Activists march on the Googleplex to demand more transparency. Schmidt responds: "We get it"

By Dan Raile , written on May 15, 2014

From The News Desk

I was on hand yesterday afternoon for an activism jamboree of sorts, just outside the Googleplex, on the springy lawns of Charleston Park in Mountain View. A number of different groups converged to stage a rally before the start of Google’s annual shareholders meeting: An anti-eviction group, a government transparency group, an environmental group, local rally stalwarts the SEIU 1021 and… a Boston-based investment management company.

There was a small plane flying a banner, one of those giant gym-class parachutes, easy-up tents and bins of iced-down bottled water to bolster the 100 or so people assembled in the record-breaking heat. All the protest materials were emblazoned with the event’s official hashtag: “Don’t Fund Evil.”

But rather than impotently chanting down Babylon, yesterday’s crowd had a distinct and actionable agenda. Walden Asset Management, in partnership with the Treasury of the State of Connecticut, both of which own significant Google shares, would be presenting a proposal at the stockholder’s meeting calling on Google to disclose how much money it gives to ALEC and the Chamber of Commerce, and over a hundred other trade organizations, third party groups and membership organizations.

Timothy Smith of Walden Asset Management said that if Google voluntarily disclosed the dollar amounts of these donations and contributions, that would be a victory, if an uneasy one. He mentioned that in the past Apple and Microsoft had backed away from such groups, and hoped that shareholders could pressure Google to do similarly.

The activists and activist stockholders did walk away with a silver lining. The moonshot proposal was voted down by a 76% margin – but, since Google’s board controls 62% of voting shares, the 14% approval means more than a third of the remaining stockholders were in favor.

In the meeting (which you can watch here), Google executive chairman Eric Schmidt made light of the initial questions posed by Sam Jewler, of Public Citizen, a national consumer advocacy group.

When the undisclosed third-party lobbying was brought up, Schmidt joked that he thought the ALEC controversy was about Alec Baldwin. But Jewler followed up by citing a Center for Political Accountability study that gave Google a 51% transparency rating and mentioned that Microsoft had scored a 92%, which seemed to get Schmidt’s attention, as he interrupted Jewler’s listing of other Silicon Valley firms that scored higher than Google. “Let me summarize your request” Schmidt said, “We need to be more transparent? Is that right? We get it. We’ve heard that from a number of other shareholders, so let us come back with some ideas. We got a very clear set of messages from a number of shareholders about this transparency issue already.”

So stay tuned.

The reason these groups are opposing Google’s connection to bodies such as ALEC and the Chamber is that those organizations often support policy initiatives that run directly counter to Google’s stated values and interests, notably on climate change and net neutrality. But in the lobbying world, this is exactly why Google might want to pay to sit at the table – to ensure a voice in decisions that could wind up badly for Google.

At the same time, other tech companies have voluntarily shared these sorts of numbers with stockholders, in an effort to maintain the perception that Silicon Valley’s titans play by a different, more ethically consistent, set of rules than do corporations in more traditional sectors.

Google seems to have parted with the need to shore up that perception. The company's lobbying exercises in past years have come to be as broad and varied as the number of verticals and lines of business the company crosses into. In 2012 they spent $16.48 million (second among all U.S. corporations), and $14.06 million in 2013. Of course, Google is not alone. In 2013 Silicon Valley's top ten firms spent nearly $60 million on lobbying efforts.

In the year since the last stockholder meeting, Google has been the subject of revelations about surveillance and privacy arrangements and of a wage collusion suit, among other potential damaging developments. It’s lobbying and contribution disclosures – the money spent directly to retain lobbyists and contributed to campaigns through the company’s Political Action Committee (PAC), both of which the company is required to disclose by law – reinforce the theme that Google is playing both sides of the aisle and is currying favor anywhere it could matter.

Like any savvy corporation it retains former government staff and officials to support its interests throughout the elected bodies and government agencies, at all levels. And Pando’s Yasha Levine has reported that beyond these lobbying affiliations, Google has many former government actors on its regular payroll, not least from the intelligence community.

But these issues barely came up at the meeting, and Google seems undiminished by the bad PR. If funding the Chamber of Commerce and ALEC over the objections of some stockholders truly serves Google’s interests, they have little incentive to discontinue that support. But do they have an incentive to hide it?  By not disclosing the amount of their support, they are firmly within their legal rights, and if the sum is substantial it maybe better to let people wonder rather than give them something to sink their teeth into.

As to why Google would give money to the Chamber or ALEC, Chief Legal Officer David Drummond told shareholders, that, essentially this how the game is played. Google disagrees with the Chamber about copyright law, among other things, but it sees a benefit in working with them on other issues.

While there might not have been any clear victories to hang hats on, the Bay Area anti-tech activist crowd effected a pivot by joining with national organizations and shareholder groups, working with the corporate governance process, and attacking a real violation of Google’s stated corporate values. The “bus protests” have mostly subsided, so yesterday’s protest can be read as the beginning of a second act for the groups that emerged last winter as would-be leaders of the anti-tech backlash.

And the activists aren’t the only ones growing up.

As Pando’s Nathaniel Mott argued yesterday, anti-establishment corporate values are on the wane throughout the tech sector, as the major players adopt more “mature” stances, protecting their market advantages and acting more like the rest of America’s corporations.

The peak of yesterday’s the rally happened just before the meeting began, as the crowd took up their placards and the giant parachute and marched onto Google’s campus. They were allowed as far as the plaza in front of the “Partner Plex”. Beyond which a cordon of security guards in breezy business casual emerged to softly but firmly herd any stragglers back toward the flock.

I was curious why security let the protesters on the Google campus at all. One security guard told me “we try to find a middle ground, give them some of what they want without being bastards.”

Though a little wordy, Google may want to think about adopting that as their new, more realistic, motto.

[Photo credit: Dan Raile]