replaced by greed. As I expected, the call was filled with chest-thumping glee from never-modest CEO Eric Schmidt. That's why I listen, by the way — not to hear numbers I could read in analyst reports, but to hear how Google's executives talk about the company on one of the brief occasions that they leave the bubble of the Googleplex. Live coverage, starting at 1:30 p.m. Pacific:

Google's best hope in the Yahoo takeover battle is to have nothing happen. A Yahoo, weak but independent, providing just enough competition to keep antitrust cops off Google's back, is the best outcome. To assure that, CEO Eric Schmidt has turned to the unlikeliest of layabouts: investment banker Frank Quattrone, who's trying to make a comeback after having an obstruction-of-justice conviction overturned. How frustrating for the hard-charging Quattrone: In this assignment, he'll only succeed by assuring that a deal doesn't come to fruition.

News Corp. is now discussing a possible joint takeover bid for Yahoo with Microsoft, according to unnamed sources cited by the Wall Street Journal. Meanwhile, Yahoo is now discussing combining Internet operations with Time Warner-owned America Online as part of a three-fold move to stave off the takeover bid that includes teaming up with AOL, buying back much of the company's stock and running search ads from Google. Analysts quoted in the Journal still suggest the sale to Microsoft is a fait accompli, and that Yahoo is just trying to get CEO Steve Ballmer and company to cough up a higher bid for shares.

Google cofounders Larry Page and Sergey Brin spend exactly none of the company's money on protecting their personal security. Google CEO Eric Schmidt, however, spent $532,755 in 2006 and $474,662 in 2007. Silicon Alley Insider's Henry Blodget can't figure out why. Maybe Schmidt's found yet another another somebody to love.

Having cleared his name of obstruction-of-justice charges, former Credit Suisse tech investment banker Frank Quattrone is launching his own boutique firm, Qatalyst Partners. Several big Valley names volunteered quotes for the press release. It's not surprising that Google CEO Eric Schmidt, who's made his own moral missteps, would be forgiving of Quattrone. But Gideon Yu, Facebook's CFO, makes a more curious appearance. He gave a statement applauding Quattrone's partner Jonathan Turner, not Quattrone himself. But still, it amounts to an endorsement. Does Yu really think Quattrone did nothing wrong? Or, as a minister's son, is he just expressing the highest form of the Valley's belief in the power of redemption?

"I was brought in as sort of a father figure — somebody who has a lot of operating experience — because [Google] at the time was very small and basically right out of Stanford," Google CEO Eric Schmidt said in a press conference in Australia yesterday.

Recession reschmession, Google CEO Eric Schmidt told reporters in Beijing over the weekend. "The kind of advertising we do is more measurable," Schmidt said. He then repeated the company's favorite line about in how belt-tightening times, advertisers prefer to know exactly what they're paying for, as they do with Google's keyword ads.

Google CEO Eric Schmidt told Portfolio that owning Yahoo would give Microsoft too much control over instant messaging and email. That power, he said "could be used essentially to break the Internet and diminish choice." Google's dominance in search and entry into display advertising with DoubleClick, however, doesn't "have much to do with that argument."

Buried in CEO Eric Schmidt's blog post about the company's greenlighted acquisition of DoubleClick:

Who's the richest billionaire in the Bay Area? No surprise here: Oracle founder and yachting enthusiast Larry Ellison, is the 14th wealthiest in the world (which must grate on him something fierce) with $25 billion. Trailing him are a trio of Googlers, Larry and Sergey with almost $19 billion each and CEO Eric Schmidt with $6.6 billion. Facebook founder Mark Zuckerberg, the youngest billionaire is pegged at $1.5 billion and outgoing eBay CEO Meg Whitman, one of only 99 women on the list, has $1.3 billion. Other local billionaires include Steve Jobs, Charles Schwab and George Lucas. Grab the full list from Forbes.