Tuesday, August 14, 2012

Why Not Be Evil?

Can a corporation be evil? Seems these days the better question is "can a corporation not be evil?". From banks to camera companies, big oil to milk producers, one could be excused for mistaking the business page for a how-to crime wiki. Ask a hundred people to name a not-evil corporation and I'll bet many of them would come up with the name Google, the search engine that became a verb that became a $200 billion gorilla. Not only did they revolutionize search, they've changed the way we see the world through Google Maps, Google Earth and Youtube, all of which may one day pale in comparison if Project Glass does half they hope it does. We blog through them, read through them and may one day drive through them. We've all been pretty happy with the arrangement so far, people dream of working for them, stock holders have gotten rich and hey, so what if they've got more information about us than the CIA could dream of, their informal corporate motto is Don't Be Evil. So what happens when they suddenly become evil? Four stories hit my screen in quick succession today that tell me we might be about to find out.

Unless you live in Russia (Yandex) or China (Baidu), in all likelihood you rely on Google for your search results on the web. It's worldwide market share peaked at 86.3% in 2010 and is now probably somewhere around 80%. While it only controls two-thirds of the US market it has nearly the entire mobile market, 96.9%. Hooray for them and hooray for us, right? After all, we wouldn't use it if it weren't the best and with so many of us using Google, it's only getting better. Right? Yeah, it worries me too, in fact, I started worrying a little while ago after seeing this TED talk about how Google provides each user with different results for the same search. Innocuous at first blush, again, just making our web experience better by providing individual users with the hits they'll be interested in. Worrisome on second thought as we get trapped in a "filter bubble" and don't get exposed to information that could challenge or broaden our worldview. And now creepy on third after today's news that Google has joined the copyright police force.

Last Friday, Google SVP of engineering Amit Singhal informed us: "Starting next week, we will begin taking into account a new signal in our rankings: the number of valid copyright removal notices we receive for any given site. Sites with high numbers of removal notices may appear lower in our results." If your Orwellian doublespeak sensors don't go off when a statement like this is followed by claims that "this ranking change should help users find legitimate, quality sources of content more easily", let me translate it for you: "Our censorship will help guide you more efficiently to our corporate sponsors". Copyright claims are known as DMCA takedown notices and are routinely abused as there is no downside to claiming ownership of content. This has led to many examples of content claims that turned out not to be owned or were defensible as fair use or worse yet, takedown notices are sometimes used to suppress free, lawful speech. Google should not circumvent the judicial process by passing judgment on websites just because someone complains. The legal system presumes innocence until guilt is proven; Google should make the same presumption. Imagine if the Google logo were replaced with the FBI emblem and the search button said, "See all government approved results." Would you use that search engine? Well, you might as well be, just replace 'government' with 'corporate advertisers'.

Well, at least they're not doing anything illegal, right? Not so fast. Part II of IV is the story of Google being hit with a record fine for violating the privacy of people who used Apple's Safari Web browser even after pledging it would not. A RECORD FINE! That'll keep'em honest. I'm sure they won't go about bypassing people's privacy settings to track them across the web anymore, especially after promising they won't. Well, why not? See, as the LA Times called it, the fine is "a drop in the bucket" that CNN said amounted to a "slap on the wrist": $22.5 million. Sure, a lot of money to you and me, a number your grandfather probably never even saw in his life, but in today's world of billions in profits and trillions in bailouts, mere pocket change. In fact, it's 0.1% of Google CEO Larry Page's net worth. It's equivalent to about five hours of sales. Wait though, here's the kicker: the penalty is less than the gain Google's stock saw the day it was announced last Thursday as Google added $39.2 million to its market capitalization! Yep, it's profitable being evil.

Even when they're not breaking the law, Google, just like any large multi-national company, is very adept at bending it to their advantage and our detriment. No one wants to pay more tax than they need to, Google included. In fact they have the same fiduciary duty as any corporation to their shareholders to maximize profits which means minimizing taxes. So, like any of us would do, they have a full-time stable of tax lawyers and accountants to dream up schemes such as the Double Irish with a Dutch Sandwich. Yes, Apple, Microsoft, Oracle and IBM all play the same game, but Google plays it best, to the tune of a 2.4% tax rate. I know, I know, you thought the US corporate tax rate was 35% and the UK's 28% and this exorbitant rate was throttling business, suffocating innovation in order to pay for benefit cheats' heroine habits. Nope, by sending their earnings to Google Ireland, whose 12.5% tax rate isn't quite low enough but whose loose tax laws allow most of the revenue to be redirected through the Netherlands where the generous Dutch tax laws allow 99.8% of what the shell company (it has no employees) collects to be sent on to Bermuda (it's subsidiary there is an Irish company, thus the Double Irish) whose white sands have no corporate taxes at all, Google has saved $3.1 billion over three years. Yet if we remember that their saving is societies cost in the times of austerity, well, no wonder some in the UK are starting to question the legitimacy of such transactions. As Google is thought to be based in the US, it's strange that Americans with their $trillion deficits and $16 trillion debt don't seem concerned. They really would pay more if they had to, honest, plus it's still a great place to work, right?

Well, why don't pull out the last article of the Google is Evil day on the Internets: Google Cutting Motorola Staff By 20 Percent In Search Of Profits. In case you missed it, Google recently concluded a $12.5 billion takeover of Motorola Mobility in May. Those who didn't will pass this purge as Google's move to shake things up and return their new subsidiary to profitability. Yet, digging deeper reveals a fleck of evil, and not just any evil, the financial shenanigans kind, worse yet, the mergers and acquisitions kind. Google didn't appoint a consumer electronics guy to turn around a, well, consumer electronics company, instead they hired Danny Woodside, a mergers and acquisitions lawyer. In case you're unfamiliar with these types, just watch the original Wall Street movie or better yet, turn on your TV and you'll be sure to see Mitt Romney, a man whose business experience was earned at Bain Capital. They're not in the business of resurrecting money-losing companies but the opposite, killing them by breaking them up into pieces and selling the pieces off to make a profit. Yeah, the evil's in the details of a huge corporation but the lives of those who lose their jobs in the middle of a depression.

What's it all mean? Not much I'm sure. Billions will continue to turn to Google daily as they continue to build up an ever larger database of our habits in order to sell things to us more efficiently which will allow them to avoid more taxes on ever greater profits as they grind up smaller companies, keeping the tastier bits and selling off the scrap. Few will even know what's happening, the technology will keep getting deeper under our skin, Google and other corporations will continue to pour money into the political process to keep the tax laws as they are and their war chest of cash will continue to grow. What could go wrong, right? Ah, I think people were saying the same things about AIG et al just about five years ago if I remember correctly. If only we'd moved our money out of them...think I'll switch my default search engine to Duck Duck Go.

Here's an alternate vision to Google's Project Glass brought to you by Google's Youtube! (couldn't get Vimeo's embed to work, watch it here)