Google (GOOGL) has had several run-ins with its workers lately, and there seems to be no end to those tensions in sight. Bloomberg reports Google recently fired an employee for leaking information, and suspended two others. Google workers have also become more vocal activists. Here are four ways the rise of employee activism at Google could hurt the company and investors.
Workers risk damaging Google’s reputation
Facebook’s (FB) privacy scandals have tainted its reputation, leading to graduates from America’s top universities shunning job offers from the company. Google relies on top talents to fuel innovation and stay competitive. Privacy scandals could limit its ability to attract the best candidates.
Workers’ demands could drive up Google’s costs
Moreover, Google workers have demanded the company do more to address climate change. Google recently committed to investing $2.0 billion toward reducing its carbon footprint. This rapidly increasing climate change spending could boost Google’s costs faster than management planned, disrupting its other development programs.
Shutting Google out of lucrative business opportunities
Google employees have protested against the company selling its technology to certain US government agencies. For example, Google’s employees rejected its contract to provide AI technology to the Pentagon for the Maven project. As a result, Google adopted ethical guidelines limiting its work with military organizations and sat out of the Pentagon’s $10 billion JEDI (Joint Enterprise Defense Infrastructure) cloud contract. The deal eventually went to Microsoft (MSFT). And unfortunately for Google, federal spending on technology is growing. Deltek forecasts the US government’s cloud spending will rise to $9.1 billion by 2024 from $5.3 billion this year.
Moreover, Google employees want the company out of contracts with big oil companies, which are important cloud customers. Oil companies spent $4.9 billion on cloud services in 2016, and MarketsandMarkets estimates that total will total jump to $9.4 billion by 2024. In its pursuit of cloud dollars, Google has singled out the energy sector as one of its six priorities.
Google workers seem to want the company broken up
Google’s staff is making big campaign donations to Democratic presidential candidates who want to break up the company. Senators Elizabeth Warren and Bernie Sanders collected thousands of dollars in donations from Google employees in the third quarter. Both Warren and Sanders think big tech companies have grown too powerful and should be broken up, despite big tech companies’ worries that breaking them up would be counterproductive.