Google Corporate Social Responsibility

Corporate Responsibility

Spring Term 2009

Case Report: Google®

4th June 2009

Table of contents 1. Company description...........................................................................................................3 2. Industry description.............................................................................................................3 3. Google® and Corporate Responsibility...............................................................................4 3.1 Understanding of the Game.........................................................................................4 3.2 Rules of the Game.......................................................................................................5 3.3 Actions within the Game...............................................................................................5 3.4 Used Instruments for Communication..........................................................................6 4. Censorship..........................................................................................................................7 4.1 Dilemmas faced by Google®.......................................................................................8 4.2 Google®’s response to the dilemma.............................................................................9 4.3 Evaluation based on Golden Rule..............................................................................10 5. Privacy..............................................................................................................................10 5.1 Dilemmas faced by Google®......................................................................................10 5.2 Google®’s response to the dilemma...........................................................................12 5.3 Evaluation based on Golden Rule..............................................................................13 6. Conclusion.......................................................................................................................13 6.1 Lessons Learnt...........................................................................................................13

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1. Company description Google® is a US internet services provider located in Mountain View, California. It was founded by Larry Page and Sergey Brin who positioned Google® differently from its competitors by emphasizing on transparency in its searches using the page rank system and by downplaying the role of profits. The two Stanford graduated students developed a search technology, that developed Google.com into the most popular search engine in the world. The market share of the search engine is 53.6%, ahead of Yahoo (19.9%) and Microsoft Live Search (12.9%). Google® is earning its revenue with advertising related to its services like: Internet search, email, online mapping, office productivity, social networking and video sharing services. Since 2004 Google® became a public company by going for a dutch auction IPO at the NASDAQ. Its revenue increased by 31% to approximately $22 billion and its net income increased by 6% to $4.2 billion in the year 2008. After the IPO many people criticized that the company culture of Google® had changed, because of shareholder pressure for employee benefit reductions and short term advances. However, Sergey Brin and Larry stated that the IPO won’t have any impact on the Corporate Culture. So the Google® mission is till this day “to organize the world’s information and make it universally accessible and useful.” Furthermore Google®'s corporate philosophy embodies such casual principles as "you can make money without doing evil," "you can be serious without a suit," and "work should be challenging and the challenge should be fun”.1

2. Industry description Google® acts in an economic system that is characterized by market competition. Main players that run a general content/topic search engine like Google® are for example Microsoft and Yahoo. Besides these, numerous other companies run search engines on specific topics, on various types of information (e.g. multimedia, blog) and with various models (e.g. open source, metasearch). The players in this industry are aware of the fact that corporate responsibility is an issue. “At Yahoo!, we believe in sharing success and treating people right. We share our success with the communities we live and work in. We treat our employees right, celebrating their diversity and encouraging them to experience the joy of volunteering. We strive to do our very best for our employees, shareholders, customers and the environment.” That’s the way Yahoo, one of Google®’s main competitor states it´s corporate responsibility and others do so in a similar way. Nevertheless, considering the enormous amount of players in the market it is almost impossible for any company to have complete control to realize social states and to avoid dilemma structures that are caused by 1

"Google® Corporate Philosophy." Google®. Retrieved on 31 August 2006

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problems of incentives or information. Furthermore, with the globalized character of the business, conditions for functioning institutions are hard to create. This results only in national/regional institutions (e.g. California Initiative for Internet Privacy (CIFIP), China´s regulations/censorship). On an international level institutions that are so substantial for investments in social cooperation for mutual advantage are discussed (e.g. codes and other laws of cyberspace) but not implemented. When companies like Google® follow their core principle not to influence any search results it can even be said that basic Human Rights are not ensured.

3. Google® and Corporate Responsibility What does Google® define as corporate responsibility and what instruments are used to communicate it? To answer this question, it is useful to apply the three-step model to see how the understanding of the game, the rules of the game and the actions within the game are related to each other and finally forming Google®’s corporate responsibility. After that, one can analyze the instruments, which Google® uses to communicate this responsibility. 3.1 Understanding of the Game Google® has defined concrete common values that have to be shared by all employees and board members. The central value is “Don’t be evil”. These words reflect the approach of Google® to provide their users with unbiased access to information, focusing on their needs and giving them the best products and services that they can. At the same time, these words also mean to follow the law, act honorably and treat each other with respect.2 These common values and beliefs are based on so called “ten things that Google® has found to be true”. In detail these are: - Focus on the user and all else will follow. - It's best to do one thing really, really well. - Fast is better than slow. - Democracy on the web works. - You don't need to be at your desk to need an answer. - You can make money without doing evil. - There's always more information out there. - The need for information crosses all borders. - You can be serious without a suit. - Great just isn't good enough.3

