Don't be evil, Google, Australia and Facebook

Good morning, 

In today’s essay, I connect Google’s “Don’t be evil” origins to the fascinating tech battles in Australia. 

This week’s podcasts feature Margaret Dawson, the CDO of Red Hat — the original open source leader of Linux and more.

—Edward

---

This week’s sponsor:

Remote IT Can Be Difficult. Jamf Now Makes It Easy.

Whether you're trying to set up, manage, or secure your team's Apple devices, Jamf Now helps cut down time-consuming IT tasks — no need to be an IT expert! The best part? Startup Curated/Marketing BS readers can manage up to 3 devices FREE right now!

---

Don’t be evil 

Back in 2000, Google wrote a code of conduct document for its employees. The first three words were legendary: “Don’t be evil.” 

Vox recently produced a seven-part podcast that traces Google’s history from modest beginnings to global dominance. In the first episode, Marissa Mayer — one of Google’s earliest employees (who later went on to become CEO of Yahoo) — discussed the origin story of the “Don’t be evil” motto:

Mayer says the idea of “Don’t be evil” came about when Google began making deals to monetize its search engine in the late ’90s. An early business meeting with the Washington Post raised excitement among Google’s engineers but also some trepidation. In particular, Mayer told us, one engineer named Amit Patel had serious doubts.

“He was worried that [we] might tell the Washington Post that we’ll put an article that they think is more important first in the search results or not be as comprehensive if they didn’t want us to be. Things that he really viewed would compromise our integrity” ...

And so, says Mayer, Patel went into the conference room where the Google team was going to meet with the Washington Post and wrote a message to his co-workers on the whiteboard “in the lower left-hand corner ... in tiny little letters, ‘don’t be evil.’”

Other Google employees remember the story about the motto’s history a little differently. But no one disagrees that the phrase defined the company’s culture in the early years: 

“Don’t be evil” quickly became part of Google’s identity, internally and to the outside world. It represented a new kind of ethos for a future corporate powerhouse, one that would help shape the culture of Silicon Valley and the many tech companies that formed in the past 20 years. Google was meant to be innovating technology to make the world a better place.

In Google’s early days, applying the mantra of don’t be evil was simple: Don’t let advertisers buy their way to the top of search results, don’t charge people to find information, don’t spam people with banner ads on the homepage.

As we all know, once-taboo ideas like “letting advertisers buy their way to the top of search results” are now a central part of Google’s business model. 

In 2015, Google was reorganized within the structure of a new parent company, Alphabet. The familiar motto “Don’t be evil” was de-emphasized and pushed to the end of their code of conduct. A new, more innocuous principle — “Do the right thing” — appeared in the document’s opening section.

Let’s take a look at a recent piece of tech news and evaluate whether Google is “not being evil” (or at least “doing the right thing”…).

---

Digital services Down Under 

Last December, Australia’s centre-right government introduced legislation that would require “digital platform services” — specifically Google and Facebook —  to pay Australian-based media publishers for any news content that appears on their platforms.

The world-first piece of legislation, proposed under Australian anti-competition laws, includes a number of assertive checks on the tech companies:

• Google and Facebook must pay a fee every time they link to news content owned by an Australian media publisher (with more than $150,000 AU in annual revenue). 

• Whether or not the tech companies show a preview snippet of the content is irrelevant — the simple act of linking to an Australian media site would trigger the payment. 

• The tech platforms and the media publishers must agree on the specific monetary value of the fees.

• If the two parties cannot agree, they will enter an arbitration process. Each side will submit their proposal for a “fair” dollar amount. A third-party arbitrator will select one of the proposals (NOT a middle-ground figure between the proposals). 

• In the event that Google or Facebook cannot reach agreements with media publishers, they will not be allowed to share ANY news — Australian or otherwise — with users located in Australia. 

• Finally, both Google and Facebook must inform the media publishers — with at least 30 days’ notice — about any changes to their algorithms. 

Both Google and Facebook have expressed concerns about this game-changing legislation. 

In particular, Google objected to requirements about disclosing changes to their algorithm. Providing 30 days’ notice is untenable for a company that continually revises its algorithms. Plus, Google benefits from the opaque nature of their algorithms (just think about SEO — an entire industry dedicated to reverse engineering Google algorithms so companies can place higher in the search results). 

There is no way Google wants to turn over their algorithms to a third party — especially a media organization!

As I mentioned in last week’s Marketing BS briefing, Microsoft is pouncing on this opportunity to go after Google. 

In a February 11 blog post, Microsoft president Brad Smith ENDORSED Australia’s draft law: 

In Australia, Prime Minister Scott Morrison has pushed forward with legislation two years in the making to redress the competitive imbalance between the tech sector and an independent press. The ideas are straightforward. Dominant tech properties like Facebook and Google will need to invest in transparency, including by explaining how they display news content.

Even more important, the legislation will redress the economic imbalance between technology and journalism by mandating negotiations between these tech gatekeepers and independent news organizations. The goal is to provide the news organizations with compensation for the benefit derived by tech gatekeepers from the inclusion of news content on their platforms.

