It All Started with a Search Engine
How Google became Alphabet and pioneered for-profit conscious capitalism and innovation.
My generation is unlike any that has come before. It is the most informed, most socially conscious generation in human history. Millennials set the bar high for ourselves, and expect the same from our family, friends, politicians and brands. It is a generation that is connected to communities around the world, and therefore, connected to the injustices, issues and innovations that generations before did not have exposure to. Consumer data accumulated in recent years indicates that the economic paradigm is shifting. Consumers are more aware of the brands they purchase and how socially impactful they are.
Concurrently, corporations, many of whom have been established for decades, are having to shift focus, and explore new markets, and new ways to do business, as climate change becomes more ostensible. The concepts of social consciousness, business and innovation do not have to be mutually exclusive, and are in fact deeply interconnected and dependent upon each other.
Acclaimed HBS Professor Michael Porter tells us in his 2013 TEDGlobal talk (Porter, n.d.)that whilst social change has historically come from government, NGOs and philanthropy, we will never reach the scale needed to achieve the under 2°C increase by 2100 as targeted in the Paris Agreement relying on these entities alone. (Wikipedia, n.d.) What we need is for change to be driven by profit-seeking business.
So, which for-profit corporation, above all others, has given us the ability to be so informed and is on the frontier of innovation and social consciousness?
Alphabet, or Google, as it was at the time, has been involved in the climate change agenda for quite a while now. Google first came to the fore in sustainability and climate change initiatives in 2008 when it launched Google.org, which is effectively the company’s Corporate Social Responsibility (CSR) arm. Alphabet has also been carbon neutral since 2007, their data centers use 50% less energy than comparable data centers and they are the largest corporate purchaser of renewable energy on the planet. (Google, n.d.)
But this was not enough for the tech giant; they saw an opportunity to not only lead change with their charitable work and operational improvements, but with leading the innovation of new solutions for climate change. When Google completely upheaved its business structure and separated its operations into distinct entities under the new umbrella of Alphabet, it was perceived as a means to separate its cash-cow search engine business, from its future technological bets. Indeed, even the name AlphaBet(a) is a signal that leaders believe in their ability the outperform the market in the future. However, this reorganization and rebranding goes much deeper. Most of Alphabet’s new R&D and investment business units are working on sustainability and climate change-impacting ventures.
Alphabet’s GoogleX business unit is working on things such as electric/driverless cars, airborne wind turbines and energy storage solutions. (Krosinsky, n.d.) In fact, Alphabet has invested so much in renewable energy that it may well be one of the world’s largest energy utility companies in the future. (Woody, n.d.) Even within the core Google business unit, the company continues to integrate socially-conscious features. For example, Google Earth allows users to check on countries who claim to be stopping deforestation through integrated heat-map overlays.
CEO Larry Page and President Sergey Brin are both huge advocates of tackling climate change. In 2015, American business columnist Ashlee Vance wrote the book ‘Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future’, where Vance claimed that Tesla/SpaceX CEO Elon Musk, Alpabet CEO Larry Page and President Sergey Brin regularly spend time in a secret apartment in Silicon Valley, discussing moon-shot inventions that will better the world. (Eadicicco, n.d.) Venture Capitalist George Zachary attended one of the meetings and told Vance…
“Elon was talking about building an electric jet plane that can take off and land vertically. Larry said the plane should be able to land on ski slopes, and Sergey said it needed to be able to dock at a port in Manhattan.”
So consumed are these men by socially-conscious innovation, that much of the profits of their companies are dedicated to such endeavours. This is what the world needs to reach the lofty goals set forth in the Paris Agreement; for-profit, innovative companies that are pushing the boundaries and leading us into the next generation of socially-conscious technology.
Critics argue that Alphabet has been funnelling money through Ireland and the Netherlands for years to avoid paying taxes. (Sterling, n.d.) But is this money better of is a true for-profit, innovative company of idealists, or in a bureaucracy-laden government?
