How Google’s co-founders are having their cake and eating it too

  • Both Larry and Sergey retain dual-class voting power as stakeholders. They cumulatively have 83% of the Class B shares, each [PA1] with the voting power of 10 GOOGL shares. This allows them to obstruct any move in the boardroom against them. This structure is meant to ensure control of corporate vision is in the hands of the founders, without diluting actual control of the company to the mercy of the investors.
  • Just after three years of incorporating Google, the duo got onboard Eric Schmidt who was hired as CEO as the company was in need of adult supervision. Schmidt remained as CEO for more than a decade and then became executive chairman first of Google, then Alphabet. This enabled the duo to focus on moonshots, the next big thing while the Google Search machine marched on. All this while, Schmidt was responsible for corporate governance and was the face of the company while Page and Larry continued to passionately follow their pet projects some of which we now know to be augmented reality glasses, self-driving cars, hyper-fast internet for the masses amongst others.
  • When in 2015, Page and Brin created Alphabet, a holding company that held control of Google and other bets which, Sundar Pichai was tasked to run Google while the duo looked after the parent company with CEOs of all subsidiaries reporting into them. This created the framework for them to relinquish day to day public-facing operating control of the company. Pichai ran Google, while Page and Brin focussed on other bets. In fact, Pichai represents Alphabet/Google for everything be it earning calls, keynotes, famed Google TGIFs and even senate hearings. While all this was happening, he never had full control; for instance when Larry Page unilaterally signed off a $100 million severance package to Android founder Andy Rubin despite him being accused of sexual harassment.
  • Despite removing themselves as CEO and President of Alphabet, Page and Brin retain full control of Alphabet because of the dual-class voting power. They still retain their seats on the board, they still are Alphabet employees and they haven’t spoken anything about divesting their controlling stake. Pichai may now be the CEO of Alphabet but the status quo remains the same. Technically nothing changes at Alphabet or Google for that matter, though you can imagine, Pichai having more say in what the “other bets” do as he may make them financially more viable with him having the fiduciary responsibility towards shareholders.

Eat-Pray-Love

  1. The rumours of romantic affairs of some of Google’s founders and top executives have been around for a long time. In fact, Larry Page dated Marissa Mayer (Former Yahoo CEO) when she was one of the company’s earliest employees. Brin dated Amanda Rosenberg, a then-27-year-old public relations manager at Google while. This was even weirder as she was dating Google’s former VP of Android Hugo Barra and this news only came out when he left Google to join Xiaomi in China. How do you expect thousands of employees to follow basic workplace etiquette when the top management isn’t following them and rather publicly bucking them.
  2. Andy Rubin, the creator of Android, was alleged to have an “inappropriate” relationship with a subordinate while at Google. Page asked for Rubin’s resignation. However, the company mysteriously still continued to pay him millions of dollars in installments of $2 million per month for four years. It has been revealed that Larry Page unilaterally signed paycheck off despite being aware of Rubin’s indiscretions.
  3. Alphabet’s Chief Legal Officer David Drummond quietly married a current Google employee in the legal department. Another former Google employee alleged a year-long relationship with Drummond. This is a huge deal as Drummond is one of the oldest confidants of Page and Brin as he was the one whom they hired when they were forming the company.
  4. Similarly, Google’s former head of search, Amit Singhal was asked to leave a couple of years ago for sexual harassment. Singhal was key to the company as he was the guy who rewrote the iconic “Page Rank” algorithm invented by Page and Brin in their Stanford dorm room. It can be said that Singhal is more responsible for Google’s current success even more so than its founders.

Change in culture

  1. James Damore, a software engineer at Google, was fired after he circulated a controversial anti-diversity memo. Employees supporting James started a nationwide protest at Google campuses. The protests were meant to raise awareness on how Google does not respect freedom of speech and censors dissenting voices on its video-sharing site YouTube.
  2. Google employees have accused the company’s leadership of developing an internal surveillance tool that they believe could be used to monitor workers’ attempts to organize protests and discuss labour rights. It would automatically report staffers who create a calendar event with more than 10 rooms or 100 participants, according to an employee memo.
  3. Google fired four employees on the grounds they violated data security policies, prompting ire among colleagues concerned it was retaliation for worker organizing. One of them was connected to a petition against Google working with the US immigration and border patrol agency.
  4. Google CFO Ruth Porat, is being positively viewed by both employees as well as investors. She joined a mass protest at the company’s handling of sexual harassment allegations. Porat sought to portray a company that gives its employees “voice” and listened to their demands. She has overseen a dramatic restructuring of the company while also doubling its stock price. Investors shall be bullish because Porat and Pichai make an excellent team.

In the eyes of the law

  1. Being a global company, Google is also facing regulatory hurdles on multiple fronts. Chinese regulators are reportedly mulling an “Unreliable Entities” list in retaliation for the ban on Huawei products in the U.S.
  2. The U.S. Justice Department (DoJ) is preparing an antitrust probe against Google. Many American politicians also want to break-up tech giants into smaller companies since they are afraid one entity is becoming too influential and obtaining a monopoly.
  3. Lastly, regulators across the globe no longer see fines as sufficient, especially as the company appears to simply take the penalties as the cost of doing business.
  4. Google also planned to launch a censored version of its search engine in China, dubbed Project Dragonfly. Employees have been against the project because Chinese authorities could censor web content and monitor citizens’ behaviour online. Investigation documents suggested that Google engineers were at one point working on ways to filter out individual websites — including the BBC and Wikipedia — from search results, based on web censorship in China.
  5. European regulators have already fined Google billions for anti-trust issues with regards to Android and pre-bundling of Google apps. It is entering an era of even more scrutiny in places all around the world which doesn’t bode well for it which is why it needs a change in culture.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
warpcore

warpcore

Serving communities on the intersection of technology, indie music and culture, the warp core is a think tank founded by technology journalist Sahil Mohan Gupta