Face-off: Is Google motivated by self-interest or indignation?

March 25, 2010: 11:05 AM ET

Fortune contributing editor David A. Kaplan and senior editor Roger Parloff got into a spirited email debate Wednesday: When it came to pulling out of China, was Google doing no evil or simply doing what was best for business? David suspected long-term profit: "By taking the action it did ... Google enhances its standing in the American imagination." Roger didn't much care about motive: "It would be like asking if that guy who stood in front of the tank in Tiananmen Square was really doing the most practical thing from the perspective of his wife and family."

The debate was pointed, deep and worth reprinting. Take the poll at the end and weigh in in the comments: Team Roger or Team David and why?

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From: David Kaplan
Sent: Wednesday, March 24, 2010
To: Roger Parloff
Subject: Google and China

Roger:

Google's decision about China strikes me, to quote our nation's vice president, as "a big f@!#$* deal." I'll be Brooks; you can be Collins. Do you think Google acted out of courage or Machiavellian self-interest? And is Google's mantra of "Do No Evil" proving to be harder to execute than the lads imagined a decade ago? What will shareholders think about foregoing possible boatloads of revenue? And somewhere, is Bill Gates chortling?

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From: Roger Parloff
Sent: Wednesday, March 24, 2010
To: David Kaplan
Subject: Re: Google and China

David:

I do think Google's acting out of courage, in part because I can't see any prospective Machiavellian payoff for many years down the road. In truth, I'm having trouble subjecting Google's action to either a conventional legal or business analysis because I'm so emotionally caught up in admiring the spectacle of a public corporation doing something so unambiguously right. It would be like asking if that guy who stood in front of the tank in Tiananmen Square was really doing the most practical thing from the perspective of his wife and family.

After those highly-sophisticated China-based hackers broke into servers in the U.S. and stole information about Chinese dissidents, not even the U.S. government dared act – maybe in part because they couldn't prove who did it, but probably more because it's indebted up to the eyeballs to the Chinese. In contrast, Google pushed back, and the more China reacts or retaliates, the more face it loses around the world. I think it's incredibly moving.

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From: David Kaplan
Sent: Wednesday, March 24, 2010
To: Roger Parloff
Subject: Re: Re: Google and China

Roger:

I share your sentiment that Google deserves "huzzahs." When so many corporations so much of the time act out of brazen self-interest – not that there's anything wrong with that, as Seinfeld might have said if he were running Goldman Sachs – it's refreshing when one sees a Bigfoot with a leviathan market cap (how's that for mixed metaphors?) behave in a way that's related to core principles.

That said, I still think Google's acting out of brazen self-interest, even if that's co-extensive with doing the right thing. For better and for worse – and usually it's been for better, in my view – Google's co-founders imbued their start-up with moralistic and benevolent overtones. "Do No Evil" is the manifestation of that.

I have little doubt that Larry Page and Sergey Brin believe that, and I also am confident Eric Schmidt, the CEO, thinks large and beyond quarterly bottom lines. But once a company adopts (and markets) that world view, it had better follow through. All the world hates a hypocrite: the only thing worse than a company that ignores ethics is one that professes to honor ethics and then does not.  In the case of China, the only "right" thing to do in the face of government censorship born of political intolerance is what Google did.

A while back, Yahoo took a public-relations hit by attempting to dance with the Chinese government, but could get away with it because, apart from being an American high-tech company with two smart, decent co-founders, it had made no particular claim to the high ground. Similarly, one could easily imagine Microsoft in Google's position concluding it would not suffer much by acquiescing in Beijing's repressive policies on free expression.

But Google, perhaps singularly, cannot. Were it not to take the action it just did, its reputation would suffer. How much and more so than the revenue it will now lose in China? There's no way to measure. But as Google's power continues to rise, it has to worry about becoming just another loathed corporate titan. By acting as it did ­– whether or not the Chinese reverse course in the short term – Google enhances its standing in the American imagination. That's an invaluable payoff, all the more so when Google takes daily hits on its privacy policies, entanglement with the Obama administration, and catfights with other respected companies (like Apple).

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From: Roger Parloff
Sent: Wednesday, March 24, 2010
To: David Kaplan
Subject: Re: Re: Re: Google and China

David:

Some interesting points there. I guess I never really expected a whole lot out of the "Do No Evil" slogan, and therefore would not have been shocked or dismayed if Google had just done what, I'm told, Jack Welch recently suggested it should have done, which was cave in, suck it up, and do the safe thing for shareholders. (Full, if weird, disclosure: I own no Google stock, and hence have no skin in the game preventing me from cheering Google on.)

