Google CEO Sundar Pichai had a tough and terrible year — but it was still better than Facebook's

Key Points
  • When Google CEO Sundar Pichai testified before Congress on Tuesday, he remained cool but managed to dodge or evade tough questions.
  • The hearing felt like the perfect culmination of Google's rough year, which was rife with high-profile controversies.
  • Like many of Pichai's responses to Congress, management's reactions to Google's various issues have at times felt lackluster or unclear, too.
Sundar Pichai, chief executive officer of Google, is sworn in during a House Judiciary Committee hearing in Washington, D.C., U.S., on Tuesday, Dec. 11, 2018.
Andrew Harrer | Bloomberg | Getty Images

During his three and a half hours in the Congressional hot seat earlier last week, Google CEO Sundar Pichai managed to play it cool.

He was well-rehearsed and responded to questions evenly, with patience and without the provocativeness or peculiarities which were characteristic of previous Google CEOs Eric Schmidt or Larry Page. Still, the hearing disappointed many viewers, who felt like it was a missed opportunity to press Pichai to explain more directly how the company plans to protect users' privacy or reckon with its societal impact.

As Pichai dodged pointed questions or provided evasive answers, the spectacle felt emblematic of his and the company's tough year. Google faced numerous high-profile public controversies and failures in 2018, and its responses have often felt similarly lackluster or unclear.

Yet as Pichai skated by in Congress, Google, too, has dodged arrows overall thanks to the more intense scrutiny that Facebook received for its own truly disastrous year.

A Google sign is seen during the China Digital Entertainment Expo and Conference  in Shanghai, China August 3, 2018. 
Aly Song | Reuters

A long, messy laundry list of issues

Google's year featured a long, messy list of both internal and external calamities. Frequently, the company's responses were inconclusive or unsubstantial.

YouTube. Let's start last winter with its video platform, YouTube. It promoted conspiracies and inappropriate content in its trending section and was described as "one of the most powerful radicalizing instruments of the 21st century" for its abundance of divisive or misleading content. The company has made strides to curb problematic content, but as Pichai admitted, there's "more work to be done."

Maven. Then in the spring, Gizmodo broke the news that Google was working with the Pentagon to help it analyze drone footage, which prompted more than 3,000 employees to sign a letter of protest. The company ultimately dropped the so-called Project Maven, which appeased employees but also ruffled feathers in Washington. The resulting list of artificial intelligence ethics were also panned as milquetoast.

Diversity. At Alphabet's shareholder meeting in June, a group of Google employees showed up to present a proposal from Zevin Asset Management to tie Alphabet's executive compensation to diversity metrics in employee recruiting and retention. They said that Google's response to HR issues had been inadequate. Meanwhile, over the course of the year the company was hit with a spate of opposing lawsuits, which argue that it is either not doing enough or going too far in its push for diversity.

President Donald Trump talks to the media on the South Lawn of the White House, December 8, 2018. 
Yuri Gripas | Reuters

Regulators on the warpath. Google's run afoul of regulation too. In July the European Union fined Google $5 billion for abusing the dominance of its Android mobile operating system. Moreover, critics claim Google isn't doing enough to comply with a 2017 antitrust ruling involving its shopping product. Stateside, now former U.S. Attorney General Jeff Sessions was reportedly open to investigating whether tech companies, including Google, are stifling competition, while Republican lawmakers and even President Donald Trump himself, have accused Google of suppressing conservative voices. Google has denied accusations of bias and there is no proof that results on its search engine or YouTube are purposely skewed toward any particular ideology, but the scene in Congress on Tuesday made it clear that lawmakers are far from convinced.

Dragonfly. In late summer, The Intercept first reported details of Google's secretive plans, dubbed Project Dragonfly, to launch a censored search engine in China which would block search results for queries that the government deemed sensitive, like "human rights" and "student protest" and link users' searches to their personal phone number. The efforts raised alarm bells with lawmakers, human rights activists, and employees, and there is still no clear answer about whether Google will ultimately undertake a project in this vein.

