Why It's Time for US Tech Giants To Acknowledge Their Image Problem - And Fix It

Google changes its name to Alphabet as European competitors and regulators combine to hem it in. Amazon is forced to surrender its tax advantages while its treatment of suppliers is exposed as a mere extension of the way it treats its own employees. Apple kowtows to officials in China on whom much of its future growth depends. Even cute little Etsy is challenged about its Irish tax dodge.

As Microsoft learned - the hard way - a couple of decades ago, just because people don't make as much money and aren't as 'smart' as you doesnt mean they can't damage your prospects. Especially if you remain tone deaf to their concerns. JL

Jonathan Guthrie comments in The Financial Times :

Some have argued that it doesn’t matter if a company is seen as nasty or arrogant, or appears to be. They are wrong. If you are seen in that way, powerful people, particularly politicians, have an incentive to hurt you. It is bad business.
Google rejected the thrust of antitrust charges brought against it by the European Commission. Many Europeans, regardless of the merits of the case, would urge the commission to give the tech upstart the thrashing they think it deserves.From the perspective of Europe’s main financial hub, the City of London, Silicon Valley companies such as Google, Facebook, Apple and Amazon are too big, too conceited and get away with too much. One “grandee”, as the silverbacks of this ecosystem are known, says: “The more dominant they become, the more arrogant they become. But pride comes before a fall.”Silicon Valley, a business cluster with some of the characteristics of a messianic cult, does not care greatly about the views of the rain-drenched inhabitants of an old city on the Atlantic rim. And that’s just New York, where Wall Street bankers are American old money compared with the newer currency of west coast venture capital.

London, capital of a country with an underwhelming record in commercialising digital innovation, is at an even further remove. When you have created a business with a market capitalisation of more than $400bn, as Larry Page and Sergey Brin have done, it does not matter whether Brits in suits disapprove of your restructuring.

But a large company listed in London would never be permitted to combine a mature business such as internet search with blue-sky tech investment, as Google plans to do under its cheesy new umbrella name Alphabet. A shareholder revolt would result. Orthodoxy requires founders to cash out and invest privately.
Alphabet resembles nothing more than a multibillion-dollar “man cave”. There is a laptop in the corner, where the inhabitant does some work to make the rent. But then there’s all this, like, y’know, cool stuff littered around to play with.

At the risk of sounding like the genius who forecast a world demand for computers of five units, few of these investments are likely to pay off. The first reason is that many of the inventions are supposed to make money in the physical world, where the digital duo of Page and Brin are tourists. The second reason is the very coolness of the concepts. The failure rate for these has historically been high. Think of the Segway, relegated as a mode of transport to sightseers and accident-prone photographers. Think of amphibious automobiles.

Alphabet’s driverless cars are likely to be buyerless too, because of their perceived vulnerability to hacking. The market for BigDog, a slow, noisy, military robo-mule, looks limited to soldiers who don’t mind their enemies knowing they’re coming.
A counterblast to such naysaying comes from Saul Klein, a respected British serial entrepreneur and venture capitalist. He insists: “These businesses have become extremely valuable because of the drive and vision of the founders. It’s economically rational to retain them for value creation.”

Sir Martin Sorrell, the British entrepreneur who built a small company called Wire and Plastic Products into WPP, the world’s largest communications group, also admires the freedom the US market gives. There, founders may wield voting rights greater than their economic stake. Sir Martin says: “The geared voting structure is advantageous. It enables successful entrepreneurs to run companies more effectively.”

Disruption, he adds, “is Google’s business”. Disruption upsets incumbents, and a good thing too. But tech entrepreneurs and fans who have supped of their Californian Kool-Aid too easily demand special rights under that banner. Bruce Kogut, a professor at Columbia Business School in New York, sees this as a retread of the “Great Man” theory articulated by the 19th-century thinker Thomas Carlyle. Human progress, this proposes, depends on the efforts of a few brilliant individuals.
Online taxi group Uber waves the flag of disruption lustily in its battles with local regulators. In reality, it has combined genuine customer liberation with slaloming round local transport rules, some of which are there to protect the public.
Amazon is a superb online retailer. But complex tax strategies and tough employment policies account for at least some of its success.
Big tech groups are particularly prone to conflict with officialdom because their culture is imbued with the restless and sometimes aggressive character of their founders. Mr Klein says: “Conversations between grown-up institutions and these companies can be like a conversation between a five-year-old and a 50-year-old.” Incomprehension may be mutual.
Some have argued, after a New York Times exposé of workplace practices at Amazon, that it doesn’t matter if a company is seen as nasty or arrogant, or appears to be. They are wrong. If you are seen in that way, powerful people, particularly politicians, have an incentive to hurt you. It is bad business.
As the latest wave of US tech giants grows ever bigger, they need to learn to deploy the emollient, tactical culture of those stuffy multinationals headquartered in old cities such as New York and London. There is a reason for it.