Tesla Probes, Walmart Wins, Nvidia Trips: CEO Daily for August 17, 2018

Good morning. David Meyer here in Berlin, filling in for Alan.

Google’s ambitions for building censor-friendly Chinese search and news aggregation apps face an enemy within. There had already been rumblings about employee discontent, but now the internal pushback against the “Dragonfly” initiative is plain to see.

As initially reported by The New York Times, as many as 1,400 Google employees have signed a letter complaining that they “currently…do not have the information required to make ethically-informed decisions” about their work, projects, and employment.

They aren’t happy that they only found out about Dragonfly through news reports this month, the letter notes: “That the decision to build Dragonfly was made in secret, and progressed even with the AI Principles in place makes clear that the Principles alone are not enough. We urgently need more transparency, a seat at the table, and a commitment to clear and open processes: Google employees need to know what we’re building.”

The letter also references the internal revolt over Project Maven, the Pentagon deal in which Google AI was to analyze drone footage—a role that some at Google saw as potentially helping to mark people for death.

Are Google’s employees (well, some of them) right to push back in this way? Opinions are divided on that front, but here’s what’s clear: nobody should be surprised to see this sort of internal activism gaining pace, particularly at a company like Google.

Google has always painted itself not just as a mission-driven organization, but also as a values-driven place to work. On the one side, its employees have the directive “to organize the world’s information and make it universally accessible and useful,” which is why some say it’s important to be present in China, no matter what that takes. At the same time, they signed a code of conduct that literally tells them: “Don’t be evil, and if you see something that you think isn’t right—speak up!”

Well, they’re doing just that. But are these Google employees right to see acquiescence to Chinese censorship as the wrong path? Again, they can’t be blamed for taking their cue from the top. When the company pulled out of China in 2010, co-founder Sergey Brin (who is still their boss, as president of parent company Alphabet) stressed how “opposing censorship and speaking out for the freedom of political dissent” was Google’s “key issue.”

Here’s what Brin said then about the argument that being present in China is more useful than absence: “You can always make the argument that a little bit is better than nothing. At some point you have to stand back and challenge this and say, this goes beyond the line of what we’re comfortable with and adopt that for moral reasons.”

Google’s internal dissent is supposed to be part of its corporate culture. Let’s hope the company’s leadership keeps that fact in mind as it deals with the current revolt.

More news below, and have a good weekend, everyone.

Top News

Tesla Probes

Turns out the SEC was already on Tesla's case before Elon Musk's now-notorious "funding secured" tweet. The regulator opened an investigation last year into whether Tesla misled investors about its production problems relating to its Model 3. The SEC reportedly subpoenaed a parts supplier as part of that probe. Wall Street Journal

Walmart Wins

Walmart's shares soared by 9% after the retailer posted strong sales that demonstrate resilience against Amazon's onslaught. It wasn't just sales—store visits were up. Walmart has now raised its guidance for annual results. However, rising commodity and transportation costs brought down the company's Q2 operating income 3.7%. Fortune

Nvidia Trips

Nvidia's share price fell 6% yesterday thanks to low revenue guidance, despite solid earnings. The graphics card firm saw fiscal Q2 revenue increase 40% year-on-year, but its expectations for Q3 are $3.25 billion rather than the $3.34 billion analysts were hoping for. That estimate excludes Nvidia's cryptocurrency products—graphics cards are well-suited to and frequently used for cryptocurrency mining. CNBC

Amazon Theaters

Amazon is reportedly looking to buy the indie-focused Landmark Theaters chain, which is currently owned by Wagner/Cuban Cos. The move, if it happens—and it still might not—would give Amazon a bricks-and-mortar distribution network for its content. Interestingly, the news of the talks boosted shared in AMC and Cinemark, on the basis that it showed Amazon wasn't trying to destroy the traditional cinema experience. Bloomberg

Around the Water Cooler

Chipotle Retraining

After last month's mass food poisoning incident at an Ohio restaurant, Chipotle has decided to retrain all its staff in food safety. A series of food poisoning episodes has brought down the company's share price, and the chain now says it will change its cooking methods to tackle the problem. CNN

Not So Original

A Chinese tech startup called Redcore proudly asserted that it had developed an original Chinese web browser, only to climb down and admit the thing was based on Google's Chrome. The ruse was rumbled when people found Chrome files in the browser's installer. "The web browser is a very old technology," said CEO Chen Benfeng. "Writing the code from scratch will take many years. It’s like Android was built on the foundation of Linux, but nobody doubts Android or Google’s innovation. Google and Apple also did not write the first line of code, doing so would be reinventing the wheel." South China Morning Post

Trump Parade

President Trump's big marching day won't happen this year, sadly. Urged by the president after he attended France's Bastille Day parade, the U.S. military parade was slated for November and was originally supposed to cost in the range of $10-$30 million. Yesterday, officials admitted the real cost would be around $92 million. And the Pentagon now says the Defense Department and White House have "agreed to explore opportunities in 2019" instead. BBC

Aretha Franklin

The Queen of Soul passed yesterday, and everyone lined up to pay tribute. Here's how the likes of Tim Cook, Ava DuVernay, Paul McCartney and Hillary Clinton paid their R.E.S.P.E.C.T.S. Fortune.

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.

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