Smith articulates some strong positions:  

• Google should acquiesce to the terms of Australia’s proposed legislation. 

• Microsoft committed that its Bing search services will not only adhere to the new rules, but it would also build its platform to better support Australian individuals, media publishers, and other organizations. 

• Other countries — including the United States — should consider passing similar legislation. 

Let’s be clear about some things. First, Smith knows full well that Google could never expose their algorithm. Additionally, Smith understands that Bing COULD reveal their algorithm without much downside. Bing’s market share is so small — less than 5% in Australia — that websites would be silly to optimize for Bing at the expense of Google.

Quite clearly, Microsoft recognized an opportunity to exploit the political situation for their own benefit. On the spectrum of “Don’t be evil” to “Do the right thing,” Microsoft’s position is pretty evil (in the sense that decisions were based on profits over principles). Plus, CEO Brad Smith tried to justify Microsoft’s actions with some arguments — like “the legislation will redress the economic imbalance between technology and journalism” — that clearly betray the company’s previous history and values.

---

The Aussie agreement 

Last Wednesday, Google reached an agreement with News Corp, which is the dominant media conglomerate in Australia (commanding roughly 30% of the market). 

During debates about Australia’s proposed media legislation, few people supported the plan more enthusiastically than Rupert Murdoch, the Australia-born media mogul (who also owns Fox News, The Wall Street Journal, and hundreds of other newspapers and television outlets). Many pundits have suggested that Murdoch — a strong supporter of Australian Prime Minister Scott Morrison — played an influential role in shaping the legislation.  

Machinations from Murdoch or not, there is no question that News Corp stands to benefit from the deal with Google.

A February 17 press release from News Corp announced the deal: 

News Corp announced today that it has agreed to an historic multi-year partnership with Google to provide trusted journalism from its news sites around the world in return for significant payments by Google.

The landmark three-year agreement also includes the development of a subscription platform, the sharing of ad revenue via Google’s ad technology services, the cultivation of audio journalism and meaningful investments in innovative video journalism by YouTube.

Notice what is NOT included in the agreement — any access to Google’s algorithms. 

The press release continues with some fawning comments from News Corp CEO Robert Thomson:

“I would like to thank Sundar Pichai and his team at Google who have shown a thoughtful commitment to journalism that will resonate in every country. This has been a passionate cause for our company for well over a decade and I am gratified that the terms of trade are changing, not just for News Corp, but for every publisher.

“The deal simply would not have been possible without the fervent, unstinting support of Rupert and Lachlan Murdoch, and the News Corp Board. For many years, we were accused of tilting at tech windmills, but what was a solitary campaign, a quixotic quest, has become a movement, and both journalism and society will be enhanced.

“Particular thanks are certainly due to the Australian Competition and Consumer Commission’s Rod Sims and his able team, along with the Australian Prime Minister, Scott Morrison, and Treasurer Josh Frydenberg, who have stood firm for their country and for journalism.”

In a February 18 Stratechery post that analyzed the situation, Ben Thompson included this delightful meme: 

Even through the least cynical lenses, most people can see that Rupert Murdoch worked with the Australian government to “shake down” Google and Facebook. Access to the algorithm was never a real demand; the presence of that specific clause forced Google to pay News Corp as much money as possible. 

So why did Google cave? Because News Corp made it clear that unless a deal was reached, they would restrict Google’s ability to share not just their Australia-focused news content for Australian users, but ALL of News Corp’s content (The Wall Street Journal, the New York Post, etc.) for GLOBAL users. 

Without that intimidation from News Corp, Google might have felt comfortable continuing the game of digital chicken with Australia’s politicians — by ultimately removing Google search services from the country. Perhaps Australian users would have pressured their government to mend fences with Google. (Or maybe Australians would have easily adopted Microsoft’s Bing — “it isn’t great, but at least it shows me the recent news”)?

Losing most of the Australian market is one thing, but forfeiting global access to major media outlets is a completely different scenario. When News Corp squeezed, Google flinched.

By surrendering to extortion, was Google “being evil”? I suppose not. But Google’s position certainly wasn’t courageous or righteous (or whatever the opposite of evil is).

---

Facebook’s stand

Australia’s proposed legislation specifically targets both Google and Facebook. The two companies responded in two very different ways. I just outlined Google’s surrender to News Corp. Facebook, on the other hand, stood up for itself.   

In a February 17 statement, Facebook’s newsroom declared their position on the political showdown: 

In response to Australia’s proposed new Media Bargaining law, Facebook will restrict publishers and people in Australia from sharing or viewing Australian and international news content. 

The proposed law fundamentally misunderstands the relationship between our platform and publishers who use it to share news content. It has left us facing a stark choice: attempt to comply with a law that ignores the realities of this relationship, or stop allowing news content on our services in Australia. With a heavy heart, we are choosing the latter.

Facebook’s statement uses economic arguments to support its position:  

In fact, and as we have made clear to the Australian government for many months, the value exchange between Facebook and publishers runs in favor of the publishers — which is the reverse of what the legislation would require the arbitrator to assume. Last year Facebook generated approximately 5.1 billion free referrals to Australian publishers worth an estimated AU$407 million. 

