Case 4 Google Searches for Solutions to Privacy Issues 425

This material was developed by Kelsey Reddick, Jennifer Sawayda, Michelle Urban, and Isaac Emmanuel under the direction of O.C. Ferrell and Linda!Ferrell, © 2019. This case is intended for classroom discussion rather than to illustrate effective or ineffective handling of administrative, ethical, or!legal decisions by management. All sources for this case were obtained through publicly available material.

Google Searches for Solutions to Privacy Issues CASE 4

Introduction Google’s ease of use and superior search results have propelled the search engine to its number one sta- tus, ousting former competitors such as AltaVista and WebCrawler. Even later offerings by other large tech companies using comparable algorithms, such as Bing by Microsoft, have failed to make significant inroads with internet users, with Google retaining an impressive 90 percent of the global market share of mobile, web, and in-app searches. Each day, more than 3.5 billion searches are processed by Google. As the search engine gained popularity, it began expanding into several dif- ferent ventures, including web analytics, advertising, and digital book publishing. It has spent billions to acquire hundreds of companies in a variety of industries, from robotics to smart home devices to intangibles such as voice recognition technologies.

As may happen with any large company, Google has experienced their share of ethical issues. Their mantra “Don’t Be Evil” was called into question after they worked with the Chinese government on a secret project called Dragonfly to censor aspects of some of their sites to enter the market. Though Dragonfly was ultimately terminated, Google’s vice president of public policy would not commit to the U.S. Senate to not engage in censorship in China in the future. Google has also been investigated and sued by multiple governments based on concerns that their widespread reach and market power violate antitrust laws.

The hot ethical topic for many internet users, how- ever, is the company’s approach to internet privacy and collection of user information. To improve their services— including customized search results, targeted ads, and more precise integration of their various offerings— Google tracks and leverages user information without explicit permission (although Google’s privacy statement informs users about the recordkeeping, and Google does allow users to opt out of some forms of tracking). Such tracking is common practice for internet companies, but Google’s deep access to so many different types of user information has led people to question whether Google violates user privacy. Considering the increasing amount of cyberattacks and the U.S. government’s determination to crack down on these illegal attacks, consumers also worry their private information, tracked and stored by Google’s algorithms, might be compromised.

This case analyzes Google’s efforts to be a good corporate citizen and the privacy issues the company has faced. The analysis starts by providing background on Google, their technology, and their initiatives. Google’s efforts to be a socially responsible company is dis- cussed. We then discuss the criticisms levied against Google, including their initial attempts to break into the censored Chinese market, their tracking of users, and more recent changes to their privacy policies. We examine how Google has sometimes clashed with gov- ernment authorities. Finally, we review some of the legal methods that have been proposed to regulate internet data collection practices and Google’s response to the proposals.

Company Culture Google adopted a decentralized approach to empower their employees. Their corporate headquarters in Mountain View, California, is known as the “Googleplex” and consists of a campus containing such amenities as on-site gymnasiums, swimming pools, a bowling alley, an outdoor volleyball court, and even high-tech “nap pods” for optimized downtime. When Sergey Brin and Larry Page founded the company, they recognized employees had to put in long hours to make the company not only successful but flexible enough to adapt to the changing environment. Thus, Google employees are provided with fringe benefits to make the campus seem like their second home. They built a sense of community with break-out zones and micro-kitchens around the campus in addition to their peer-to-peer coaching program, Googler to Googler. The company strives to make their corporate culture fun and innovative.

At the same time, Google works to ensure they have top talent. While they reinvent the office experience, they also take different tactics in recruiting to ensure they hires the most creative, talented individuals. For instance, Google recruiters take a bottom-up approach when reading résumés. Recognizing that top items such as education and work experience do not always guarantee the applicant is innovative, some Google recruiters start at the bottom of the résumé where applicants put more creative information. Google’s innovative approach to company culture is one of the reasons why they have become successful in so many different market niches.

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Products Although Google started out as a search engine, they have since branched out into a variety of fields, including consumer electronics and productivity tools. While it would be too long to list all of Google’s products, some of the more popular offerings are described below.

Search Engine According to Larry Page, a good search engine “under- stands exactly what you mean and gives you back exactly what you want.” This philosophy was the founding principle behind the creation of Google and is a fundamental reason why the Google search engine surpassed competitors.

