Leaders 7I
t may bejust21 yearsold,butGoogleisinthemidstofa mid-
life crisis. As so often in such cases, all seems well on the sur-
face. Every day its search engine handles 6bn requests, YouTube
receives 49 years’ worth of video uploads and Gmail processes
about 100bn emails. Thanks to its dominance of online advertis-
ing, Google’s parent company, Alphabet, made a profit of $34bn
last year. Beyond its core operations, it is a world leader in artifi-
cial intelligence (ai), quantum computing and self-driving cars.
Along with the bosses of Amazon, Apple and Facebook, its chief
executive, Sundar Pichai, was grilled this week by lawmakers in
Washington, dc, who fret that America’s tech giants need to be
restrained because they are so profitable. Crisis? What crisis?
Being hauled before Congress is, on the face of it, a sign of
success. But it also marks a difficult moment for Google’s lead-
ers: the onset of corporate middle age (see Briefing). This is a pro-
blem as old as business itself. How do companies sustain the cre-
ativity and agility that made them great, even as they forge a
culture and corporate machine that is built to last? For Google the
transition is especially dramatic because its founders, Larry Page
and Sergey Brin, tried from the start to build a firm in which this
moment would never arrive. As Google prepared to go public in
2004 they declared that it was not a conventional company, and
“we do not intend to become one”. They hoped playground-like
offices, generous perks and a campus atmo-
sphere would allow it to retain the agility and in-
novation of a startup as it grew. The appearance
of wrinkles on the corporate forehead is an ad-
mission of failure.
The signs of ageing are apparent in Google’s
maturing business, its changing culture and its
ever-more-entwined relationship with govern-
ment. Take the business first. The firm is run-
ning up against growth constraints in its near-monopolies of
search and online-advertising tools. Its market share in search
ads is around 90%. Unearthing other gold mines has proved dif-
ficult. None of the ambitious “moonshot” projects into which Al-
phabet has poured billions, such as delivery drones and robots,
has been a breakout success. To keep growing, Google is having
to try to muscle in on the turf occupied by big tech rivals, such as
cloud computing and enterprise software and services.
The cultural challenge is fuzzier but no less urgent for a firm
that is proud of its unusual corporate character. The freewheel-
ing ethos that was so successful in Google’s early days has be-
come a liability. It works much less well at scale. Google now has
nearly 120,000 employees, and even more temporary contrac-
tors. Doing things from the bottom up has become harder as the
workforce has grown larger and less like-minded, with squab-
bles breaking out over everything from gender politics and the
serving of meat in cafeterias to Google’s sale of technology to po-
lice forces.
The third sign of lost youth, the attention of trustbusters, has
long looked inevitable. As big tech has grown, so have its interac-
tions with government—as an institution to lobby, as a customer
and as a regulator. America’s Justice Department is poring over
Google’s online-ads businesses and may soon file an antitrustsuit.Scrutinyisunlikelytowaneasthetechtitans break out of
their silos and compete more. Indeed, regulators may take it as a
sign of broadening power (see United States section).
How should Google respond? To be both innovative and ma-
ture is a hard trick to pull off. History is littered with failed at-
tempts. In giving it a go, the firm has to decide who it puts its
faith in: managers, investors or geeks?
The first route would involve taking a strong dose of manage-
rial medicine to become a more tightly run conglomerate. The
archetype for this approach is gein its heyday under Jack Welch,
who persuaded shareholders that sprawling businesses could
work well, provided they were run by expert managers (see
Schumpeter). But it turned out that gewas disguising weakness-
es in its industrial units by leaning on its financial arm, geCapi-
tal. ge’s subsequent woes offer a warning of the peril of relying
on one hugely successful division to subsidise less profitable
units elsewhere—as Google does with its advertising business.
If doubling down on the conglomerate model is not the an-
swer, what about the opposite approach: spinning off, selling or
closing some units and returning money to shareholders? That
would please many investors. By some calculations, Alphabet is
worth $100bn less than the sum of its parts. Spinning off You-
Tube would increase competition in internet advertising—a
handy sop to regulators—as well as unlocking
value. It might be worth more than Netflix, be-
cause it need not pay for content, most of which
is user-generated. But the experiences of firms
like at&tand ibmhighlight the danger that
downsizing hollows out innovation. And while
Google might hope to retain its distinctive cul-
ture in whittled-down form, the truth is that no
matter how much it wants to be as youthful and
free-spirited as Peter Pan, it is no longer a startup.
That leaves trusting the geeks. Becoming a glorified venture-
capital outfit has appeal, but the woes of SoftBank’s Vision Fund
warn of hubris. Google would do better to examine how two old-
er tech giants overcame their own mid-life crises (and near-
death experiences): Microsoft, nearly broken up by antitrust reg-
ulators, and Apple, which spent years in the wilderness before
Steve Jobs returned to reinvent it as a maker of portable devices.
Both bounced back by rediscovering their core purpose and ap-
plying it in a new way. Under Satya Nadella, Microsoft has rein-
vented itself as a provider of cloud-based software tools and ser-
vices, rather than its Windows operating system. And Apple,
previously known for its elegant, easy-to-use computers, has
minted money by applying its genius to smartphones.
Could Google similarly identify what it does best and apply it
in new areas? It could decide its mission is helping consumers
trade their personal data for goods and services; or using aito
solve more of the world’s problems; or being the data processor
of net-enabled gadgets. At the moment it is betting on almost
everything. Indiscipline can lead to unexpected innovations, but
more often saps vitality. Google’s best way forward is to follow
the advice often given to victims of a mid-life crisis: slim down,
decide what matters and follow the dream. 7How to cope with middle age
The firm has outgrown its uninhibited corporate culture. It is time to learn from its eldersLeaders