For Facebook, the business gain from news is minimal. News makes up less than 4% of the content people see in their News Feed. Journalism is important to a democratic society, which is why we build dedicated, free tools to support news organisations around the world in innovating their content for online audiences.

Whether or not you agree with Facebook’s principles, they clearly HAVE principles. Moreover, Facebook chose to stand by its principles, even in the face of political pressure and (possible) public protest.

To be clear, Facebook occupies a safer position in this mess than Google. Facebook’s business model affords them more leeway for defiant statements (as well as greater downsides for surrendering to media companies). 

Under the current wording of the legislation, Facebook would be required to pay news organizations each time a link was posted on Facebook. Unlike Google (whose algorithms determine which links appear), links on Facebook are inserted by users themselves — including the news organizations. 

In other words, the new law would require Facebook to pay News Corp every time that News Corp posted a link to News Corp content on News Corp’s own Facebook page!

If we believe Facebook’s statement, then “news”-related links make up less than 4% of the content that people see in their feed. Many Facebook users get some of their news via the platform, but that is definitely NOT the main reason why people spend time on the social media service. As such, you can imagine that Facebook will work just fine without links to any third-party news content.

And that’s exactly what Facebook did last Wednesday. For all Australian users, Facebook removed the links to any news-related content, including both domestic and international media publishers. In an extra show of force, Facebook also prohibited users around the world from sharing any news links for Australian publishers. 

A friend of mine lives in Australia. Facebook allowed him to share Marketing BS essays from my main website (MarketingBS.com), but not any individual articles from the Substack page. While I like to think my content is “evergreen,” Facebook has categorized my writing as “news.”

As a more dangerous side effect of Facebook’s actions, they categorized information from Australian Health Authorities and the Bureau of Meteorology as news. These governmental sites use Facebook to share emergency weather information and public health announcements. When criticized for their decision, Facebook responded with the following statement: 

As the law does not provide clear guidance on the definition of news content, we have taken a broad definition in order to respect the law as drafted.

Facebook has, however, restored the ability for those organizations to share news information. (Alas, the company still stops anyone in Australia from sharing links to Marketing BS essays). 

---

What is Evil? 

Although Google no longer highlights their “Don’t be evil” mantra, people will always associate the company with the ethos of that lofty statement.  

But how seriously was the idea ever held? I would argue that Google’s moral commitment was never actually about morality. Instead, the slogan met the needs of its employees. During the company’s early days, “don’t be evil” was a simple way to contrast Google from Microsoft — the big, established tech company that many people believed was morally compromised. (Whether Microsoft acted ethically or not is irrelevant — “perception is reality”). 

Differentiating Google’s do-good culture from Microsoft’s evil empire was very important for employees — both current and potential. 

In the beginning, Google could attract a small group of “hyper-intelligent misfits” who saw the world in a particular (“Google-like”) way. But as the company grew bigger and bigger, they needed to draw from a larger and larger talent pool. To maintain their recruiting and retaining edge over other rivals (like Microsoft), Google could not risk making any “evil” decisions that would offend highly educated (and politically progressive) tech workers. 

(I first articulated my concept of Marketing to Employees in a July 2019 essay, and I expanded the idea in a number of subsequent Marketing BS posts: “Brands are Deeply Saddened”, “Real Fidelity and Marketing to Employees” and “Employees vs Customers”).

But the definition of “evil” has evolved over Google’s 23-year history. Today, the political winds are such that refusing to pay Australian publishers is seen as “evil.” Jason Kint, CEO of Digital Content Next, recently tweeted some interesting perspectives about the tech giants:

Kint then polled his followers. Among the 804 people who voted, the vast majority sided with Microsoft (and Apple) over Google and Facebook:

For Vox’s podcast series about Google, they spoke with Dana Wagner, Google’s antitrust lawyer from 2007 to 2011. Wagner was candid: “Google doesn’t always do the right thing [, because] sometimes it’s not clear what the right thing is.”

In the case of Australia’s media legislation, “the right thing” IS pretty clear — don’t give in to extortion. But fighting back against Rupert Murdoch and Scott Morrison is not easy, especially in a world where media publishers can use newspaper articles and television reports to convince the broader public that NOT giving in to extortion is evil.

Google needs to recruit their future employees from that broader public. Even if Google manages to convince prospective employees that the company was “in the right” about the Australian media law, those prospective employees have friends and family who will believe that “Google is a monopolistic anti-news organization.” No company — especially one that competes to recruit highly talented people — wants their employees to face constant questions about the morality of their workplace.  

Sometimes it’s just easier to surrender and then live to fight another day.

Maybe next time Google will stand up against evil. As long as it’s not too hard. 

Wasn’t that Spiderman’s motto? “With great power comes great responsibility (if it’s convenient).”

Keep it simple,

Edward

Edward Nevraumont is a Senior Advisor with Warburg Pincus. The former CMO of General Assembly and A Place for Mom, Edward previously worked at Expedia and McKinsey & Company. For more information, including details about his latest book, check out Marketing BS.