Google Is Getting Ready for Its Turn
in the Washington Hot Seat
By Jon Swartz | Dec, 3 2018, 12:01am EST
Mr. Pichai is going to Washington.
As Facebook(Ticker: FB) faces another week under the searing scrutiny of regulators and the media, Sundar Pichai, CEO of Alphabet's (GOOGL) Google unit , is getting ready to take what could be an uncomfortable turn on the Beltway.
Pichai, who has been noticeably quiet the past year while peers Mark Zuckerberg, Sheryl Sandberg, and Jack Dorsey were grilled by federal lawmakers, was scheduled to speak before the House Judiciary Committee on Wednesday. That hearing was postponed Monday as both Washington and financial markets made plans for Wednesday mourn the death of former President George H.W. Bush. Pichai was also due to attend a White House briefing on technology with other tech execs such as Microsoft (MSFT) CEO Satya Nadella and Qualcomm (QCOM) CEO Steve Mollenkopf on Thursday.
Whenever Pichai does appear on the Hill, the issue of privacy and Google’s considerable sway over personal data as one of the biggest Internet companies in the world is sure to be in focus. Google commands 90% of the global search market, and has access to the personal data of hundreds of millions of people.
Google declined to comment on the hearing.
Rep. Bob Goodlatte (R., Va.), chairman of the Judiciary committee, confirmed it in a statement: “Americans put their trust in big tech companies to honor freedom of speech and champion open dialogue, and it is Congress’ responsibility to the American people to make sure these tech giants are transparent and accountable in their practices.”
Google’s turn under the spotlight is overdue. Its absence reached a level of absurdity when the company refused to send a top-level executive to the Senate Intelligence Committee hearing in September attended by Twitter (TWTR) CEO Dorsey and Facebook Chief Operating Officer Sandberg. Instead, Google was famously represented by an empty chair.
But pressure mounted in recent months, leading to Pichai’s visit. In late September, Pichai met with Rep. Kevin McCarthy (R., Calif.), a vocal critic, and other Republicans who claim the company isn’t a neutral forum. Google, which disputes McCarthy’s claims, says officials representing the company have testified before Congress 22 times since 2008.
The company’s duck-and-cover strategy came under more pressure when news surfaced in October that it remained tight-lipped for seven months about a bug that gave outside developers access to private data for 500,000 Google+ members. (The company said it found no evidence of misuse, but chose not to go public then, fearing repercussions, according to a memo first reported by The Wall Street Journal.)
“This Google+ bug and Cambridge Analytica are symptoms of the same problem: huge companies with mountains of user data, flawed APIs, and lax developer guidelines,” Gennie Gebhart, associate director of research at the Electronic Frontier Foundation, told Barron’s in a phone interview.
The issues Google had been able to dodge for most of the year now engulf it—and that’s should be worrisome for tech companies that rely heavily on customer data for revenue. Indeed, as companies collect more data to sell advertising, they have become richer targets for attackers.
Digital-security company Gemalto said there were 945 security incidents reported in the first half of 2018, down 18.7% from the 1,162 breaches disclosed in the first six months of 2017, but much more data was exposed. In the first half of 2018, 4.5 billion records were compromised.
It’s all part of an evolving narrative in which tech companies position themselves as the most trustworthy with data. Privacy advocates Apple (AAPL) and Amazon.com were reportedly exposed to malicious chips inserted by Chinese intelligence operatives in the supply chain there, so it isn’t a stretch to say data is a four-letter word for FAANG these days— Netflix (NFLX) being the notable exception. (Apple and Amazon adamantly deny the report.)
Ultimately, a company’s standing in an increasingly data-sensitive society depends on trust, Rob Bernshteyn, CEO of Coupa Software (COUP), a cloud-based company, told *Barron’s* in a phone interview. The steady beat of high-profile breaches, he says, may finally prompt consumers to take more interest in privacy matters after years of indifference.