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Google-Employee Clash Continues: Why Investors Should Worry


Nov. 11 2019, Published 1:08 p.m. ET

Since at least last year, Google (GOOGL) has clashed with its employees on multiple fronts. Google workers’ protest against providing AI technology to the Pentagon led to the company deciding not to renew its Maven contract. Workers have also sought to keep the company out of contracts with US federal immigration agencies. Now, Google employees want out of contracts with big oil companies due to climate concerns. Google has also clashed with employees over unionization. Here are three ways tensions with staff could undermine Google’s growth prospects.

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Google employees could lock the company out of lucrative cloud contracts

Federal spending on cloud services will hit $5.3 billion this year, according to Deltek, and reach $9.1 billion in 2024. The federal government’s swelling cloud budget makes it an important customer for cloud providers. As the world’s third-largest cloud provider, Google seems to be well positioned to compete for government contracts.

However, Microsoft (MSFT) recently won a huge Pentagon cloud contract. And Google’s activist employees could force the company to sit out for more government cloud contract contests. After employees protested against Google’s Maven project with the Pentagon, Google decided to limit its sale of technology to the military.

Google could see diminished returns as workers seek to clip its wings

Google and its siblings in the Alphabet corporate family pour billions of dollars into research and development. These investments have helped Google develop some of the most advanced AI technology, giving it a competitive advantage in the Internet search and cloud markets. However, Google workers are trying to restrict how and where the company could apply and monetize its AI technology, which could pinch its investment returns.

Google workers support candidates who want to break up the company

Google employees are among the top contributors to Elizabeth Warren’s and Bernie Sanders’s presidential campaigns. Both candidates have vowed to break up big tech companies such as Google if they get to the White House. There are worries that breaking up big tech companies would diminish their competitive advantage. Facebook has warned the US could lose the tech innovation race to China if it breaks up its tech stars.


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