individual assignment subject business ethics case 7 google the quest to balance privacy with profits

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INDIVIDUAL ASSIGNMENT

Subject: Business Ethics

CASE 7: GOOGLE: THE QUEST TO BALANCE PRIVACY WITH PROFITS

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Encyclopedias have been around for centuries, but the idea of creating a search bar that can search anything on the internet has only been around for more than 30 years A large number of search engines were and have been created and used, but up until now Google is the most popular search engine that the world uses on an everyday basis A Case summary

I Background information

In 1996, Sergey Brin and Larry Page created their search engine "BackRub" BackRub

was an internet search bar which then serve as the foundation for Google In 1998,

Google was officially born, named after the term "gogol”, a mathematical term for a 1 followed by 100 zeros

Google started out to be a small search engine and ranking system are now the world most profitable Internet companies of our time As Google gained in popularity, it expanded into different ventures, including advertising, book publishing, social networking, mobile phones

Google’s survival as a provider of internet services is very much linked to the right to information as resource This case study deals with the ethical issues in international business when it comes to modern communication systems and the right to information

for everybody The case is built around Google’s efforts to be a good corporate citizen

as well as the privacy issues the company has faced II Company culture

One of the biggest reasons Google continues to be an innovator and leader in their industry is that they have a clear idea of their values and goals By having a clear understanding of their core values, Google can continue to hire people who share the same values or show the eagerness to learn those values, ensuring that only like-minded people work at the company The following are 10 of their core values:

1 Focus on the user and all else will follow It's best to do one thing really, really well Fast is better than slow

Democracy on the web works

You don't need to be at your desk to need an answer 2

10 Great just isn't good enough

The company creates an in-depth search index of articles, websites and other content, using program called “Googlebots” When user types a search term into search box, Google’s index matches the term with the most relevant materials and responses a list of these within approximately one-fourth of a second

- Alerts the users when they enter “risky” sites

- Regularly updates the latest software to combat new malware attacks

- Connects users to its Chrome web store where users can download apps,

extensions, etc

3 Email Account

Email account service, called Gmail, has approximately 425 million active users Gmail surpassed Hotmail to become the top email service provider Users like it for many reasons, but especially because of the ability to hold a large amount of data It is fully integrated with Google Voice, YouTube, and Google Reader

4 YouTube

In 2006 Google acquired the video sharing site YouTube for $1.65 billion YouTube is the third most popular site in the world It has enabled Google to make millions in advertising revenues and videos are often preceded by short advertisements

Although YouTube opened new opportunities in marketing and entertainment, it has not been without its share of controversy YouTube was sued by organizations such as Viacom for copyright infringement after finding copyrighted content on YouTube’s site YouTube warns users but not all users heed the warning Therefore, in order to detect and eliminate copyrighted material, Google uses Content ID to compare files on the site for similarities Google then contacts the copyright holder and removes the video

5 Android

In 2005 Android Inc acquired by Google and called the acquisition as the company’s “best deal ever” The Android operating system has been used in HTC, Samsung, Motorola, T-Mobile, Sony mobile phones Android phones have become the most popular smartphone, with market share at about 50%, making it a strong competitor

with the Apple iPhone The number of Android apps download since release surpassed 10 billion

6 Advertising

Google’s main source of revenue comes from advertising In 2012 the company earned

about $43.7 billion in advertising revenue The primary form of advertising is Google AdWords, introduced in 2000 Google AdWords differs from traditional advertising in that companies only pay when users click on the link

Google also offers display advertising and mobile advertising Display Network gives companies the choice to place ads on related websites to target those consumers more interested in the company’s product Mobile advertising is also gaining in popularity It has a great opportunity to transform Google’s advertising offerings

7 Google Wallet

Google developed a new mobile application called Google Wallet that substitutes for credit cards Google Wallet only works in stores that offer MasterCard PayPass and only about 15.000 merchants currently do so Yet as paying with mobile technology gains in popularity, more merchants will purchase the technology to process mobile payments Google Wallet may soon become a common sight on smartphones

Nexus 7 - Google’s tablet comparable to iPad, Kindle Fire

Google Glass — wearable computer in the form of glasses worn on the face IV Google’s Initiatives

Google has invested in a number of initiatives that support economic development,

environmental awareness, charitable endeavors

1 Economic Development - Google Ventures

In 2009 Google Ventures was formed as a separate entity to provide funding for startup firms It began with $100 million in seed money, but now receives $300 million from Google each year Google Ventures’ goal is to invest in entrepreneurs that can change the world through technology by having “a healthy disregard for the impossible” 2 Environmental Awareness - Google Green

Google has recognized the business opportunities from adopting greener 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

