Eric Schmidt is a gift to journalists: there's something irresistible about the combination of "don't be evil" and a CEO whose public pronouncements have something of the Hannibal Lecter to them.

But the news that he's stepping down as Google CEO doesn't just mean the search giant is scaling back the sinister; it means Google recognises it's in trouble.

Trouble is a funny word to use about a firm that dominates the internet and appears to be organising most of the world's money, but while Google is at the top of the tech heap the cracks are beginning to show.

There are three big problems facing Google. The first is that the quality of its search results appears to be deteriorating. The second is that social networking could bypass Google altogether. And the third is that regulators could do to Google what they did to Microsoft in the 1990s.

Bad search results are the most obvious problem. Content producers such as Demand Media dominate the results for pretty much anything: you might as well cut out the middleman, skip Google altogether and go directly to eHow.com. And when the results aren't full of eHow, they're full of spam - especially when you're looking for reviews of white goods or consumer electronics.

Green eggs and spam

If you're anything like me, you've stopped Googling for that kind of thing anyway: if you want product recommendations you'll ask your friends on Facebook, or the people in your Twitter stream.

Of all the threats to Google, that's the biggest: time spent asking people things on social networks is time we're not spending searching for things or clicking on Google Ads. Everything Google does is centred on search. What happens if we stop searching?

The third issue, and the one that probably explains the reshuffle, is that Google is facing the same sort of regulatory scrutiny that Microsoft faced in the 1990s. Dealing with politicians and investigators is likely to keep Eric Schmidt so busy he won't have time to focus on anything else.

And product focus is what Google really needs. Its social networking adventures to date have been disastrous, its search is under siege, and despite its many joys Android suffers at the hands of phone firms who don't care about updating their handsets. As Dan Frakes put it on Twitter: "Some parts of Google will get Larry Page CEO update; other parts are stuck with Schmidt, perhaps indefinitely."

If Larry Page can't fix those problems, then Google is likely to see history repeating - but this time with Google as the dinosaur, not the exciting young upstart.

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Liked this? Then check out Highs and lows for Google in 2010

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