Part 5: Cases
its technology, and its initiatives. Google's core principles will be discussed as well as its
efforts to be a socially responsible company. We then discuss the criticisms levied against
Google, including its initial attempts to break into the censored Chinese market, its track-
ing of users, and more recent changes to its privacy policies. We examine how Google has
sometimes clashed with government authorities. Finally, we review some of the legal meth-
ods that have been proposed to regulate Internet data collection practices and Google's
response to the proposals.
COMPANY CULTURE
Google adopted a decentralized approach to empower its employees. Its corporate head-
quarters in Mountain View, California, is known as the Googleplex and consists of a cam-
pus containing such amenities as on-site gymnasiums and swimming pools, an outdoor
volleyball court, laundry services, and even high-tech "nap pods" for optimized downtime.
When Sergey Brin and Larry Page founded the company, they recognized employees had
to put in long hours to make the company not only successful but flexible enough to adapt
to the changing environment. Thus, Google employees are provided with benefits to make
the complex their second home. The company strives to make its corporate culture fun and
innovative. In fact, two of its core principles, "You can be creative without a suit" and "You
don't need to be at your desk to need an answer," demonstrate the company's divergence
from a more formal office environment. The company's 10 core principles are outlined in
Table 1.
At the same time, Google works to ensure it has top talent at the company. While it
reinvents the office experience, it also takes different tactics in recruiting to ensure it hires
the most creative, talented individuals. For instance, Google recruiters take a bottom-up
approach when reading résumés. Recognizing that top items such as education and work
experience do not always guarantee the applicant is innovative, some Google recruiters
start at the bottom of the résumé where applicants put more creative information. This
type of mentality-being more concerned with hiring creative people than those who
TABLE 1 Google's Ten Core Principles
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.
Source: Google, "Ten things we know to be true. http:/www.google.com/about/companyi hilosophy (accesved May 22, 2015)
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Case 7. Google: The Quest to Balance Privacy with Profit
excelled in school-meshed well with Googles famous informal policy of allowing employ
ees to spend up to 20 percent of the workweek pursuing their own unique projects. Not
only did this policy make employees feel empowered, it led to some of Google's standout
products including Gmail and key improvements to AdSense. However, in 2013 this "20%
time policy was largely discontinued after Google determined it was splitting its focus
among too many projects. It decided to commit itself to putting "more wood behind fewer
arrows." Nevertheless, Googles innovative company culture is one of the major reasons
why it has become successful in so many different market niches.
PRODUCTS
Although Google started out as a search engine, it has since branched out into a variety of
fields, including consumer electronics and productivity tools. While it would be too long
to list all of Google's products, some of the more popular offerings are described below.
Search Engine
According to Larry Page, a good search engine "understands exactly what you mean and
gives you back exactly what you want." This philosophy was the founding principle behind
the creation of Google and is a top reason why the Google search engine surpassed its
competitors.
Google could not have gained such prominence without an in-depth search index of
the web's content. The company creates this index using programs called "Googlebots" -
automated web crawlers that visit webpages, add their content to the index, and then follow
the links on those pages to other parts of the Internet. This process is constantly ongo-
ing, with every indexed page periodically revisited to ensure the index contains the most
updated material. Google's index is one of the most extensive in the world, at well over 100
million gigabytes worth of information.
A good search engine's index must not only be comprehensive, but also easily accessi-
ble. Therefore, Google uses technology such as PageRank to organize search results accord-
ing to their perceived relevancy. When a user types a search term into Google's search box,
Google's index matches the term with what is deemed the most relevant materials and
creates a list of these materials for the user. Each search result is followed by a few sen-
tences describing the webpage (called a "snippet"). To maintain a competitive edge, Google
responds quickly to its users' queries, with a response time on Google's side of approxi-
mately one-fourth of a second so users get information as quickly as possible.
Advertising
Google's main source of revenue is advertising. In 2014 the company earned over $59 billion
in advertising revenue. Google's signature advertising platform is Google AdWords, first
introduced in 2000. Google AdWords differs from traditional advertising in that advertis-
ers do not pay Google anything upfront, but only pay when customers take action-either
by viewing the ad (pay-per-impression), clicking on the ad (pay-per-click), or perform-
ing a certain predefined action such as making an online purchase (pay-per-conversion)
This model is attractive to advertisers because they only pay when their ad is effective, as
determined by the metric of their choice. The twist, however, is that Google does not set
ad prices, but rather puts its limited advertising space up for auction, companies submit
Part 5: Cases
"bids" for how much they will pay per customer action, and higher bids generally get more
ad time (other factors are also considered, such as how popular an ad has been so far).