Google could not have gained such prominence without an in-depth search index of the web’s content. The company creates this index using programs called “Googlebots”—automated web crawlers that visit web- pages, add their content to the index, and then follow the links on those pages to other parts of the internet. This process is ongoing, with every indexed page periodically revisited to ensure the index contains the most updated material. Google’s index is one of the most extensive in the world, with well over 100 million gigabytes worth of information.

A good search engine’s index must not only be comprehensive but also easily accessible. To achieve easy access, Google uses algorithms to organize search results according to their perceived relevancy. Google constantly searches for new pages in a process called crawling. When a new page is crawled, Google analyzes its contents and catalogs it, a process called indexing. When a user types a search term into Google’s search box, Google’s index matches the term with what is deemed the most relevant materials and creates a list of these materials for the user, a process called serving. The order in which the results are served to users is called ranking. Factors considered in ranking include user’s location, language, device, site load speed, and more. Each search result is followed by a few sentences describ- ing the webpage (called a “snippet”). To maintain a competitive edge, Google responds quickly to their users’ queries, with a typical response time of approximately one-fourth of a second.

Advertising Google’s main source of revenue is advertising. The company earns approximately $116 billion in advertis- ing revenue. Google’s signature advertising platform is Google AdWords, first introduced in 2000. Google AdWords differs from traditional advertising in that advertisers do not pay Google anything upfront, but only pay when customers take action—either by viewing the ad (pay-per-impression), clicking on the ad (pay-per- click), or performing a certain predefined action such as

making an online purchase (pay-per-conversion). This model is attractive to advertisers because they only pay when their ad is effective, as determined by the metric of their choice. The twist, however, is that Google does not set ad prices, but rather puts their limited advertising space up for auction; companies submit “bids” for how much they will pay per customer action, and higher bids generally get more ad time (other factors are also considered, such as how popular an ad has been so far). Since Google makes no money from even a very high bid if customers do not engage with the ad, advertisers are incentivized to bid high, which benefits Google’s bottom line. Google promotes the model as a win-win; the company makes a profit and customers get more bang for their advertising buck.

Google leverages their various product offerings to provide a variety of attractive advertising options. Companies can choose to have their ads displayed as “sponsored links” alongside search results for certain keywords, or as banners on any of the more than two million websites that display Google ads in return for a cut of the profits (known as the Google Display Network). Google continuously expands placement options to improve ad performance. YouTube is another option, offering video ads before, during, or after videos, as well as traditional banner space on the site. Mobile is also becoming a critical advertising space, through searches on both mobile devices and apps that allow advertising. Improving the effectiveness of their AdWords service is a key driver of Google’s collection of user information—the more they know about their users, the more targeting options they can provide to advertisers and the more precisely they can serve targeted ads to desired consumer segments.

Web Browser Google Chrome is the most popular web browser in the world with about two-thirds market share. When Google Chrome was released, it was praised for its unparalleled speed, support, and security. The Chrome browser is known for loading within seconds and maintaining a simplistic design to make it easier for users to navigate. Chrome is also updated more frequently than most of the other browsers, allowing Google to quickly push out new features and security improvements. With more than 1 billion monthly active users, the web browser has a vast audience. The Chrome Web Store contains a wide selection of apps and extensions, providing additional flexibility and functionality for users.

Email Account Google’s email account service, called Gmail, has more than 1.5 billion monthly active users and is the world’s largest email service provider. Gmail was initially revolutionary for the huge amount of space it offered—1 gigabyte per user when rivals were only

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offering 100 mega bytes or less—and the integration of Google search, which gave users a robust way to search within their stored emails. Since then, Gmail has continued to offer popular features such as snoozing, email “nudge” reminders, email scheduling, clickable attachments, two-factor authentication, predictive Smart Compose, a variety of add-ons, and deep integration with other Google products such as Hangouts, YouTube, Maps, Drive, and Calendar.

YouTube In 2006, Google acquired video sharing site YouTube for $1.65 billion. YouTube allows users to upload and share original videos and has become the second most visited of all websites (Google.com is the most visited site in the world). Everyone from global corporations to consumers uses YouTube to share videos ranging from video blogs to parodies, to corporate messages to news events. By selling video advertising slots before, during, and after videos, as well as placing banner ads in free space on the site, Google has made billions in advertising revenue. Additionally, YouTube content creators can share in advertising profits from their videos through YouTube’s Partner Program, allowing popular “YouTubers” to make careers out of their channels.