Is it all for long-term profits, for brand equity, or monopolization? Maybe. But regardless of your opinion on the virtues of its leaders, Alphabet is vertically integrating, transcending industries and has turned into one of the world’s forefront leaders in climate change innovation. And it all started with a search engine. (798 words)
End Notes
Eadicicco, L. (n.d.). Business Insider Tech. Retrieved from Business Insider: http://www.businessinsider.com/googles-secret-apartment-elon-musk-2015-5
Google. (n.d.). Google Green. Retrieved from Google.com: https://www.google.com/green/
Krosinsky, C. (n.d.). The Balance. Retrieved from thebalance.com: https://www.thebalance.com/google-and-sustainability-3025467
Porter, M. (n.d.). TEDGlobal. Retrieved from Ted.com: https://www.ted.com/talks/michael_porter_why_business_can_be_good_at_solving_social_problems?language=en
Sterling, T. (n.d.). Reuters. Retrieved from reuters.com: http://www.reuters.com/article/us-google-tax-idUSKCN0VS1GP
Wikipedia. (n.d.). Paris Agreement Wikipedia Page. Retrieved from Wikipedia: https://en.wikipedia.org/wiki/Paris_Agreement
Woody, T. (n.d.). QZ. Retrieved from qz.com: http://qz.com/125407/google-is-on-the-way-to-quietly-becoming-an-electric-utility/
I never knew how much Google/Alphabet is investing in sustainability. One really interesting point to me is that they go beyond making “themselves” sustainable – most companies we talk about focus on sustainability within their company (e.g., reducing their own energy use, making their supply chain sustainable, reducing their carbon footprint). Google has done that but also has the capital to go beyond that and try to create projects that would actually help sustainability globally. In some ways they are coming from a position of privilege – large amounts of capital, stead cash inflow, and a dominant market position that is unlikely to be disrupted anytime soon.
One question to think about is whether public-private partnerships between organizations such as Google and governments (however bureaucracy-laden they might be) are. For instance, carbon emissions are rapidly growing in developing countries yet much of Google’s research (self-driving cars, energy storage, electric planes) are likely to have the greatest impact in developed countries. What would it take for Google (or other organizations) to partner with smaller countries (or cities or regions) on local climate change initiatives while also developing “moonshot” technologies which might be used globally? Sort of like Google Fiber in Kansas city or Google’s partnerships with public schools in India but focusing on climate change.
Interesting, like Alex I also wasn’t aware of these initiatives.
Alphabet has had the privileged of consistently strong growth, high margins, and a very defensible business. To what extent will they come under shareholder pressure to cut costs once the growth of their marketing business starts to stabilize? One of the reasons I’ve heard for structuring the company under Alphabet was because of investor pressure to have more transparency on spending. Now that investors have this transparency, it feels like only a matter of time before they start to question large cost centers that fail to meet Wall Streets desire for short-term profits.
Anton – While I don’t believe that Google/Alphabet is an organisation, which has been massively affected by climate change/regulations (given the nature of their core businesses) – I do agree that given their leading position in the tech industry they have the power to truly innovate on alternate energy forms. Thanks for a great summary on their current efforts towards sustainability and operational improvement. Would love to additionally hear your thoughts on what additional steps Google could take to further their existing sustainability efforts.
Alphabet, nee Google, has served as an example for socially conscious companies in the 21st century. This article highlights the great initiatives that the company has promoted since its inception, however it also raises another important question…is social responsability a luxury for successful companies? Its much more difficult to sustain a CSR organization when a company is primarily concerned with a struggling bottom line. Will Alphabet remained committed to these initiatives if the market turns against them?
I too had no idea that Alphabet was Alphabetting so big on renewables. I do wonder what their investment thesis is and how the returns will look in the long run. Early in the post, you discuss the fact that Alphabet has been carbon neutral since 2007; I wonder whether they expect to generate significant returns from this (is it actually cheaper for them to this, and if not how long will it take?) or whether they are only trying to set an example for the rest of the market. I also wonder whether other tech giants have followed suit on sustainability as a result of Alphabet’s leadership.
Anton! Cheers for this post – didn’t know sustainability was part of the move to alphabet.
I definitely agree that in order to reach true scale in the fight against climate change we need the private sector corporations need to act as spearheads. Unfortunately, I also think the actual change to tip the scale cannot come from crowd initiated campaigns or NGOs unless they get the attention of major profit seeking businesses.
Having said that, given the premise that they should be leading the fight and that most of us are pretty pleased with their actions – how do we actually know that they are doing enough at all?
Perhaps Google, given its excess cash and control of the market, should be doing twice as much? These companies, being as big and influential as they are, are in my mind in position to control the narrative surrounding their own CSR campaigns. For irony – see almost no negative results when doing a google search for “Is google doing enough to fight climate change?”
In other words – who is overseeing and critiquing the big corps and keeping them honest?
Interesting article! Well written. Love the point on taxes. As we are living in increasingly interconnected global economies, it is interesting to see to what extent large organisations will take over the role of government in terms of allocating resources efficiently.