Google employees hold signs at the protest in Mountain View, California. 
Jillian D'Onfro | CNBC

Employee walkouts. On Nov. 1, more than 20,000 employees walked out of their offices around the world in the wake of an explosive New York Times' report that detailed how Google shielded executives accused of sexual misconduct, either by keeping them on staff or allowing them amicable departures. While Pichai made some changes based on that message, organizers of that protest say that large issues were ignored and continued to push for demands like equity for Google's contract workers and an end to all cases of forced arbitration.

Privacy. Two separate security bugs exposed the private profile information of more than 52 million Google Plus users, prompting the company to shut down the social network. Even more egregiously, The Wall Street Journal reported in October that Google didn't disclose its first bug for months because it feared regulatory scrutiny and reputational damage. Google also had a handful of other privacy and snafus, including unclear information on when it stores location data. When a confused congressional representative tried to ask Pichai on Tuesday about Google's location tracking, he took the question literally, instead of frankly discussing the ways that Google (and apps in its Play store) can opaquely track and target users.

The protest is coming from inside the 'Plex

Throughout all of Google's troubles, the most persistent narrative was the surge of employee activism.

Through petitions, open letters, resignations, and major protests, workers have expressed their dissatisfaction with the company's business contracts, future plans, and internal policies.

Some employees say they're disenchanted with the company's playbook of lukewarm responses.

The Google worker who spoke at the shareholder meeting, engineer Irene Knapp, says that management has continued to exhibit deliberate "avoid-and-evade" tactics rather than driving meaningful change.

"I would say that communication from Sundar and his team around diversity concerns over the past year has generally been structured in ways that minimize the opportunity employees have to respond or give input," Knapp says. "This feels like a leadership vacuum to many employees, because it's not possible to address the concerns many of us have without real, open communication."

Meanwhile, the organizers of the Google walkouts are also pushing management to be clearer and do more: Although Pichai and his team conceded to some of their demands, it didn't "address the core issues of inequity, discrimination, and abuse of power."

"While there is much work to do, we are entering 2019 hopeful," members of the core organizing group around the walkouts told CNBC. "Collective action and solidarity among workers is making change where slide decks and entreaties have not."

Google employees hold signs during a walkout to protest how the tech giant handled sexual misconduct in Mountain View, California, U.S., on Thursday, Nov. 1, 2018. 
Michael Short | Bloomberg | Getty Images

It could be worse — just ask Mark Zuckerburg

While Google and Pichai's responses may not have pleased everyone, at least they look good in comparison to its Silicon Valley rival.

"Google did better than Facebook this year," says Pivotal analyst Brian Weiser. "Many of the same issues that Facebook faced are issues for Google as well, but the primary distinction is that Google is a better-run company so it just didn't have the same level of focus."

That sentiment hasn't been lost on employees. One worker on the advertising side told CNBC that their manager jokes that any time it seems like an issue could blow up, Facebook does something worse.

Pichai's demeanor has helped.

"I think he brings emotional intelligence to a Valley that has very little of it," says Eric Schiffer, chairman of consulting firm Reputation Management.

"Employees that I talk to also have empathy for the position that he's in, which is having to be a coalition-builder between employees and shareholders, whose interests don't align in all cases and at times have harrowingly different priorities."

Google's renewed interest in China is an example. Pichai has described it as too big a market to ignore, but its plans for censored search there counter the company's previous decision to withdraw from the country, which was couched in moral terms. Threading that needle requires the kind of deft touch — tactfulness, if you will — that Pichai has made his signature.

However, this tactfulness could also be seen as wishy-washiness. As one former Google executive summed it up, Pichai is well-balanced leader who likes to find compromises. But that can mean that instead of solving problems quickly and decisively, he and the rest of Google's leadership are letting them build and fester.

While Google has slipped in the rankings of desirable places to work, all its missteps and scandals haven't caused a blip in its financials. Powering the Internet's most extensive and essential network of advertising platforms pays off: Alphabet earned $9.2 billion in profits last quarter, up 37 percent from a year ago.

As Google's strained year winds down, it seems like Pichai's biggest challenges for next year, too, will not be making shareholders happy, but appeasing users, regulators, and employees.

Google CEO: We go to great lengths to protect user privacy
Google CEO: We go to great lengths to protect user privacy