2 3

cf http://investor.Google®.com/conduct.html cf. http://www.Google®.com/intl/en/corporate/tenthings.html

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3.2 Rules of the Game Google® formulated a code of conduct to put its values and beliefs into practice. The company has the approach to include the highest possible standards of ethical business in this code of conduct. The motivation for that is the belief, that only the highest standards help the company to hire great people, who then build great products, which in turn attract loyal users. That is also reflected in the statement “Trust and mutual respect among employees and users are the foundation for the success, and they are something we need to earn every day”. In detail the code of conduct consists of the following parts: - Serve Our Users (e.g. integrity; privacy and freedom of expression etc.) - Respect Each Other (e.g. equal opportunity employment; positive environment etc.) - Avoid Conflicts of Interest (e.g. personal investments; gifts etc.) - Preserve Confidentiality (e.g. confidential information; competitors etc.) - Protect Google®'s Assets (e.g. intellectual property; company equipment etc.) - Ensure Financial Integrity and Responsibility (e.g. spending Google®'s money; signing a contract etc.) - Obey the Law (e.g. trade controls; anti-bribery laws etc.) 4 Google® expects all of its employees and board members to know and follow the code. Google® also created institutions to ensure the implementation of the code in day-to-day business. That can be seen in the treatment of misbehaviour that can result in disciplinary action, including termination of employment. Moreover, while the code is specifically written for Google® employees and Board members, Google® expects contractors, consultants and others who may be temporarily assigned to perform work or services for Google® to follow the code in connection with their work. Failure of a Google ® contractor or consultant or other covered service provider to follow the Code can result in termination of their relationship with Google®. An internal department called Ethics & Compliance deals with questions and implementation regarding the code of conduct. Besides the institutions set up by Google® and mentioned above, there are more “natural” institutions that employees have to follow (e.g. law or regulations in countries where Google ® has subsidiaries). 3.3 Actions within the Game In terms of activities regarding corporate responsibility, one has to mention first Google.org. Google.org was founded in 2004 to manage the activities of the non-profit organization “The Google Foundation” as well as to create public awareness about several topics that are linked indirectly with long-term profit generation. Google.org's five major initiatives, announced in January 2008, are: 4

cf. http://investor.Google®.com/conduct.html

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- Develop Renewable Energy Cheaper Than Coal: create utility-scale electricity from clean renewable energy sources that is cheaper than electricity produced from coal. - Accelerate the Commercialization of Plug-In Vehicles (RechargeIT): seed innovation, demonstrate technology, inform the debate, and stimulate market demand to foster mass commercialization of plug-in vehicles. - Predict and Prevent: identify "hot spots" and enable rapid response to emerging threats, such as infectious disease and climate risk. - Inform and Empower to Improve Public Services: use information to empower citizens and communities, providers, and policymakers to improve the delivery of essential public services (such as education, health, water and sanitation) in the developing world. - Fuel the Growth of Small and Medium-Sized Enterprises: increase the flow of risk capital to small and medium-sized businesses in the developing world.5 Besides those activities, that obviously are more long-term oriented, Google® also invests in conditions to foster social cooperation in day-to-day business. That is in particular reflected in their efforts to bring the code of conduct into daily practice. By creating a company culture that encourages employees to act according to the defined values, Google® ensures sustainability in its business. One example for investments in social cooperation is the “Googleplex”. Googleplex is the headquarter of Google® in Mountain View, CA. With this investment, Google® provides its employees free access to sports facilities and restaurants as well as free laundry service. This working environment is highly appreciated by the employees and benchmark for working conditions. In return, employees are working longer and, more important, with a higher motivation. Google® sees its employees as a valuable asset and according to the company culture, all employees are equally important for the success of the company. Everybody can and should share ideas and opinions. The example how Google® treats its own employees shows how sophisticated the activities are to turn the ideas of corporate responsibility into daily life. Similar examples can also be found in Google®’s relationship to other stakeholders like suppliers, educational institutions, customers, media etc. 3.4 Used Instruments for Communication When analyzing the instruments that Google® is using to communicate its responsibility, it is important to consider that there are two dimensions of communication: internal and external.

