May 02, 2004
Google's Heart
Posted by Gordon Smith

The now-famous letter from Larry Page and Sergey Brin -- "'An Owner's Manual' for Google's [Future] Shareholders" -- has struck a chord with many who fancy themselves as part of a "corporate social responsibility" movement. And no line in that letter has attracted more attention than this one: "Don't Be Evil."

Oddly, this line is applied to a fairly narrow aspiration -- keeping search results untainted by advertising. That is not to say that Google is an ad-free zone, just that the ads are "relevant" and clearly labeled. When most people hear about the "Don't Be Evil" line, however, I suspect that they think of bigger issues than untainted internet searches. They think about what comes in the next paragraph of the letter:

MAKING THE WORLD A BETTER PLACE

We aspire to make Google an institution that makes the world a better place. With our products, Google connects people and information all around the world for free. We are adding other powerful services such as Gmail that provides an efficient one gigabyte Gmail account for free. By releasing services for free, we hope to help bridge the digital divide. AdWords connects users and advertisers efficiently, helping both. AdSense helps fund a huge variety of online web sites and enables authors who could not otherwise publish. Last year we created Google Grants -- a growing program in which hundreds of non-profits addressing issues, including the environment, poverty and human rights, receive free advertising. And now, we are in the process of establishing the Google Foundation. We intend to contribute significant resources to the foundation, including employee time and approximately 1% of Google's equity and profits in some form. We hope someday this institution may eclipse Google itself in terms of overall world impact by ambitiously applying innovation and significant resources to the largest of the world's problems.

Commentators have oohed and ahhed over this passage. For example, Leslie Walker states:

I'm glad to see Google's self-image includes a high-minded sense of public mission like great media companies tend to have. Read the letter from its founders. They say things like, "Our goal is to develop services that improve the lives of as many people as possible--to do things that matter." They talk about retaining the purity of search results from undue influence by advertising. Refreshing talk for an IPO filing, no?

Elsewhere I have examined (with the help of many friends) why people are so enamoured with this passage. Here, I would like to tackle a distinct, but related, issue: Is this good corporate policy?

Social Responsibility as Marketing. One response (admittedly a bit cynical) to Google's aspirational language is that it is all part of corporate image making. Certainly, the first part of the message -- the part about Google's products "bridg[ing] the digital divide" -- is not distinctive at all. Every corporate manager knows that the corporation benefits when people feel good about using its products and that people feel good about using the products when those products seem to be helping the poor or downtrodden.

Social Responsibility as Moral Duty. The rest of the passage, however, implies that Google is doing something distinctive and noble, something other corporations have (for the most part) not done: sacrifice profits for charity. (I assume that marketing is done in service of profits, so it is qualitatively different than the sort of expenditure that interests me.)

Is this good corporate policy? This question may not be very interesting. Companies that sacrifice profits for charity -- without a compensating marketing boost -- increase their cost of capital and thus disadvantage themselves in the competitive marketplace. If they don't stopping shooting themselves in the foot, they bleed to death. If this is true, then the Letter's rhetoric about "making the world a better place" by sacrificing profits is empty because it is not sustainable.

Let's assume, for the sake of argument, that Google's aspiration is sustainable. Why do we admire Larry Page and Sergey Brin for this sort of sentiment? After all, they have merely announced that they are willing to spend corporate funds on causes that they adore. Maybe it's just my cynical law professor side speaking, but I do not admire people who use money that is not their own to pursue works that make them appear noble and good. Charity is cheap when someone else is paying the bills. If you feel a moral duty to give to charity -- and I hope that all of us do -- use your own money.

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