Speaking at the Mobile World Congress in Barcelona, Spain, Schmidt said the Internet is "like water" -- it will find a way to break through -- but "we need to act now to avoid the rise of this new digital caste system."
The Google executive chairman was referring to censorship efforts throughout the Middle East in the last year, from Egypt to Syria and Iran, where access to secure Web sites -- including Google services -- was cut off this month, PC Magazine reported Wednesday.
But technology, he said, will eventually create a "global community of equals."
Schmidt warned against burdensome legislation in the United States.
"There's a tendency of regulators to regulate now as opposed to what will be," he said. "If you have to regulate, try to regulate the outcome, not the technology.
"If there's an outcome you don't like, don't specify in law a specific technology because the technology moves forward."
Bringing the Internet to underserved portions of the world was another major theme of his remarks.
"There will still be elites," he said, but "technology is the leveler [because] everyone is blessed with creativity," Schmidt said. "I believe this profoundly -- in every person there is a company waiting to get out."