News continues to emerge from Mountain View regarding the increasingly predatory and paranoid behavior of the company that once touted its corporate motto as “don’t be evil.” A combination of November’s corporate takeovers and internal management decisions has veered so far to the dark side that consumers should be wary of using even the basic services.
Where to start?
This week, Alphabet Inc.’s Google used an email touting “securing our data,” to explain to its employees that four employees were being terminated because they were allegedly involved with “systematic searches for other employees’ materials and work.” Among the four employees were Rebecca Rivers, an activist who challenged Google’s contracts with U.S. Customs and Border Protection and Laurence Berland who was involved in Google Walkout For Real Change, a Google workers’ union. The firings were announced in an email obtained by Bloomberg News.
Other Google staff have protested issues with Google’s cooperation with the Chinese government and with its response to sexual harassment charges leveled at executives. Google’s internal hard line highlights the shift from quirky service provider, to corporate-nation-state.
Federal labor law protects employees from retaliatory firing if they are engaged in concerted activity, which is when “employees take action for their mutual aid or protection regarding terms and conditions of employment.” Whether the conduct in question will be protected by the labor laws will undoubtedly be determined through protracted litigation that ends in a confidential settlement.
Alphabet also moved to purchase Fitbit for $2.1 billion this month. Although framed as an effort to move into the sports and wellness hardware space, Alphabet has been notoriously poor at hardware acquisitions. Motorola was the most obvious of these hardware plays, with Google purchasing the lagging phone company for $12.5 billion in 2011 only to sell it to Lenovo for $2.9 billion in 2014.
Alphabet continues to push the phone market, including its purchase of HTC’s design team for $1.1 billion to keep Pixel growing and throw a lifeline to the struggling Taiwanese manufacturer. The Android app store and phone ads were reported to generate $31 billion annually for Google (according to the filings in litigation with Oracle), making the vibrancy of the hardware an essential part of its long-term strategy.
In the current example of Fitbit, and in the Motorola situation, the actual transactions are much different. From Motorola, Google acquired one of the most robust telephony patent portfolios that existed. It gave Alphabet leverage to stop patent litigation against the giant and to force competitors to change their negotiation strategies for Android. It also opened the door to development of Pixel and the Google Assistant AI. These were all exceptionally valuable, even if the legacy product line of Motorola was an afterthought.
The Fitbit acquisition is likely to be much the same. The acquisition provides untold amounts of fitness data, mapping data, and information that can be used to educate Alphabet’s AI products. This information can be used to push the price of health keyword advertising, to promote Android services, and to diminish the lead held by Apple in the fitness market.
Even Nest, a poorly integrated household product with a poor track record of IoT partnerships might be able to be integrated with Fitbit to create a new enterprise for wearable tech that interacts with home equipment. (Why is Nest both a failure and a predatory product: “Google phased out the cloud services in favor of its own, effectively causing partner-connected devices in the Works With Nest ecosystem to become abandonware.”)
Google has also become increasingly predatory in the ad space around travel. As Google increases the paid ads on its search results and uses its own travel company to compete with Bookings (with its $80 billion market cap) and Expedia (with a mere $14 billion market cap), Google can take an ever-larger piece of these companies’ revenue. Google entered the space with its 2010 purchase of ITA Software. Google Flights has become the starting point for 10-20% of the travel search, but for Google it is an even better threat to its competitors, leveraging data and advertising revenue. By owning a piece of the market and reducing the native search, Google has turned travel into an annual advertising business in excess of $13 billion.
In many of its purchases, such as Waze, Alphabet simply acquires products that could emerge as competitors to its ad-generating products. Google doesn’t need to earn a return on these products, it needs to protect its advertising platform from competitors who could siphon away traffic.
Last year, Alphabet earned $137 billion in revenue, generating over $30 billion in net profit. The Motley fool reports that 70% is advertising revenue. To protect that revenue, Alphabet continues to acquire companies to discourage competition, fire employee-activists, and mine personal health data. It has been a good month for Google, but another dangerous month for its consumers. Perhaps the time has come to stop promoting these dangerous practices.