3 Charitable Endeavors — Google.org

The purpose is to create “technologies to help address global challenges and supports innovative partners through grants, investments and in-kind resources” Google.org contributes grant money, develops tools for nonprofits and provides disaster relief Google for Nonprofits provides resources such as discounts on Google products and free AdWords Google Dengue & Flu Trends collects data on these diseases and shows a map of the areas currently active Google also partnered with the National Center for Missing and Exploited Children to provide tools for the nonprofit’s fight against global child exploitation

V Privacy

Google is a recipient of Ethisphere’s World’s Most Ethical Companies for its contributions to the community and the environment The company consistently ranks among Fortune magazine’s “100 Best Company to Work For’ because of its fun and innovative work environment

Being a large company, Google has many risks and ethical issues it must constantly address, from antitrust issues to copyright infringement to accepting illegal ads, etc This case will analyze one major ethical issue Google has continually wrestled with as it seeks to expand its reach: privacy The advent of the Internet and mobile technology provides so many opportunities for stakeholders that many don’t realize the cost for this information might be privacy Consumers are shocked to find that web companies like Google, Facebook track their online activity and often use it to tailor advertisements or sell to marketers For Google, which offers free content and gets most of its revenue from advertising, this information is valuable to continue business operations Some consumers feel that use of their personal information is a small price to pay in exchange for using Google’s superior services

Despite Google’s attempts to be transparent, there are ethical gray areas regarding the collection and use of data The following sections discuss some of the major privacy issues Google has experienced

1 Google Search Queries

One of the major privacy criticisms levied against Google is the fact that the company keeps track of users’ search terms Google claims that although it stores users’ search terms, after 18 months the data become “anonymized” Critics, however, debate this claim because anonymized data from other search engines have been used to locate

users

2 Google in China

Entering China required Google to allow the government to censor its users’ searches, something that conflicted with Google’s mantra “Don’t Be Evil” Despite criticism,

Google applied the principles of utilitarianism to the situation and concluded that the benefits of doing business in China outweighed the costs

Google began self-censoring some of the more controversial search terms to placate Chinese authorities However, sometimes computer outages happened because the government often blocked user access to certain sites After intense pressure and cyberhacking from Chinese hackers, Google stopped its practice of self-censorship In 2012 Google provided a mechanism to warn users when a search term might encounter censorship Yet calling attention to terms that are clearly restricted went against Chinese government policies Chinese authorities responded by cutting off services Google eventually capitulated to the government and discontinued the warning feature Chinese censorship and privacy will likely remain significant issues Google must regularly address in the oncoming years

3 Tracking users

On the one hand, privacy advocates claim that tracking features like collect GPS coordinates, coordinates of nearby WiFi networks violate users’ right to privacy Google defended by stating this information was necessary to build Google’s location- based network

On the other hand, supporters of Google tracking maintain that tracking is necessary to provide the best services to users These services are often free of cost because Google generate revenue through advertising Consumers therefore must be proactive in deciding whether they place greater value on their privacy or Google’s free services Security analysts realized Google used loopholes in the system to track users on the Safari browser The Federal Trade Commission (FTC) launched an investigation to determine if Google violated agreement to stop misrepresenting its privacy practices to public Google agreed to pay $22.5 million to settle charges by the FTC Although Google might have legitimate reasons to track user activity, bypassing default mechanisms appeared deceptive and underhanded

In 2010, Google used vans with special detection equipment to drive around collecting data and photo for its location-based services in the U.K Unfortunately, its vans also scanned wireless networks of some nearby residences, including their emails Although promised the Information Commissioner's Office in the U.K it would destroy the data, a later investigation in 2012 revealed Google still retained some of this data Its violations have increased image of being a firm that disregards privacy

In 2012, Google was fined $25.000 by the Federal Communications Commission (FCC) for deliberately delaying an investigation into way they take photos for street-view feature of maps in the United States and collect information through unsecured WiFi networks In 2013, Google agreed to pay a fine of $7 million

It is alleged that customers don’t know the kind of information they give up when making a purchase in the Google Play Store Google, again, claims customers are told

6

what kind of information is shared to developers when they purchase an app However, criticisms over privacy policies continues

4 Hacking Attack

In 2011 Google released some disturbing information regarding the privacy of user accounts on Gmail The company claimed a wide-scale phishing attack had broken into the Gmail accounts of hundred of users, including politicians, political activists and military personnel After the attack was detected, Google worked to secure user accounts and notify those it suspected were victims of the attack Although not heavily criticized for the attack, the company should continue to safeguard user information through updated security measure

5 Google Privacy Audits

In 2010 Google launched the failed social networking platform Google Buzz Users clicked on Google Buzz were largely unaware their frequent contacts on Gmail would be made publicly on the Internet The FTC alleged that even those who opted out of joining were still enrolled in certain features of the social network