One of the key missions of Google.org and internet.org (by Facebook) is to enable internet connectivity at every corner of the planet. However, added connectivity may impose a huge energy consumption burden on the underlying networking infrastructure, which are largely developed by telecommunications companies such as Cisco and Huawei. As we anticipate a significant ramp up on connectivity and data transmission intensity on a global scale, does Google have any plans in place to address the environmental and sustainability issues on the infrastructure side?
Thanks Aton for the intriguing take and analysis on the internet giant.
How do you think Google can justify its significant investments in Sustainability initiatives?
It is a recruiting tactic for attracting the best engineering talent in the world? Is it another example of one of their moonshot bets? Or is it rather a shrewd tactic for portraying a good public image so that consumers and governments are distracted from its monopolistic practices and privacy-invasive policies?
Thanks Anton – impressed by Google’s initiatives, yet not surprised. They say that ‘ignorance is bliss’, and with Google as the leader in the technological and information revolution, they are more knowledgeable than any on the impact of climate change on the future of our World. It only makes sense that they be at the forefront of sustainability.
Google as been carbon neutral since 2007, their data centers use 50% less energy than comparable data centers, and they are the largest corporate purchaser of renewable energy on the planet – all shocking / very impressive. With that being said, I think it is good for the World and ‘good business’ for Alphabet to be doing even more. Private entities, especially progressive ones, must drive further change.
This article reminded me of the website Blackle [1] which claims to use less electricity because it uses a google search engine without a white background, instead using a black background. I am dubious of whether it actually saves energy because Blackle, presumably, uses its own server capacity as well as Google’s. On a similar vein of misdirected effort, I wonder whether some part of this new technology research is going towards trying to create something radical to replace carbon fuels,, when its resources could be better off creating incremental gains to dampen the effects of existing technologies.
[1] http://www.blackle.com/
Anton!
Thought you’d get away with posting about Google and not consulting me…
Great, great post. Really nailed the work that Google is doing in the space, and hinted at some of the underlying drivers and conflicts of interest I perceived as an insider. Loved these quotes that get at the nuances of the overall situation here:
“Is it all for long-term profits, for brand equity, or monopolization? Maybe.”
“When Google completely upheaved its business structure and separated its operations into distinct entities under the new umbrella of Alphabet, it was perceived as a means to separate its cash-cow search engine business, from its future technological bets. Indeed, even the name AlphaBet(a) is a signal that leaders believe in their ability the outperform the market in the future.”
To play devil’s advocate… in a lot of way’s Google is simply getting ahead of the curve in the sustainability efforts they are making, almost like the Ikea case… bad PR could be devastating for them as a business, so they focus on pushing good PR through their incredible efforts in the sustainability space. However, often is the case that they are correcting for issues that they themselves have caused.
Google uses enough energy to continuously power 700,000 homes a day! (We now average ~3.5B searches a day, as opposed to this 2011 number her, but logic remains in tact: http://inhabitat.com/infographic-how-much-energy-does-google-use/)
Google’s hiring in the bay area has displaced entire original populations, who have now moved to suburbs and greatly contribute to a negative ripple effect on the environment due to many new drivers (lack public transport in suburbs). This is not necessarily offset by the eco-buses they deploy for Googlers– the same people that created the gentrification in the first place (https://www.theguardian.com/commentisfree/2014/may/09/google-bus-lawsuit-gentrification-environment).
This is getting pretty long, so to sum up, as a former insider and Marketing/PR guy I’ve grown a bit weary when considering the whys around the sustainability decisions Google has made as per the above, but as you mention, their intention cannot negate all the good they are doing for the environment. They are light years ahead of competitors and have the infrastructure and resources to make am absolutely tremendous impact in the sustainability space overall.
Some truly amazing stuff….
creating the first data center fully powered by renewable energy:
https://googleblog.blogspot.com/2015/06/a-power-plant-for-internet-our-newest.html
using machine learning and artificial intelligence to cut energy costs:
https://www.bloomberg.com/news/articles/2016-07-19/google-cuts-its-giant-electricity-bill-with-deepmind-powered-ai
-angelo
Hey Anton!
Just to balance the score from another Xoogler 🙂
I also wanted to add the efforts Google puts with its Googlers Give arm, the organization that coordinates actions with NGOs and matches Googler’s donations to charities with the same amount. In moments of disaster, many of them related to global warming, Google has stepped up and deployed their human and monetary resources to be of help. In many cases this isn’t communicated externally: the efforts are many times generated from lower levels (not from above) and don’t come with an agenda.
In all, I think it’s valid to talk about the role for-profits will have in global warming. We do need the joint effort of government, companies and society to tackle this issue