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cf. www.Google®.org

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First, regarding internal communication, Google® uses a variety of different instruments that are also used by many other companies. As usual for IT companies, Google ®’s main instrument for internal communication is the intranet that shows all public content from its website but additionally also internal information that is only dedicated to employees. Here Google® provides all relevant information regarding corporate responsibility. In contrast to other companies, Google® keeps important parts like the code of conduct very short and understandable for everyone. Besides electronic media, Google® also uses meetings as instrument for two-way communication. These meeting are important to ensure the information flow among employees and management. Meetings can be formal (so called town meetings) or informal (e.g. during a sports session in own facilities). Furthermore Google® also uses classic instruments like blackboards to inform. Second, regarding external communication, Google® also uses the internet as main instrument for communication. All information about corporate responsibility is available for anyone outside of the company. Furthermore Google® uses two-way communication instruments externally. One example are events with educational institutions like universities, where Google® management and employees get in contact with students and faculty staff to share ideas. However, Google® uses also classic PR instruments for communicating about its responsibility. Events for example are always flanked by press releases, interviews or other offers for the press. Summarized, Google® uses a variety of different instruments to communicate about its responsibility. However, also many other companies are using similar instruments. Why Google® seems more successful than others? The difference to Google® is that other companies often miss the opportunity to communicate their responsibility in the right way and, very important, consistently. But also Google® has to face challenges with respect to the application of its values and beliefs as it is stated in the next chapter.

4. Censorship As on March 31st 2009 approximately 1.59 billion people are using the internet6 to read the news, blog, buy goods etc. or simply just to “surf” and in the processes they generate terabytes of information. Google®’s mission is to organize this information and make it universally accessible and useful. In accordance with this it is their commitment to maximise access to information which is contrary to censorship. Censorship in Google®’s case is the removal or omission of information from its services based on local government laws regulations and the company’s old policies.

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http://www.internetworldstats.com/stats.htm

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4.1 Dilemmas faced by Google® Censorship in China is one the biggest ethical dilemmas faced by Google®. (i) Google® and China Google® first entered China in 2000 with a Chinese language version of its homepage. The site was hosted in the United States and was therefore not subject to Chinese laws. Search results were unfiltered and whenever users attempted to access a banned website, Chinese filters blocked them. This strategy worked until September 2002 when Google® became inaccessible for two weeks following which the service became slow, unreliable and often unavailable. In 2004 the company showed the first steps towards a compromise with the Chinese government. On Google® News China, links that were blocked by the government were dropped from the list. As the company began to lose market share, in January 2006 it announced the creation of Google.cn based in China. Google® however maintained Gmail (e-mail services) and Blogger (personal web Blog hosting service) outside China and continued

to

simultaneously

offer

the

slower

Google®.com

in

Chinese.

®

Compliance with Chinese laws also proved tricky. Since Google could not display the content of ‘harmful’ websites, they did not post inaccessible links saying it would be “frustrating to users”7. They also put a notification at the bottom of every page saying ‘In order to comply with local laws and regulations, some search results may not be shown.’ Since the Chinese authorities did not provide a specific list of ‘harmful’ material, Google® set up a computer in China and continuously conducted searches to determine what was being blocked using the results as a basis for their censorship. The decision of Google® to enter the Chinese market in such a manner caused public outcry. Organizations

like Reporters Sans

Frontieres accused Google® of

“hypocrisy”8, whilst some bloggers called for a boycott of Google ® others referred to the new service as “Castrated Google®”. Further points of criticism were that Google® did not provide a list of websites that were delisted nor did it inform the websites owners. Transparency and disclosure were inconsistent with Google®’s practices in other countries. For example if a website was removed from search results due to copyright violations in the U.S., a notification could be seen at the bottom of the page informing the user that the site was removed from the list and a link was provided that directed the user to the details of the legal request. It is important to note that Google® is not the only company to face opposition towards its operational policies in China; Microsoft, Yahoo and CISCO have also been criticized for their actions. 7 8

http://www.darden.virginia.edu/corporate-ethics/pdf/Case_BRI-1005_Google®_in_China_condensed.pdf http://www.rsf.org/article.php3?id_article=16262