Although YouTube opened up new opportunities in marketing and entertainment, it has had its share of controversy. YouTube has been sued by organizations such as Viacom for copyright infringement after find- ing copyrighted content on YouTube’s site. YouTube’s Community Guidelines specifically directs users to respect copyright. However, not all users heed the warning. To detect and eliminate copyrighted material, YouTube enables users to “flag” videos for copyright infringement. If, upon review, the flag is found to be valid, the offending video is removed. YouTube has invested $100 million in automated system called Content ID which automatically compares newly uploaded videos to a database of copyrighted material and notifies the copyright holder if a match is found. To date, Content ID has paid more than $3 billion to rights holders. Google believes providing tools to enable self-interested copyright owners to protect their property is the best way to police YouTube, arguing it is simply not feasible for the company to screen the more than 500 hours of video uploaded to the site every minute.

Android In 2005, Google acquired the startup firm Android Inc., which worked on mobile phone software technology. In 2008, the Android operating system was released by the Open Handset Alliance, a team of organizations led by Google whose mission is to promote development of open standards for mobile devices. The Android operating system is an open source platform, meaning

the source code is available for outside users to view and use. However, Google has copyrighted the Android name and logo, as well as some proprietary features of Google’s version of the software. Companies that wish to claim they make “Android” devices must enter into a licensing agreement with Google. The Android operating system is most often used in mobile devices and tablets but can also be found on other devices, including full computers, game consoles, and digital cameras.

Android has become the most popular mobile operating system in the world, making up over 86 percent of the market. In many countries, Android has more than 90 percent market share. Apple’s iOS, while undeniably a strong competitor with a loyal customer base, trails far behind with 15 percent of the smartphone market. One reason for Android’s larger market share is that, unlike Apple and their iPhone and iPad, Google is not the only company that makes Android phones and tablets; Samsung, HTC, Motorola, T-Mobile, Sony, and many other manufacturers develop Android devices. However, there are disadvantages to this approach. For example, Amazon built their mobile offerings, the Fire Phone and Kindle Fire tablets, off the Android open source code, and now competes directly with Google in the mobile sphere. In Europe, Google’s partners can now offer Android-powered phones without Google apps pre-installed on the devices. Google is also a direct player in the mobile device market with their Nexus line of phones and tablets, placing them in the uncomfortable position of competing with their business partners. Still, Android has been a great success for Google, vastly increasing the company’s reach into electronics. One top Google executive called the initial Android Inc. acquisi- tion the company’s “best deal ever.”

Web Analytics In November 2015, shortly after acquiring Urchin Software Corporation, Google released the free web analytics service Google Analytics which has grown to become the most popular web analytics service on the web with approximately 30 million active sites. Google Analytics tracks and freely reports website traffic statistics, giving businesses a market research tool to understand how customers are interacting with their websites. The dashboard is broken out into five reports: Realtime, Audience, Acquisition, Behavior, Conversions. Google Analytics 360, a premium version, is designed to help companies target potential customers with even more in-depth analytics, tying in data from other Google products such as Tag Manager and Data Studio. The tool identifies the habits of individuals from web and television to mobile, competing with companies like Salesforce and Oracle. Services like Google Analytics helps website owners measure and interpret the effec- tiveness of business activities. Google tracks visits via a user’s IP address, raising some privacy concerns.

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Expanding the Product Mix Google offers several other popular products to businesses and consumers. Google Translate and Google Maps offer automated translation and mapping/directional services. Google Flights provides flight information including price data from many airlines. Google Drive allows users to store files in the cloud and share them with others. The service offers 15 gigabytes of free storage per user, and more can be purchased if desired. The company is also investing in artificial intelligence (AI) processing and has developed a new chip called the Tensor Processing Unit. This is a breakthrough in the more sophisticated systems needed to run artificial intelligence applications. Google aims to push AI processing into devices like phones and virtual assistants.

