Google recently surprised the world with its announcement that it might shut down operations in China if it can’t offer unrestricted access to its services. One question raised by several, including TechCrunch’s Sarah Lacy, is how can Google afford to take such a righteous stance. Despite its vast bank balance, it can’t be good business to drop out of the world’s fastest-growing emerging market. Lacy’s theory:
Does anyone really think Google would be doing this if it had top market share in the country? For one thing, I’d guess that would open them up to shareholder lawsuits. Google is a for-profit, publicly-held company at the end of the day. … Google has clearly decided doing business in China isn’t worth it, and are turning what would be a negative into a marketing positive for its business in the rest of the world.
Clearly. What Lacy fails to note is a fact that I believe is behind so much of Google’s maverick ways. That is that while Google may well be publicly traded, the founders have kept control of the company. Larry Page and Sergey Brin control 58 percent of the voting stock, and Eric Schmidt has another 10 percent. At Google, the founder-managers run the show, and the rest of the stockholders are along for the ride.
I think this explains how Google can afford to not be evil, albeit their own definition of evil. It explains the ungodly gamble of $4.6 billion in the 700 MHz auction. No other company could have taken such a risk. In that case, like in the recent China episode, I think they were similarly pursuing righteousness, not only business interest.
The ability to ignore the short-term obsessions of the market and concentrate on the long term, can make a company very powerful. But on the flip side, the ability to make such big bets can also expose it to incredible downside. For now, three cheers for Google. We’ll see what happens next.
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