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(ii) Censorship in other countries Though there has never been much criticism about censorship in other countries China is not the only country in which Google® and others censor search results in compliance with the laws of the country. Anti-semitic websites are banned in both France and Germany. Censorship occurs in the United States as well; laws governing personal information, activities of minor children, child pornography and gambling affect the services of search engines. 4.2 Google®’s response to the dilemma Now we will ask the 3 Heuristical questions to evaluate how Google® responded to the dilemma posed by the situation in China. (i) What do we want? – Moral Ideas According to Elliot Schrage (Vice president global communications and public affairs, Google®) the corporate mantra ‘Don’t be Evil’ is “an admonition that reminds us to consider the moral and ethical implications of every single business decision we make.”9 In line with this on one hand Google® wishes to provide their users with unbiased access to information however on the other hand this also requires Google® to act honorably, treat others with respect and follow the law. Both these goals however are not always compatible and sometimes involve a trade-off as was the case with China. (ii) What are our constraints? – Empirical conditions The exact nature of the circumstances is as follows. Since Google® was unable to provide quality services in China it was losing marking share. To do business in China they would have to indulge in self censorship, a practice that was against their values and commitment as a company. The other option was to continue to offer the old services, a move that would have probably cost them the Chinese market. It is also a fact that when Google® blocked certain websites in other countries it did not lead to public outcry since the content that was/is blocked is widely considered as harmful to society. Given the scenario in China any form of censorship on Google®’s part would be interpreted as against the interest of Chinese population and viewed as Google® going against everything it stands for. (iii) What should we do? – Ethical judgments Though Google® admits that filtering search results goes is inconsistent with its mission, not providing services to one fifth of the world’s population would be a bigger 9

http://Google®blog.blogspot.com/2006/02/testimony-internet-in-china.html

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failure of their corporate mission. In the words of Andrew McLaughlin (Google ® Inc) “we intend to provide the greatest access to the greatest amount of information to the greatest number of Chinese Internet users”10. The bigger picture the company says is that the internet is transforming China for the better. Officials at Google® also pointed out that the website Google.cn was an additional service offered in China not a replacement. Services such as Gmail and Blogger were not launched as personal data stored would also be subject to Chinese laws. In addition to its commitments to satisfy the interests of the users and to expand access to information Google® depended on a third commitment – be responsive to local conditions. 4.3 Evaluation based on Golden Rule The evaluation of Google®’s actions depends on how one views the conditions of social cooperation for mutual advantage. By themselves both goals - to provide access to unbiased information and following the law - are conditions of social cooperation for mutual advantage however in this case one cannot be achieved without sacrificing the other. In the case of censorship in Germany and France, since anti-Semitic content is widely accepted as harmful, the law triumphed access to information. In China however Google® seems to have caved into the pressures of profit. However the questions here are - how does one decide on what content is harmful and what is not? To what degree should such content be restricted? Or should it be restricted at all?

5. Privacy World leadership in a consumer oriented service industry brings with it a whole set of legal and ethical responsibilities also, more so when the business requires dealing with the consumers’ sensitive personal information. Due to its ever expanding portfolio of online services and consequent exponential rise in the consumer reliance and trust on Google®, it finds itself in a position where it has been increasingly difficult for Google ® to satisfy the demands of all stakeholders (creation of anti-Google groups such as www.google-watch.org is an example). The stakes are even higher when a company openly proclaims its policy of “Don’t be Evil” and vows to “do good things for the world at the cost of foregoing some short term gains”11. 5.1 Dilemmas faced by Google® The broader issue of privacy, in light of Google®’s various services, can be classified as follows –

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http://Google®blog.blogspot.com/2006/02/human-rights-caucus-briefing.html Google® founders Larry Page and Sergey Brin in their “Founders’ Letter” during Google®’s IPO in 2004

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(i) Collection and retention of user data Google® has a policy to collect user data such as search terms, URLs, IP address, browser type, language etc. and store them on their servers in order “to provide a better user experience, including customizing content for the users”12. It also states that Google® may collaborate with third parties to use such user data to provide newer and better services. Google® has been facing a lot of ire for allegedly encroaching upon users’ privacy by putting their pictures and also those of their homes on services like Google Street View®, Google Maps®, etc. without their explicit consent. Finally, Google®’s business model is based on selling relevant contextual advertisements, i.e. advertisement relevant to the content contained in users’ emails, search results and other browsing patterns. In spite of Google®’s assurances that the whole system is completely automated, keeping the data away from human scrutiny, many people tend to fear a possible misuse of their sensitive information in the future. A classic example is the AOL search data scandal, wherein the search engine AOL released search patterns of over 650,000 users for research purposes, which was later maliciously circulated over the internet and a lot of users could be personally identified using the same13. This raises an ethical dilemma of conducting business in a manner that could jeopardize the privacy/security of the consumer. Moreover, Google® does not mention how long it will retain user data, which many people fear is infinitely14. Also there are apprehensions about who could be the “third parties” with which Google® may share the data and to what (harmful) extent it can be used to customize their services. (ii) Dealing with regulations that could compromise users’ privacy rights This is a dilemma related to privacy which we will try to analyze. Since the late 1990s, US lawmakers were trying to bring a series of laws into effect, to regulate internet pornography and one such law was Child Online Protection Act or COPA. It was passed in 1998 with the objective of restricting access by minors to any material defined as harmful to such minors on the internet. However, the act was struck down being regarded as unconstitutional by violating the freedom of speech and has been unenforced since 1999. In subsequent efforts to challenge the court orders, the lawmakers subpoenaed Google®, along with other search engines, asking them to provide two months worth of user search queries and URLs reflecting the surfing patterns of its users. Although Google® admits that the data asked for by the government was not enough to personally identify the users, it considered the act as 12