I didn't expect much for two reasons. One is that, ever since Adam and Eve were ejected from Eden, most of their descendants have found it quite difficult, as a practical matter, to do no evil. The other is that public corporations have a better excuse than most of us for sometimes doing evil. Not infrequently, doing evil is beneficial (at least in the short-term) for shareholders.

When I was a kid, I remember every U.S. corporation that did business in apartheid South Africa explaining that they were doing so in hopes of changing that unjust society from within. Yet I don't remember any of them pulling out upon discovering that they didn't seem to be making much progress. None feared being called "hypocrites." It was Nelson Mandela and his party who changed that society, not Polaroid Corp.

That's why I was so gob-smacked when Google actually took their own rhetoric seriously. In truth, Google's presence in Chinese society really may turn out to have made a positive difference, but only because of this risky, highly public stance it is taking now. Personally, I'm speculating that the stories Sergey Brin's mom told him about the life in the totalitarian Soviet Union may have something to do with what we're seeing Google do now, though I guess we won't really know until Ken Auletta snags the interview. [Ed note: The Wall Street Journal Thursday ran an interview with Brin where he confirmed Parloff's speculation.]

As for the "invaluable payoff" you suggest Google is getting, in terms of goodwill that acts as a counterweight to the growing public and regulatory perception that it might be a monopolist and/or bully, you might be right. If I were one of their lawyers, trying to explain why Google management made a reasonable business judgment in deciding to thumb its nose at the totalitarian government that controls what will be, if it's not yet, the largest population of Internet users, I would write that one down on a piece of paper and save it.

By the way, since we are talking about possible Machiavellian overtones, one thing did cross my mind at a weak and cynical moment. The timing of the China announcement: it happened to come out the evening before the European Court of Justice's long-scheduled issuance of its ruling on the legality of Google's policy of auctioning off trademarks for use as keywords in connection with its AdWords sponsored-links advertising program. Although Google has succeeded in persuading most observers that it won that ruling, it's not at all clear to me that it did, and maybe Google anticipated bad to lukewarm news (which is what I think they got). in any case, Google's page-one, above-the-fold China announcement turned that ECJ news into a squib item.

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From: David Kaplan
Sent: Wednesday, March 24, 2010
To: Roger Parloff
Subject: Re: Re: Re: Re: Google and China

Roger:

Several final thoughts:

1) I'm rarely shocked or dismayed by anything companies do. (Perhaps having a teenager is a metaphor, but never mind.) Nonetheless, I think Google was unique in its self-professed identity – even going so far as to launch its IPO in a way that made traditionalists scoff (they laughed less when the numbers kept going up).  So I think greater public (and media) expectations come with that portfolio.  It's a bit different when your nickname at GE refers to an atomic weapon. Jack Welch in nonpareil as a corporate icon, but it's a different shtick than Larry-and-Sergey (and even Eric). (Query: If I were sending this to you on Gmail, would I soon get ads for neutron bombs?)

2) My recollection of South Africa is a bit different. Many universities did change their endowment policies and some companies made non-economic decisions to scale back. It all relates to the image and thereby the bottom line, but the decisions at least have the patina of judgment not based on mere economics.

3) I agree companies aren't particularly moral creatures. They're agnostic on most things that can't be measured on a balance sheet.  It's partly why I was so bemused – or worse – by the U.S. Supreme Court's recent abomination in Citizens Union. That case, as you know, essentially said corporations-are-people-too when it comes to First Amendment rights – so that corporations now have nearly unbridled right to spend in politics. Isn't it then heartening to see that Google now has spine, too? I don't mean to seem cynical, but while I applaud Google's action in China, at the end of the day I think it was done out of long-term self-interest.

4) Your point about the European ruling?  Nicely done. I can see I'm having an influence. Too bad you're not my teenager.

5) Ken Auletta is a gifted interlocutor, but I'm not quite sure how much he's teased out of the lads.

6) I own no Google stock either, but I did get my kids Google T-shirts on a trip on my first trip to its Silicon Valley campus.  Had some free meals, too. Look what good it's done the company.

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About This Author
JP Mangalindan
JP Mangalindan
Writer, Fortune

JP Mangalindan is a San Francisco-based writer at Fortune, covering Silicon Valley. Since joining in 2010, he has written on a wide array of topics, from the turnaround of eBay to the evolution of net neutrality. A graduate of Fordham University, Mangalindan has also written for GQ, Popular Science, and Entertainment Weekly.

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