The EconomistAugust 1st 2020 BriefingAlphabet 172 vidual shareholders—with 13.1% of shares
and 56.7% of voting rights—a former senior
executive says that the company is now run
by a different triumvirate. Besides Mr Pi-
chai it includes Kent Walker, senior vice-
president of global affairs, and Ruth Porat,
the finance chief poached from Morgan
Stanley, an investment bank. Where Mr
Brin and Mr Page were technologists and
Mr Schmidt a technologist-manager, the
new team are simply managers.
This transformation was apparent at Mr
Pichai’s first quarterly earnings call as the
boss of Alphabet in February, when he de-
lighted analysts by at long last breaking out
YouTube’s revenues ($15bn in 2019, up by
more than a third from the previous year).
He has also accelerated share buy-backs,
from $6.1bn in the last quarter of 2019 to
$8.5bn in the three months to March. “They
are no longer the most hated big tech com-
pany from a shareholder perspective,” says
Mr Thill of Jefferies.
Alphabet is also becoming shareholder-
friendlier in how it manages its other bets.
Some of the subsidiaries, like Waymo, have
wooed outside investors, suggesting that
they will one day be spun off. Others, such
as Chronicle, which hoped to revolutionise
cyber-security, and Jigsaw, a think-tank,
have been folded back into Google. Yet oth-
ers, like Makani, which is developing flying
wind turbines to generate energy, are likely
to be shut down or sold.
To infinity and beyond
Mr Pichai’s shakeup of management is on
starkest display at Google Cloud. After he
became Google’s boss five years ago it was
becoming apparent that cloud-computing
was something more than a passing fad. He
ramped up investment in the division and
in 2018 hired Mr Kurian, a former senior ex-
ecutive at Oracle, a big maker of corporate
software, to run it. In keeping with Mr Pi-
chai’s evolving management philosophy,
Mr Kurian was granted far more autonomy
than his predecessor, Diane Greene, and
turned the unit into a more top-down orga-
nisation, hiring people from his former
employer as well as sap, its German rival.
It seems to be working. Google’s cloud
business, which includes gSuite, its pack-
age of professional online services, is
growing at more than 50% a year. Revenues
are expected to reach $13bn this year, con-
tributing 8% to Alphabet’s total.
However, Mr Kurian’s financial success
carries a risk. Insiders report a mini-exo-
dus from the cloud unit to other parts of Al-
phabet. Plenty of employees worry that the
top-down-approach from Google’s cloud
business will spread throughout the orga-
nisation. Many are beginning to grumble
about getting tasks handed down from
above with a deadline.
That hints at a bigger unsolved problem
with Google’s culture. After the walkouts,management made some tweaks. “When
we were smaller, we all worked as one
team, on one product, and everyone under-
stood how business decisions were made.
It’s harder to give a company of over
100,000 people the full context on every-
thing,” Mr Walker reportedly wrote in No-
vember in an internal newsletter. The tgif
meetings are now held only once a month
and limited to business-related questions.
The largest internal mailing lists are mod-
erated and postings deemed too political
are allegedly being taken down. These days
employees are being told to access sensi-
tive documents only if they “need to
know”. Some staff talk of creating if not a
labour union, then at least a group to de-
fend their interests.
In the wake of the killing of George
Floyd many Googlers criticised their top
management for doing too little, too late to
make the company more diverse; after a
couple of weeks the firm vowed to raise the
“leadership representation of underrepre-
sented groups” by 30% over the next five
years. In June more than 2,000 employees
signed an open letter to Mr Pichai demand-
ing that the company stop selling its tech-nology to police forces across America.
Over the past few weeks things have
seemed to calm down internally. But the re-
spite may be superficial. Many workers are
keeping their mouths shut for fear of being
laid off, one Googler reports. Few relish the
thought of losing a cushy job in a recession.
Activists now shun the firm’s communica-
tion tools and organise elsewhere online.
All this fuels murmurings and specula-
tion, both inside and outside Alphabet,
over whether Mr Pichai is the right person
for the job. Some Google executives and en-
gineers describe him as “too checked out”
and his leadership as “uninspired”. He is
also accused of excessive risk aversion.
“I’ve never shied away from making big
bets and following my instincts,” Mr Pichai
insists. But it is hard to argue that he has
shown the vision of Amazon’s Jeff Bezos or
Microsoft’s Satya Nadella.
Mr Pichai has an opportunity to prove
the sceptics wrong. The covid-19 pandemic
offers a convenient pretext to get rid of in-
efficiencies, such as overlapping products,
and cut through Alphabet’s internal red
tape. It could result in a new balance being
struck between Google’s innovative culture
and more systematic exploitation of its
products’ and services’ money-making po-
tential. Even the antitrust probes have a sil-
ver lining for Mr Pichai. “In some ways, I’m
looking for clarity,” he says.
To be a leader in the mould of Mr Na-
della, however, he would have to be more
daring. One idea is to charge for some of its
services. Another is for Google to become
more of a data fiduciary that manages peo-
ple’s information for them—a bit like a
bank does with money. The firm has al-
ready started developing tools necessary
for this, such as software that can mine en-
crypted data. If Mr Pichai could pull this
off, that would be truly inspirational. And
it would help keep Alphabet unconven-
tional for a while yet. 7Way behind Bezos
Share prices, June 1st 2012=Source:DatastreamfromRefinitiv41,
1,
1,
800
600
400
200
0
201816142012Facebook
MicrosoftAmazonAppleAlphabet