Google® Privacy Overview - http://www.Google®.com/intl/en/privacy_highlights.html AOL Search Data Scandal - http://en.wikipedia.org/wiki/AOL_search_data_scandal 14 http://www.google-watch.org/bigbro.html 13

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an attempt to breach the privacy of its users. This left the company in the dilemma to choose between safeguarding its users’ privacy and complying with the law of the land to restrict distribution of harmful content to minors. 5.2 Google®’s response to the dilemma Now we will ask the 3 Heuristical questions to evaluate how Google® responded to the dilemma posed by the US government subpoena asking them to provide user data. (i) What do we want? – Moral Ideas Google® has a single minded mission “to organize the world's information and make it universally accessible and useful.” And in order to achieve that mission, the company has always proclaimed its user centric values and philosophy. At various occasions, Google® executives have stressed upon the company’s commitment and wilful intent to put the welfare of the society ahead of any financial gains. Their motto of “Don’t be Evil” is a testimony to this and the company strives to protect its users’ privacy and ensure them security, using cutting edge technology and innovative business ideas. (ii) What are our constraints? – Empirical conditions All of Google®’s actions must be under the prevailing regulations and with reference to the COPA case, they had an obligation to fulfill government’s demands15, subject to their right to appeal for a judicial injunction. Under no circumstances, Google® could have afforded not to comply with the demands, had their judicial resistance not been accepted by the court – even if it meant dealing a serious blow to the trust of its users. Moreover, a conflicting situational factor was that its users expected Google® to live up to its values and protect their data from being given away to government. As mentioned earlier Google’s policy to adhere to its Code of Conduct is a strong prerequisite also. (iii) What should we do? – Ethical judgments There was a clear conflict between the moral ideas of Google® and the empirical conditions, at least partly. Since compromising user privacy was completely against Google®’s values, it successfully challenged the government subpoena in court16, questioning the legitimacy of government’s need to analyze user search queries. It was a case of prioritizing its interests and Google® defended that the negative consequences of its compliance with the subpoena would outweigh the marginal benefits that the government may derive, if any. Finally the court drastically reduced 15

US Government’s subpoena to Google (PDF document) - http://www.google.com/press/images/subpoena_20060317.pdf Court order on US Government subpoena to Google (PDF document) http://www.google.com/press/images/ruling_20060317.pdf 16

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the subpoena to require only 50,000 URLs instead of the billions demanded and no search query at all. 5.3 Evaluation based on Golden Rule The easier and apparent choice of action in the abovementioned case, as also exercised by all its competitors including Microsoft and Yahoo, would have been to accede to government demands and provide all the required user data. But would such an action be a responsible action, especially considering government’s lack of explanation on the use of data and a looming threat of potential misuse against Google®’s users or even its services? Google® chose to fight the system to uphold its values and respect the trust of the users and very well considered not only the results, but also the future conditions their actions. We can conclude by saying that Google®’s decision was an ethical decision which invested in the conditions of trust, integrity and values which foster social cooperation for mutual advantage of both Google® and all its stakeholders in the long term.

6. Conclusion After a thorough analysis of Google®’s corporate responsibility philosophy, what dilemmas it faces in its day to day business, and how it deals with them, we can say that in spite of the severe criticism in some situations, Google® is doing a commendable job. Adherence to diverse political, social, financial and technological compulsions makes it extremely difficult for Google® to be a moral idol for everyone and survive at the same time. However, in the light of the abovementioned cases, it will be apt to say that “Corporate Responsibility for Google®” means neither Corporate Philanthropy (entirely) nor profit maximization. It is making profits by investing in the conditions of social cooperation for a mutual advantage, hence satisfying the Golden Rule. 6.1 Lessons Learnt It might seem very natural and easy to implement Corporate Social Responsibility in a business environment, but in their day to day operations, the global corporations of today are confronted with several constraints (e.g. law) and conflicting interests, that make it difficult for them to act consistently. Institutions play a vital role in influencing their actions, as companies may have to prioritize and choose one out of several conflicting goals – all of which may be ethically justified. Finally, we must not only evaluate a company’s actions through the lens of moral ideas, but it is also equally important to consider the empirical conditions or the situational factors within which they operate.

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