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Alphabet Harassment, GE Probe, Facebook Strategy: CEO Daily for October 31, 2018

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

Alphabet’s “moonshot” unit, X, has lost one of its hotshots. Per Axios and CNBC, director Rich DeVaul left the company yesterday without any exit package, following claims detailed in an extensive New York Times piece last week about rampant sexual harassment and inappropriate behavior at the company.

According to that report, DeVaul told a female engineer who was applying for a position at X that he and his wife were polyamorous. Then he invited her to the Burning Man festival, where he asked her to remove her shirt for a back rub. She agreed only to a neck rub, then discovered later that she didn’t get the job. DeVaul claims X had already decided not to hire her, and he didn’t know she was unaware of this when she came to the festival.

The star of that Times piece was Andy Rubin, Android’s creator, who left Google four years ago with a $90 million exit package after allegedly—he denies it—coercing an employee into performing oral sex on him. The company’s protection of Rubin went unreported until last week. There’s also a reference to Alphabet’s now-chief legal officer, David Drummond, who had a child with an employee working in the legal department; when he admitted to the relationship, which was discouraged under company rules, she was the one who got transferred out of the division.

To protest the events that have been revealed, more than 200 Google engineers are planning a “women’s walk” walkout tomorrow. “I feel like there’s a pattern of powerful men getting away with awful behavior towards women at Google‚ or if they don’t get away with it, they get a slap on the wrist, or they get sent away with a golden parachute, like Andy Rubin,” one employee told Buzzfeed.

Sensibly, Google CEO Sundar Pichai is not pushing back against the walkout, telling employees in an email that human resources would “make sure managers are aware of the activities planned for Thursday and that you have the support you need.”

“I understand the anger and disappointment that many of you feel,” Pichai wrote. “I feel it as well, and I am fully committed to making progress on an issue that has persisted for far too long in our society…and, yes, here at Google, too.”

As Pichai noted, Google needs to do more to ensure it takes “a much harder line on inappropriate behavior.” To be meaningful, this will surely have to be a cultural change that involves re-evaluating the consequences for executives who abuse their positions of power, no matter how valuable those individuals are to the company. And whatever the future brings, it’s unfortunate that it took press exposure to bring the company to this point.

More news below.

David Meyer
@superglaze
david@dmeyer.eu

Top News

GE Probe

Yesterday was a big day for GE. Not only did it slash its dividend to a penny (from 12 cents) and announce the separation of GE Power into discrete units, but it also revealed a new criminal probe into its accounting practices. The Justice Department’s probe comes on top of an SEC inquiry, the scope of which has apparently just been expanded. GE’s shares fell 8.8%. Wall Street Journal

Facebook Strategy

Facebook is investing strongly in video and disappearing “stories” rather than its news feed, as the social network reaches saturation point in the U.S. and Europe, where advertising is most lucrative. Having set low expectations for Q3 and Q4 earlier this year, Facebook missed analyst estimates on revenue and user numbers. Still, investors seemed OK with its 33% jump in Q3 revenue and year-on-year user growth of 10%—shares were up 3.1% in extended trading. Bloomberg

Ford and Baidu

Ford is going to spend a couple years testing self-driving car technology in China in partnership with local online giant Baidu. The companies, which will test autonomous vehicles that require no intervention from a human driver, have already been fitting Baidu’s Apollo system to Ford’s cars. On-road testing will begin before the year is out. CNBC

Steel Deal

The European Commission is to open an in-depth competition probe into the planned merger of Tata Steel and Thyssenkrupp. The Commission is concerned that the deal, which would create Europe’s second-biggest steel producer, would harm competition and raise prices. BBC

Around the Water Cooler

Dimon and Saudi Arabia

JPMorgan Chase CEO Jamie Dimon says the decision by himself and other banking executives to pull out of Saudi Arabia’s “Davos in the Desert” investment shindig achieved “nothing.” He suggested the move, which followed the Saudis’ internationally-condemned killing of journalist Jamal Khashoggi, was about optics, saying: “We couldn’t be seen to be in any way condoning that behavior.” Bloomberg

SoftBank Mobile

SoftBank’s mobile phone business is preparing for a December IPO that could be the largest in history. To get in on the underwriting action, investment banks have reportedly agreed to fees of just 1.5%. In Japan, fees of around 4.5% are more typical. Financial Times

Super Micro

Server maker Super Micro, said in a highly contentious Bloomberg piece to have Chinese spy chips in some of its products, has told U.S. lawmakers that it looked for malicious hardware on its motherboards and found nothing. “We believe that it is impossible as a practical matter to insert unauthorized malicious chips onto our boards during the manufacturing process,” the company said in a letter to senators Marco Rubio and Richard Blumenthal. South China Morning Post

Roaming Fees

British people are likely to lose the ability to use their cellphones in the EU without incurring hefty charges, following Brexit. The EU got rid of internal roaming fees by law a few years ago, but after the U.K. leaves next year, its mobile operators will be free to reinstate whatever charges they like, as the British government is not intending to maintain the ban. New European

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