Alphabet’s urgent crisis

crisis

Once great company, no longer respected

A fatal crisis pending for many years

A few days ago, I wrote a blog article about the strong competitiveness of Alphabet “Consider Alphabet if you can buy one stock only to retire from it? ” Many talents are alert to how we modern people can’t escape the grasp of this company (unless you completely lose your mobile phone or stop surfing the Internet).

This article is to look at the company Alphabet (ticker: GOOGL and GOOG) from another angle. I think this company has a fatal problem that has been delayed for many years and is getting more and more serious. If we don’t try to solve it, it is possible that the Alphabet, the modern Internet empire, will gradually collapse-the company has no centripetal force, without the company’s core culture and mission. It sounds scary, yes.

Ccode of conduct changed

Many people raise their hands to oppose it at first glance. Is it listed in the company’s annual financial report? This is the problem. In the past, there was no need to look at the financial report. Many people could pass it word of mouth. The media automatically extolled the most well-known “Don’t be evil” code of conduct (Intel also has a similar code of conduct). But in 2015 (remember this number!) this code of conduct has been changed to “Do the right thing”.

As long as you have basic reading and writing skills, regardless of Chinese or English, you will immediately realize the difference between the two sentences before and after, or the state you want to achieve-“Don’t be evil” as the Alphabet was originally formulated, it is positioned as the employee’s motto, but today’s “Do the right thing”, anyone understands that it is a rule, not a motto. There is a very big difference. The motto is something that people voluntarily abide by, and the rules are used to restrain employees and legal provisions.

Lessons Learned

Alphabet was founded in 1998, and the company went public in 2004; it is said that the company has only been established for 24 years, compared with the hundreds of years of history of General Electric (ticker: GM) or Procter & Gamble (ticker: PG). Alphabet is a children. Internet companies have proved that they can rise quickly and quickly create the richest people in various countries around the world (before the advent of the Internet, the richest people in various countries were usually hard asset tycoons such as real estate or retail); but they came and went quickly.

The first one to fall down was Yahoo!, who ruled Silicon Valley and the Internet world before the advent of the Alphabet. Yahoo’s status was even better than that of the Alphabet. I wonder if the Alphabet can reverse its own destiny. Let us wait and see!

Management team

Founder has no intention of operating

When Larry Page was still the chief executive officer, most of his time was spent on the small Caribbean island he bought. It was rare to show up at the company for a few days in a season. The company’s executives couldn’t find him. Even the important tradition get together of the Alphabet company, the CEO must have a dialogue day to face the employees, but no one see him. Obviously, his mind is not in the company. Please note that although Larry Page is the CEO of Alphabet at this time, he was not in charge of Alphabet’s main profitable entity, Google, for the operating details. CEO Larry Page gave this position to Sundar Pichai in 2015.

Pichai’s issues

In December 2019, Larry Page surrendered the CEO of Alphabet to Sundar Pichai. Sundar Pichai is the third chief executive officer of Alphabet Inc., which is not a good arrangement for the time being. Sundar Pichai was a consultant to McKinsey and joined Google in 2004. He is an excellent talent with a cautious personality, but it seems that he is beyond his ability to manage the super empire of Alphabet Company.

In 2020, Alphabet’s board of directors calculated the general ledger. On the surface, Pichai was given a three-fold salary increase to US$2 million, but his total compensation was “only” US$ 7.43 million (in terms of Alphabet’s size and industry standards, this is very bad), because he has not been awarded any shares at all, which is a complete denial of his performance (this is his first year).

The problem is leaderships

Google’s current and recently departed executives said that many of Google’s problems stem from the company’s amiable, low-key CEO Pichai’s leadership style. Fifteen current and former Google executives who asked not to be named told the New York Times that Google is suffering from many of the flaws experienced by a mature large company – a paralyzed bureaucracy where the company tends to inaction, and Stereotypes of public perception.

Google has not acted quickly on key business and personnel changes, because the chief executive has repeatedly considered decisions and has been slow to take action. They say that Google continues to be hit by the workplace cultural conflict, and Pichai’s attempt to cool down has the opposite effect—allowing the problem to worsen while avoiding tough and sometimes unpopular positions.