The FTC launched investigation and found out that Google had acted deceptively and violated privacy policies Google agrees to settle with the FTC by allowing third parties to conduct biannual privacy audits regarding how the company uses information These audits are a blow to Google’s operations The company will have to tread carefully regarding how it collects and uses information On the other hand, doing so could gain trust of users and prevent future legislative action against company

6 Changes to Google’s Privacy Policy

In early 2012 Google announced new changes to its privacy policies Instead of having separate privacy policies for each of its offering (Gmail, Google+, Chrome, etc), Google created one privacy policy that applies to all

The changes concerned government officials in the United States and the European Union (EU) Congressional officials notified Google and asked to explain the changes in more detail Google stated that the new policy would not impact the amount of data collects or deletes and remained highly committed to user privacy

In April of 2013, 6 European countries banded together to take legal action against Google for not complying with EU regulations Google could face significant fines and possible restrictions for conducting business in Europe

B Case questions

1 How can Google use its power to improve the lives of its stakeholders? Google has many stakeholders, but they can be grouped based on shared interests Many of the company’s Corporate Social Responsibility (CSR) programs are directed toward these stakeholder groups Google considers the following as the most significant stakeholders:

1 Users

In Google’s business philosophy, users are the top priority in its CSR efforts The company’s philosophy states: Focus on the user and all else will follow Thus, users are the core stakeholders in Google’s business Every product is developed with the users’ needs in mind

2 Employees

Employees are the second priority among Google’s stakeholders Employees are interested in proper compensation and a rewarding experience in working for the company For example, many workers want to work for Google because the company is perceived as one of the best firms to work for This stakeholder group is important because they define the company’s capabilities, such as the capability to innovate rapidly

Google’s CSR efforts address the interests of its employees as a major stakeholder group through compensation strategy which includes high salaries and various benefits, such as free meals and flexible workflows Google’s facilities are also fun workplaces where workers can exercise, play games and enjoy sharing ideas with each other

3 Advertisers and other customers

Advertisers are the main source of the company’s revenues These stakeholders are interested in getting effective services, such as effective online advertising campaigns Advertisers and other customers are an important stakeholder group because they directly determine Google’s financial performance

Google’s CSR efforts address the interests of advertisers and customers based on the firm’s popularity As noted, the prioritization of the stakeholder group of users makes the company popular In turn, this popularity increases the firm’s market reach and effectiveness Thus, advertisers and other customers benefit more from the firm’s services

4 Investors

Investors are interested in ensuring that Google grows its profits Investors are important stakeholders because they determine the availability of capital that the company uses in its business Google’s CSR efforts generally focus on providing useful products The usefulness of these products make them popular, widely used, and profitable

5 Governments

Governments affect Google through regulations The company deals with many governments because its business is global As stakeholders, governments are interested in ensuring Google’s regulatory compliance These stakeholders are important because they can approve or prohibit Google’s business operations

Google’s business philosophy states: You can make money without doing evil To follow this philosophy, the firm ensures that all of its business activities comply with regulatory requirements

6 Communities

Communities are interested in direct or indirect benefits that they get from the company Theoretically, firms can benefit communities through charity programs and related activities Communities are important stakeholders because they can affect customers’ perception and response to Google’s products

Google’s CSR efforts include charity programs through Google.org, which has already provided more than $100 million in grants and investments Google.org aims to address climate change, global public health, and global poverty In addition, to address the stakeholder group of communities, Google also includes international environmental standards and ethics in its Supplier Code of Conduct These efforts also relate with the firm’s philosophy: You can make money without doing evil

2 Do you feel there is any way Google can respect privacy and yet still maintain its profitability?

I believe that Google can respect privacy yet still maintain its profitability but Google, will be dealing with the battle for quite some time According to the text, Google relies on tracking along with other activities to maintain profitability, it has large stake in the privacy issue (p.471) Google has been working on updating their privacy policy to better comply with what the users want when it comes to their private information In 2012, Google revamped their privacy policy and combined all its information it gathered from its users from the different Google services Google drafted a 13-page letter answering all government questions (p.469) Google states that all users have the option of turning off certain features that collect users’ information The new policy also states that it would not impact the amount of data it gathers or deletes and that it remains highly committed to user privacy (p.469)

If Google can continue to follow this new policy where it commits to its user’s privacy and not have it conflict with its profitability then Google users will be happy Majority of Google users just want to make sure that when they use the Google search engine, their private information is secured and not leaked to hackers Google has the power to respect its privacy and maintain its profitability by keeping the two issues separate 3 What are some of the effects government regulation of the Internet might have on Google’s operations?

Since Google is a multinational company, it has numerous amounts of regulations to abide by, depending on the country’s laws and legal requirements Google understands that what can be legal in one country may not be acceptable in others (p.470) Government regulations that affect Google’s operations are Google operating in China, Google tracking its users, and surpassing its privacy policy China’s government is very