Google makes no money from even a very high bid if customers do not engage with the
ad. Advertisers are therefore incentivized to bid high, which benefits Google's bottom line.
Google promotes the model as a win-win; it makes a profit, and companies get more bang
for their advertising buck.
Google leverages its various product offerings to provide a variety of attractive advertis-
ing options. Companies can choose to have their ads displayed as "sponsored links” along-
side search results for certain keywords, or as banners on any of the more than two million
websites that display Google ads in return for a cut of the profits (known as the Google
Display Network). YouTube is another option, offering video ads before or during videos
as well as traditional banner space on the site. Mobile is also becoming a critical advertis-
ing space, through both searches on mobile devices and apps that allow advertising. Google
is even experimenting with bringing the AdSense model to traditional television advertis-
ing, testing its ability to serve targeted ads and track viewer response over its new cable-like
Fiber TV service (currently only offered in Kansas City, Missouri). Improving the effective-
ness of its AdWords service is a key driver of Google's collection of user information-the
more it knows about its users, the more targeting options it can provide to advertisers and
the more precisely it can serve targeted ads to the desired consumer segments.
Web Browser
Google Chrome is the second most popular web browser in the world with 25 percent
market share. When Google Chrome was released, it was praised for its unparalleled speed,
support, and security, forcing competitors to scramble to catch up. The Chrome browser is
known for loading within seconds and maintaining a simplistic design to make it easier for
users to navigate. Chrome is also updated more frequently than most of the other brows-
ers, allowing Google to quickly push out new features and security improvements. The
Chrome Web Apps Store contains a wide selection of apps and extensions, providing addi-
tional flexibility and functionality for users.
Email Account
Google's email account service, called Gmail, has over 500 million active users and is
the world's largest email service provider. Gmail was initially revolutionary for the huge
amount of space it offered - 1 gigabyte per user when rivals were only offering 100 mega-
bytes or less-and the integration of Google search, which gave users a robust way to
search within their stored emails. Since then, Gmail has continued to offer popular features
such as filters and labels for users to organize their mail, a variety of add-ons for special
functionality from the former Google Labs, and deep integration with other Google prod-
ucts such as Google+, Hangouts, YouTube, Maps, Docs, and Calendar.
You Tube
In 2006 Google acquired video sharing site You Tube for $1.65 billion. YouTube allows users
to upload and share original videos and has become the third most visited of all websites
(Google.com is the most visited site in the world). Everyone from global corporations to
the average consumer uses YouTube to share videos ranging from video blogs to parodies,
to corporate messages to news events. By selling video advertising slots before and during
Case 7: Google: The Quest to Balance Privacy with Profit
465
videos, as well as placing banner ads in free space on the site, Google has made millions in
advertising revenue. Additionally, YouTube content creators can share in advertising prof-
its from their videos through YouTube's Partner Program, allowing popular "YouTubers" to
make careers out of their channels.
Although You Tube opened up new opportunities in marketing and entertainment, it
has not been without its share of controversy. YouTube has been sued by organizations
such as Viacom for copyright infringement after finding copyrighted content on YouTube's
site. YouTube's Community Guidelines specifically direct: "Only upload videos that you
made or that you're authorized to use." However, not all users heed the warning. To detect
and eliminate copyrighted material, YouTube enables users to "flag" videos for copyright
infringement. If, upon review, the flag is found to be valid, the offending video is removed.
YouTube also provides a more automated system called Content ID for certain situations,
which automatically compares newly uploaded videos to a database of copyrighted mate-
rial and notifies the copyright holder if a match is found. Google believes providing tools
to enable self-interested copyright owners to protect their property is the best way to
police YouTube, arguing it is simply not feasible for the company to screen the more than
300 hours of video uploaded to the site every minute.