A Google spokesperson said that the internal investigation into Pichai’s leadership is positive. The company declined to allow Pichai, 49, to comment, but arranged interviews with nine current and former executives to provide different views on his leadership abilities.

In 2018, more than a dozen vice presidents of Google tried to warn Pichai in an email that the company was experiencing huge growth troubles. They said the company had problems coordinating technical decisions, and feedback from the vice president was often ignored.

According to five people with knowledge of the email, many of Google’s executives have worked for the company for more than a decade. They said that Google took too long on major decisions, making it difficult to accomplish anything. A common criticism among current and former executives is that Pichai’s slow thinking speed often makes people feel that it is a safe way, and eventually he gets a “no” as the answer.

Too big to fall, result in bureaucracy

Began to have big company disease

Looking at it from the outside, the Alphabet company is beginning to appear obvious big company disease: risk aversion. The Alphabet Company has lost its adventurous and entrepreneurial spirit, and just wants to go to work and receive a salary, and live a peaceful life. Alphabet Inc. in 2018 due to employee protests (which is ridiculous, but similar things happen again and again for Alphabet Inc.), which led to the public withdrawal of the Maven artificial intelligence project in cooperation with the U.S. Department of Defense, and it did not bid for the $10 billion of JEDI contract.

This big contract later fell into the pocket of Microsoft (ticker: MSFT), and caused protests from Oracle (ticker: ORCL) and Amazon (ticker: AMZN). The U.S. Department of Defense was brought to court. On 7/6/2021, the U.S. Department of Defense overturned Microsoft’s bid qualification. The case was renamed JWCC and the bid was reopened.

This triggered the US Joint Chiefs of Staff Chairman Joseph Dunford to warn Google twice that Alphabet refused to cooperate with the Pentagon but invested in China to help the People’s Liberation Army catch up with the United States, which would cause long-term harm to the national security of the United States. It can be seen the seriousness of this matter, and the US military needs more artificial intelligence technology owned by Alphabet Corporation.

Smart employees have too many opinions

Alphabet Inc. employs a bunch of the smartest employees, but the company’s employees are becoming more and more outspoken, and they are busy fighting against the company every day (this kind of thing only happened in blue-collar companies before). Personnel issues are spreading to the public. Decisive leadership and great ideas have given way to risk aversion and gradualism. Many employees of Alphabet’s company, and even senior executives, left their jobs and began to speak and interview outside, and let everyone know the exact reason.

Prosecution and fines become commonplace

Faced with antitrust lawsuits from countries around the world, the four major technology giants are struggling to cope with the prosecution. It is commonplace to be prosecuted and fined. Alphabet is one of the most dangerous of the four companies. However, the ability of the Alphabet in this regard does not seem to be great. (Interested readers can refer to my other blog article “Antitrust and governance faced by Chinese and American technology giants“).

Google executives put forward the idea of acquiring Shopify (ticker: SHOP) a few years ago to challenge Amazon’s position in the field of online commerce. Two people familiar with the matter said Pichai rejected the idea because he thought Shopify was too expensive. But these people said that they had never thought that Pichai had the willingness to make a deal, and that this price was a convenient but ultimately misguided reason. Shopify’s stock price has risen nearly 10 times in the past few years. Google spokesperson Jason Post said: “We have never discussed this acquisition seriously.”

crisis
credit: Pixabay

Missed Shopify

Timnett, co-leader of Google’s ethical artificial intelligence team and one of the company’s most well-known black female employees. Timnit Gebru said that she had been fired for criticizing Google’s way of hiring minorities and writing a research paper that emphasized the biases in Google’s artificial intelligence technology.

At first, Pichai did not participate in this conflict. After 2,000 employees signed a petition protesting Gebru’s dismissal, Pichai sent an email vowing to restore the lost trust while continuing to promote Google’s view that Gebru was not fired. But she said that this is not an apology, but to cater to the public relations of some employees (sounds like a two-sided courtesy, doesn’t it?)

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