Google is also known for their forays into exciting and cutting-edge technologies, especially through their semi-secretive Google X department, whose mission is to develop “moonshots”—science fiction-like technologies that have a slim chance of succeeding but could change the world if they do. Research projects underway at Google X include using machine learning to teach robots new skills and using space optics to transmit high-speed data. One of their retired initiatives involved developing a real-time heads-up display for the average consumer. The end result was Google Glass, a wearable computer in the form of glasses worn on the face that can display information in front of the wearer’s eyes, respond to ver- bal and movement commands, and more. Google Glass was publicly released in 2014 and has been applied to a wide variety of commercial applications, from providing doctors with hands-free information during surgery to helping autistic children interact with their environ- ment. However, the device never achieved mainstream popularity. The style of the glasses was unappealing and the technology created privacy concerns since wearers could use them to record others without permission or cheat on exams. Though Glass was retired, the product lives on in its enterprise edition for businesses. The technology highlighted the need for rules to protect people from being recorded.

Google’s Initiatives Like all successful major corporations, Google is expected to act with integrity and give back to the communities where they do business. Google has invested in a number of initiatives that support economic development, envi- ronmental awareness, and charitable endeavors.

GV In 2009, Google formed Google Ventures, later shortened to GV, as a separate entity to provide funding for startup firms. The venture capital fund began with $100 million in seed money and now manages more than $4.5 billion

in assets of its own. They invest this money in startup companies at the forefront of technological innovation. The money goes not only to firms that market internet- based technologies or consumer electronics, but also to green technology firms, biotechnology and life-sciences companies, and more. Their best-known investments include Uber, Lime, and Slack. GV’s goal is to invest in entrepreneurs that can change the world through technology by having “a healthy disregard for the impos- sible,” mirroring what the Google X department is trying to do within Google itself.

Google Sustainability Google has recognized the business opportunities that come from adopting sustainable operations and technologies. Greener technology not only saves Google money in the long run with decreased energy costs, it also enables the company to create greener products for consumers. Google, which reached their goal of 100 percent renewable energy for their global operations in 2017, claims their data centers use 50 percent less energy than typical data centers. Now, 100 percent of shipments to and from Google are carbon neutral. Google has committed to include recycled materials in every single product they make. For employees, Google offers a shuttle system run on biodiesel, an on-campus car sharing program, company bicycles to commute between buildings and departments, and the largest electric vehicle charging station in the country. Other sustainability successes for Google include a large solar installation on their campus and LEED-certified buildings.

Google.org Google.org is the charitable arm of the organization. According to their website, the organization provides assistance to “nonprofits using technology and innova- tion to tackle complex global challenges” by giving more than $100 million in grants and 200,000 volunteer hours each year. Google.org also develops tools for nonprofits and provides disaster relief. Google for Nonprofits provides resources such as discounts on Google products and free AdWords advertising to nonprofit organiza- tions. Google.org has also partnered with nonprofits to offer them use of Google’s considerable resources. For example, they provided tools to the National Center for Missing and Exploited Children to help the nonprofit in their fight against global child exploitation. Google extended their community service outreach efforts with the introduction of the Google.org Fellowship that allows their employees to work full-time for their nonprofit partners for up to six months. Collectively, Google aims for 50,000 hours of pro bono work annually through the program.

In addition to the company’s work through Google. org, Google contributes hundreds of millions of dollars

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directly to various charities and socially responsible organizations. Just before the company’s initial public offering in 2004, Google’s cofounder Larry Page prom- ised Google would continually contribute 1 percent of their profits, 1 percent of their equity, and a significant amount of employee time to philanthropic endeavors. In terms of giving employee time, Google encourages employees to get involved in giving back to their com- munities. For instance, Google matches up to $6,000 of each employee’s contributions to nonprofits annually. They have donated more than $50 million to thousands of nonprofits. Google also encourages employees to take time to volunteer in their communities, especially during their annual GoogleServe event, which sets aside one to two weeks each June for Google staff worldwide to get involved in their communities and donate time to good causes.

Privacy Being a large company, Google has many risks and ethical issues they must constantly address. In many ways Google has helped advance ethical conduct in the web and technology industries. Google has been named multiple times among Ethisphere Institute’s “World’s Most Ethical Companies” due to their contributions to the community and the environment. The company also consistently ranks among Fortune magazine’s “100 Best Companies to Work for” because of their fun and innovative work environment.

One of the greatest risks faced by digital companies involves hacking attacks and online scams. Google is attempting to address these risks head on. For example, Google was hit with a massive phishing attack. Gmail users were sent an email that supposedly came from someone they knew inviting them to open up a document in Google Docs. Those that clicked on the link were directed to a real Google page, where they were asked to input their passwords to download a fraudulent app. Once the fraudsters had the users’ credentials, they used them to access the users’ contact lists to send out more phishing emails. Google immediately reacted to disable the accounts and notify their Gmail users. Though phishers are becoming more sophisticated, Google successfully blocks approximately 100 million phishing emails per day. In addition to their preventative efforts, when Google can’t positively identify a phishing attempt, they display a safety warning above questionable emails in a user’s inbox.

