Has Google become evil?
In 2004 Google founder Sergey Brin included the slogan “Don’t Be Evil” in the prospectus it circulated prior to its initial public offering. “Don’t be evil,” he wrote. “We believe strongly that in the long term, we will be better served—as shareholders and in all other ways—by a company that does good things for the world even if we forgo some short term gains.”
The idea behind the slogan was to create an ethical culture at Google and also take a bit of a jab at Microsoft and perhaps some other competitors whose aggressively competitive tactics raised a few eyebrows when they were disclosed–slashing babies, strangling children in their cribs, creating monsters—even if they were metaphors.
But now Google is embroiled in some evil challenges of its own. From snooping our medical-related gmails to sniffing wifi hotspots while taking street-view pictures to face-recognition software tracking us, Google seems more than just a little creepy. But going up to and occasionally over the creepy line is kind of par-for-the-course for the information Leviathan. The evil question comes from their latest stock plan
Google plans to issue new, non-voting shares to all existing shareholders. The old shares will retain voting rights, while the new shares will have no voting rights. The new, non-voting shares will be used for employee stock options and other actions that might dilute the existing ownership structure. So the founders will retain their controlling stake in the company—about 60% right now—no matter how many options they grant.
Now, there’s nothing evil about having multiple share classes. They’re usually associated with family-controlled corporations like Ford or Viacom where a founding family wants to retain control. But it’s usually not associated with fast-growing tech firms. They don’t need capital so much as talent, and public shares are a way to attract that.
But Google has always been the Sergey and Brin show. This new plan makes sure that will be the case for a long time. This doesn’t take anything away from anyone—it’s not evil. But it continues to mark these two as the creepiest pair on the planet.
Douglas R. Tengdin, CFA
Chief Investment Officer
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