Google's executive chairman Eric Schmidt has said that one of his biggest failures when he was chief executive of the search-engine company was underestimating the importance of friends.

In a speech in California, Schmidt said he had not addressed the impact of social networking services such as Facebook and that, as a consequence, Google had missed on "the friend thing".

"In the online world you need to know who you are dealing with. I clearly knew that I had to do something and I failed to do it," Schmidt said at the Wall Street Journal's D9: All Things Digital conference in Rancho Palos Verdes. Schmidt became executive chairman earlier this year after Google announced co-founder Larry Page would take over the chief executive role.

Schmidt said that Google products would increasingly use social media elements. The company announced plans today to add a service that will allow Google users to recommend web pages to friends and contacts. The service, known as "+1", is similar to the "like" function that Facebook users use to recommend items to their network. Facebook users now share more than 30bn pieces of content each month, and companies are increasingly incorporating a Facebook "like" button on their sites.

Schmidt said the consumer internet was now dominated by a "gang of four" that want to be platforms for other firms: Google, Facebook, Apple and Amazon. "We have never had four companies growing at the scale that those four are in aggregate," he said.