Despite their contributions to ethics, Google’s actions have been called into question. For instance, when Google created an ethics board to guide “respon- sible development of AI” at the organization, thousands petitioned for the removal of a board member who made concerning comments about trans people and whose company was skeptical of climate change. Many ques- tioned whether the eight members who would meet only

four times per year could possibly understand the full scope of Google’s AI development. When debate about their board members continued, it became clear that the board was a liability for Google. Google dissolved the ethics board after just one week and resolved to find better ways to add outside perspective on AI topics.

Google also faces intense antitrust scrutiny from the European community. Competitors in Europe claim Google uses their dominant market position to promote their own offerings and demote rival results in search listings. In 2010, the European Union (EU) investigated Google’s practices. Google proposed concessions and business changes it was willing to make to satisfy competitors and investigators, but none were accepted, and the EU announced formal charges against Google in 2015. The initial charge was that Google favors their comparison-shopping service over competitors. The EU later filed another antitrust charge against Google targeting their AdSense advertising platform. These accusations are similar to the EU’s investigation into Microsoft, which eventually led to $2.3 billion in fines and significant changes in how Microsoft conducted business worldwide. Google was fined a third time in 2019 for hindering competition. The $1.7 billion fine was in response to Google allegedly blocking their rivals from placing ads on third-party websites. In total, Google has been fined more than $9 billion by the EU in the past few years alone. Additional changes need to be made by Google to avoid further investigations.

For the sake of brevity, this case will focus on one major ethical issue Google has continually wrestled with as they seek to expand their reach: privacy. The advent of the internet and mobile technology provides so many opportunities for stakeholders that many do not realize the cost for this information might be significant portions of their privacy. Many consumers are shocked to find that web companies such as Google and Facebook track their online activity and use this information to tailor advertisements or sell to marketers. Other consumers feel that Google’s use of their personal information is a small price to pay in exchange for access to the company’s superior services. For Google—which offers so much free content and gets most of their revenue from advertising—this information is extremely valuable to their continued business success. Google’s privacy policy details what information they collect and how they use that information. For instance, Google claims they may share non-personal information with their partners.

Despite Google’s attempts to be transparent, there are ethical gray areas regarding the collection and use of data. Because there is still little legislation regulat- ing how internet companies gather and employ user information, it is tempting for firms to push the limits on privacy. Going too far, however, creates reputational and legal problems. Google was fined $57 million under the EU’s General Data Protection Regulation (GDPR) in France. The French data protection authority claimed

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Google did not disclose how data is collected across their services properly. Such concerns are not exclusive to the GDPR. Although Google is the most popular search engine, one recent poll found that 52 percent of Google users have concerns about their privacy when using it. This could be a potential obstacle for Google since consumer trust plays a big role in how they interact with a company. The following sections discuss some of the major privacy issues Google has experienced.

Search Queries One of the major privacy criticisms levied against Google is that the company keeps track of users’ search terms. Keeping a longer history allows Google to create a custom user experience. Consider all the things you have ever searched for using Google’s search engine. Now consider how comfortable you feel knowing the com- pany has recorded and stored all those search terms… forever. This tracking cannot be turned off—users can disable their Google web history to remove any external record of searches and prevent the information from being used in certain ways, but Google will continue to record and store search terms for internal purposes. To address privacy concerns, users can automatically set their Google history to be deleted on a 3-month or 18-month schedule, so it’s no longer a manual process. To be fair, the practice of retaining search data is not limited to Google—many other internet firms do the same. Because Google is the most popular search engine in the world, they are more heavily scrutinized.

The big question users ask is whether their search terms can be traced back to them personally. Google claims that although they store users’ search terms, after 18 months the data becomes “anonymized” and theo- retically untraceable. However, critics debate this claim because supposedly anonymized data from other search engines was later matched to specific users. Google claims they treat this information with respect, using it to refine their search engine. Yet under the Third Party Doctrine and the Patriot Act, the U.S. government could subpoena the data if deemed necessary for national security. Needless to say, Google’s storage of users’ searc

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