SAN FRANCISCO – If he had a another chance, former Google CEO Eric Schmidt would have pressed the Internet search leader to focus more on mounting a challenge to Facebook while he was still running the company.

“I screwed up,” Schmidt said late Tuesday during a 75-minute question-and-answer session at the D: All Things conference in Rancho Palos Verdes. The Associated Press watched a webcast of the conference.

Schmidt’s admission comes nearly two months after he ended his decade-long stint as Google’s CEO and became the company’s executive chairman. He was replaced by Google co-founder Larry Page, who is pushing the company’s employees to develop more ways to connect people with their friends and family like Facebook already does

That was a priority that Schmidt said he started addressing in internal memos written about four years ago when Facebook had about 20 million active users.

But he acknowledged he and other executives didn’t take Facebook seriously enough. Now, Facebook has more than 500 million users who shares billions of links, posts and photos each month.

Facebook’s growing popularity is becoming more nettlesome for Google.

As Facebook’s audience grows, it is attracting more online advertising and stunting Google’s financial growth. Perhaps even more troubling to Google, much of the information on Facebook’s website can’t be indexed by Google’s search engine. That restriction threatens to make Google’s less useful as more people form social circles online and could make it more difficult to get a handle on personal preferences so it can do a better job selling ads.

Schmidt said the company has been working hard to solve this “identity” problem. “I think the industry as a whole would benefit from an alternative” to Facebook’s network, Schmidt said.

Google has tried to negotiate partnerships with Facebook, Schmidt said, only to be repeatedly rebuffed. He said Facebook has preferred teaming up with another Google rival, Microsoft Corp., which owns a 1.6 percent stake in Facebook. Google also has ties to Facebook; one of its former executives, Sheryl Sandberg, is Facebook’s chief operating officer.

Just before Page became CEO, Google introduced its version of Facebook’s ubiquitous “Like” button to enable Web surfers to endorse search results and ads. Google’s recommendation button, called “+1,” is expected to be expanded to other websites Wednesday, according to the Techcrunch blog and industry newsletter Search Engine Land. Schmidt didn’t mention a timetable for expanding Google’s +1 button.

Google used Tuesday’s conference to announce the launch of another networking service that will offer discounts from restaurants and other merchants if enough people agree to buy the coupons. The service, called “Google Offers,” is based on the daily deals offered by Groupon, which Google unsuccessfully tried to buy last year. Google’s offers initially will be available only in Portland, Ore., before expanding to New York and the San Francisco Bay area later this year. The offers are part of a new mobile payment service Google unveiled last week.

Schmidt views Google and Facebook as part of a powerful “gang of four” that’s building influential platforms for selling a variety of products and services to consumers. The others, according to Schmidt, are iPhone and iPad maker Apple Inc. and the Web’s biggest retailer, Amazon.com Inc.

Apple once had a close relationship with Google, but Schmidt said things have gotten “rough” between the companies since Google introduced its Android software for mobile phones in 2008. The intensifying competition prompted Schmidt to resign from Apple’s board of directors in 2009.

Although he no longer is involved in day-to-operations, Schmidt said he remains a close adviser to Page and is consulted on all key decisions. He spends most of his time traveling to meet with customers, scouting potential acquisitions and meeting government regulators who have been scrutinizing the company’s business practices and privacy policies

It’s a role that Schmidt, 56, indicated he expects to fill for the rest of his career. He even joked he would like to still be working at Google after he dies if the company could develop the technology to make that possible.

By serving as Google’s public ambassador, Schmidt said Page can concentrate on Facebook and other internal issues

“Larry is pretty busy sitting in his office from 9 a.m. to 10 p.m. going through product reviews,” Schmidt said.

Researchers have figured out how to to crack captchas, making it possible to launchautomated attacks against sites such as Microsoft, eBay and Digg where opening phony accounts could be turned into cash.

Software written by researchers at Stanford University and Tulane University can interpret human speech well enough to crack audio captchas between 1.5% and 89% of the time – often enough to make sites that use them vulnerable to setting up false user accounts, the researchers say.

THE PAYOFF: Wiseguy scalpers bought tickets with CAPTCHA-busting botnet

Called Decaptcha, the program was able to decode Microsoft’s audio captchas about half the time. It cracked the toughest audio captcha from reCAPTCHA just 1.5% of the time and Authorize.com’s audio captchas 89% of the time.

It solved eBay audio captchas 82% of the time, Microsoft 48.9% of the time, Yahoo 45.5% of the time and 42% of the time for Digg, say the researchers, headed up by Elie Bursztein, a post-doctoral researcher at Stanford.

“[A] computer algorithm that solves one captcha out of every 100 attempts would allow an attacker to set up enough fraudulent accounts to manipulate user behavior or achieve other ends on a target site,” the researchers say.

Visual captchas (completely automated public Turing tests to tell computers and humans apart) display distorted numbers and letters that a person has to identify and key in. Audio captchas present a voice reading numbers and letters that are partially obscured by noise, music or competing voices, and the person solving them has to key in the characters being read.

The Decaptcha program samples the audio and identifies what are likely to be numbers and letters based on numbers and letters that have previously been read to it. It then tries to match the suspected character with one of the characters in its library, choosing the one that makes the best match.