Android
In 2005 Google acquired the startup firm Android Inc., which worked on mobile phone
software technology. In 2008 the Android operating system was released by the Open Hand-
set Alliance, a team of organizations led by Google whose mission is to promote develop-
ment of open standards for mobile devices. The Android operating system is an open source
platform, meaning the source code is available for outside users to view and use. However,
Google has copyrighted the Android name and logo, as well as some proprietary features
of Google's version of the software such as the Google App Store. Companies that wish to
claim they make "Android" devices must enter into a licensing agreement with Google. The
Android operating system is most often used in mobile devices and tablets but can also be
found on other devices, including full computers, game consoles, and digital cameras.
Android has become the most popular mobile operating system in the world, making
up nearly 80 percent of the market. Apple's iOS, while undeniably a strong competitor with
a loyal customer base, trails far behind with 18 percent of the smartphone market. One rea-
son for Android's larger market share is that, unlike Apple and its iPhone and iPad, Google
is not the only company that makes Android phones and tablets; Samsung, HTC, Motorola,
T-Mobile, Sony, and many other manufacturers develop Android devices. However, there
are disadvantages to this approach as well. For example, Amazon built its mobile offerings,
the Fire Phone and Kindle Fire tablets, off the Android open source code, and now com-
petes directly with Google in the mobile sphere. Google is also a direct player in the mobile
device market with its Nexus line of phones and tablets, placing it in the uncomfortable
position of competing with its business partners. Still, Android has been a great success for
Google, vastly increasing the company's reach into electronics. One top Google executive
called the initial Android Inc. acquisition the company's "best deal ever."
Google+
In 2011 Google launched its social network Google+, positioning it as an alternative to
Facebook that solved many of Facebook's glaring issues such as lack of privacy controls.
Intere was initially strong. Within a month, Google+ had over 20 million unique visitors,
Part 5: Cases
Nonprofits provides resources such as discounts on Google products and free AdWords
advertising to nonprofit organizations. Google Dengue & Flu Trends is an innovative use
of Google's existing data gatherings it attempts to predict outbreaks of the flu and den-
gue diseases by tracking where Google search requests related to the illnesses are com-
ing from. Other organizations use the predictions to more effectively combat the diseases.
Google.org has also partnered with nonprofits to offer them use of Google's considerable
resources. For example, it provided tools to the National Center for Missing and Exploited
Children to help the nonprofit in its fight against global child exploitation.
Google and Employee Charitable Initiatives
In addition to its work through Google.org, Google contributes hundreds of millions of
dollars directly to arious charities and socially responsible organizations. Just before
company's initial public offering in 2004, Google's cofounder Larry Page promised Google
would continually contribute 1 percent of its profits, 1 percent of its equity, and a signifi-
cant amount of employee time to philanthropic endeavors. In terms of giving employee
time, Google encourages employees to get involved in giving back to their communities.
For instance, Google matches up to $6,000 of each employee's contributions to nonprofits
annually. Google also encourages employees to take time to volunteer in their communi-
ties, especially during its annual GoogleServe event, which sets aside one to two weeks
each June for Google staff worldwide to get involved in their communities and donate time
to good causes. Google also participates in the Dollars for Doers Initiative, in which com-
panies agree to donate monetary amounts for every employee hour volunteered. For every
five hours a Google employee volunteers at a nonprofit, Google will donate $50 to that
organization.
PRIVACY
Being a large company, Google has many risks and ethical issues it must constantly address.
In many ways Google helped advance ethical conduct in the web and technology indus-
tries. Google has been named among Ethisphere's World's Most Ethical Companies for six
years running due to its contributions to the community and the environment. The com-
pany also consistently ranks among Fortune magazine's “100 Best Companies to Work for"
because of its fun and innovative work environment.
At the same time, Google has been accused of questionable activity, from antitrust
issues to copyright infringement. For instance, Google's announcement that it would be
digitizing the collections of several prominent libraries and making them available online
through Google Books sparked outrage from publishers who still owned the copyrights.
Google only made books out of copyright fully available--for books still within copyright,
just small snippets could be viewed-but the Author's Guild sued Google over it, arguing
the arrangement was without the permission of its members and violated their copyrights.
Google eventually won that fight, with a judge ruling that Google's actions fell under fair
use of copyrighted material.
Google has also faced intense antitrust scrutiny from the European community. Com-
petitors in Europe claim Google uses its dominant market position to promote its own
offerings and demote rival results in search listings. In 2010 the European Union (EU)
began investigating Google's practices. Google proposed concessions and business changes
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