Google’s authoritarianism and China’s democracy

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[Image Source: FakeSteve]

We’re often told to take Google’s “Don’t be evil” slogan with a grain of salt.  It’s a corporation, after all, with a fiduciary responsibility to its shareholders and thus allegedly constrained in its effort to promote non-evil causes.

So how do we explain Google’s decision to leave China?  Some thoughts are rounded up:

Sarah Lacy at TechCrunch speculated they are trying to save face after failing to capture share:

Does anyone really think Google would be doing this if it had top market share in the country? [...] Google has clearly decided doing business in China isn’t worth it, and are turning what would be a negative into a marketing positive for its business in the rest of the world.

Parsa Sobhani, joining voices on WashPo, say it is just pure strategy:

While much of the media point to the ['do no evil'] slogan as the basis of the power play, one can see that the self-censorship policy simply doesn’t align with [Google's] business vision…to make information universally accessible and useful.

Danny Sullivan scoffed at the hypocrisy:

But bottom line, it was still a business move, to me. If Google just wanted to help people in China get good information, it could have spent the past four years helping to construct ways for people in China to bypass their government’s firewall. Or the past four years arguing that the US government and US-based businesses should follow its lead in staying out of China.

And Matthew Forney and Arthur Kroeber, opining at the Wall Street Journal, say its all about trust:

The reason is simple: Google’s business model requires that its consumers trust that their information will be absolutely secure. So when Google says it will “do no evil” and will never compromise on its principles or its technologies, the world must believe it.

Whatever your take, the irony of the whole thing is that Google would not be able to promote democracy in China were it not for its own fundamentally authoritarian governance structure.

When the company went public in 2004 they created a dual-class voting structure that basically gave Larry Page and Sergey Brin unbridled power and authority – outside shareholders cannot override their decisions.  Amalie Tuffin explained at the time:

Google and its selling shareholders are selling Class B common stock, having 1 vote per share in the offering; Google’s founders, its CEO Eric Schmidt, and certain others will retain Class A common stock, having 10 votes per share, after the offering. In the initial offering, only about 10% to 15% of Google’s shares will be sold to the public and thus Google’s current owners would initially retain control in any event. However, this dual-class stock structure will allow Google’s insiders to retain effective control over Google long after a majority of the company is owned by the public.

Consider the implications.  Could any other company operating under the traditional rules of delivering returns to shareholders afford to walk away from the 1.3 billion-person behemoth that is China?

Google’s IPO precedent may be replicated by Facebook and others.  And as social networking companies become increasingly important to democratic movements, we may yet see more of this sort of corporate activism in the future.

What are your thoughts?  Purely strategic?  Just business?  Hypocritical? Is Google’s stock structure fair to shareholders?  Or is it a chance to break free of corporate constraints on social responsibility?

Meanwhile others have been inspired – Dell is moving factories out of China and GoDaddy stopped registering websites on the mainland.

To keep a pulse on the availability of Google services in mainland China, click here.

Posted on April 6th 2010 in news

OrgWatch: Brooklyn Brewery

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As part of Think Social Drink Local 2010, I put together this video profiling Steve Hindy, co-founder of the Brooklyn Brewery:

I had to cut out significant portions of the interview to keep the video short, but I wanted to share how he got to launching the brewery. Steve Hindy used to be a journalist. Prior to starting Brooklyn Brewery, he worked for the Associated Press as a correspondent in the Middle East. During that period he spent a lot of time with diplomats in Saudi Arabia, where alcohol is illegal. Many of these resourceful diplomats brewed their own beer and taught Steve Hindy the basics. He cultivated his hobby upon returning to New York and went on to launch the Brooklyn Brewery in 1987. Today, it is among one of the top 40 breweries in the country and Brooklyn Lager is among the top draft brews in NYC.

Posted on March 12th 2010 in OrgWatch

Is one bad Apple spoiling the bunch?

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The reigning business mantra is that social responsibility is a corporate side hustle.  If a market-driven opportunity to create some social impact presents itself, by all means capture it.  But make no mistake, we’ve been told, the private corporation is beholden to one master: the shareholder.  And the supreme interests of the shareholder shall not be infringed.

So what happens when shareholders demand social responsibility?  Apple tells its owners to back off:

For the second year in a row, a shareowner resolution requesting the publication by Apple of an annual sustainability report has been filed, and for the second year in a row Apple’s Board of Directors has recommended that shareowners vote down the proposal.

As You Sow, which supports activist shareholders looking to promote social impact, filed the resolution, stating that:

Among our industry peers, Dell, IBM, and Hewlett-Packard have taken leadership roles in these areas through publication of comprehensive sustainability reports that address their company’s impacts with regards to issues such as greenhouse gas emissions reduction, toxics, and supply chain working conditions

But Apple has put forth a lot of green initiatives over the past few years.  The Board of Directors, in its proxy statement, maintains that the company provides an unmatched level of detail on environmental performance, and that publishing such a sustainability report would add little value.

What do you think?  Are there too many reporting standards out there and should we just be content to critically examine what the company does put out?  Or does Apple risk looking bad next to its peers?

Posted on February 15th 2010 in news
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