According to the researchers training the program requires it to “listening to” captchas that have been accurately identified. “Decaptcha requires 300 labeled captchas and approximately 20 minutes of training time to defeat the hardest schemes,” the researchers say in a paper describing their results. After that, the trained program can solve tens of captchas per minute.

In order to make it difficult for computer programs to identify the characters, various types of distractions are played over them, such as random white noise, loud noises between characters, other voices. Some audio captchas use purposely low-quality recordings.

White noise is relatively easy to filter out, but competing voices and sounds that present sound patterns similar to letters and numbers are the most difficult for Decaptcha to discern, the researchers say. These are called symantic distractions and require human intelligence to sort them out with a high degree of accuracy.

Working in favor of Decaptcha is that the creators of audio captchas have to make them simple enough for humans to figure out the letters and numbers the vast majority of the time. The balance between simple enough for humans to distinguish and difficult enough for computers to miss is tricky, the researchers say.

Rules making it illegal to copy content from CDs and DVDs onto computers iPods and iPads are set to be scrapped.

Millions of people routinely transfer music and films they have bought on CD and DVD onto such devices for personal use.

But under current copyright rules, this copying, or ‘format shifting’, is technically illegal.

A Government study has recommended a shake-up of these laws.

Business Secretary Vince Cable has indicated the Government will act on the suggestions.

Mike O’Connor, of Consumer  Focus, welcomed the move, saying: ‘Our copyright regime is out of date and out of touch.

‘The key now is for the recommendations to be implemented.’

The music industry has accepted the proposals.

But some have suggested companies and artists should be compensated for any income lost as a result of copying through a levy applied to the price of iPods and similar devices, or CDs, DVDs and downloads.

This levy would be used to create a fund that would be paid back to the industry, but there is no such proposal in the study.

Professor Ian Hargreaves, who led the review, said: ‘In recent years, the UK has failed to make the changes needed to modernise copyright law, for which we will pay an increasing economic price.’

It is claimed his wider package of proposals could add up to £7.9billion to the UK economy

Call it real-world domination, or simply Android Everywhere: Google unveiled two initiatives at its I/O developer conference on Tuesday that hint at plans to take Android well beyond the mobile and tablet device space.

The first part of the puzzle was the unveiling of the Android Accessory Mode, which makes it possible for third-party developers to build hardware accessories that can communicate with Android devices via USB. One of the applications demonstrated by Google included game controllers for Android devices, and companies exhibiting at I/O showcased the use of Google’s reference Accessory Development Kit (ADK) to play music, grow plants and control robots.

All of this may admittedly sound pretty geeky, and Google was clearly targeting hardware hackers at I/O, giving away development kits that are based on the Arduino open source hardware. However, you have to put Android accessories in context to see where the company is really going with this; and that’s where Android@Home comes in.

Google used part of its Tuesday keynote to preview Android@Home as an initiative to connect all kinds of appliances in the home. The company teamed up with LED company Lighting Science Group to develop an open source wireless protocol that can be used to roll out inexpensive hardware for mesh networking.

Lighting Science wants to bring the first networking-enabled LED light bulbs to the market by the end of the year, and consumers will be able to control these LEDs with their Android devices, thanks to a hub that helps to interconnect Wi-Fi devices with the new networking protocol.

I talked to Android@Home Engineering Director, Joe Britt, and Android@Home Director of Hardware, Matt Hershenson, after the announcement, and Britt told me that Android@Home was really just a way of taking accessories one step further:

“In thinking about accessories as devices that surround the phone, we started thinking about how far away from the phone you could migrate. Is a light bulb a potential accessory? Is a dish washer a potential accessory?”

Ultimately, said Britt, it all came down to one question: “How can you reach out to every single device in the world and interact with it?”

Granted, some of the things Android@Home is debuting with have been done before. Smart home initiatives are nothing new, and wireless protocols like ZigBee and Insteon have been used before to control devices as well as measure energy use. Hershenson and Britt told me that LED lighting just seemed like the easiest use case to bring to market, something that consumers will understand right away.

However, combine these technologies with the existing Android developer ecosystem, and things are going to get interesting. Android devices will automatically detect connected accessories, whether these are plugged in via USB or connected through a mesh network, and give apps the ability to utilize their functionality.

This opens up countless possibilities for developers, which in turn will be a big boon for Android devices. Just imagine for a second that the Netflix app on your Google TV will be able to control the mood lighting in your living room based on the type of movie you are watching, turning to warm colors for romantic comedies and entirely dark for horror flicks.

There will also be entirely new categories of applications, designed to specifically run on devices that don’t have displays, or work with different types of input. One prototype device demonstrated during the I/O keynote was dubbed Tungsten, a music player that interacts with the user through NFC.

Bringing Android to all these devices will undoubtedly change Android itself, make it more ubiquitous, add new types of interactions and even new forms of commerce. “There is an endless realm of possibilities available,” said Hershenson, and Britt added:

I think of it as spheres, expanding outward. In the middle, you got the core Android functionality, and then we are layering on, and expanding out the reach of Android to enable more and more diverse applications.”