Google’s internal culture clash isn’t hurting its valuation–yet

Good morning. Fortune tech writer Danielle Abril filling in for Adam today.

Last week, Google’s parent Alphabet hit another big milestone. The company reached a market cap of $1 trillion just before the market closed on Thursday. Alphabet joins two other U.S. companies, Microsoft and Apple, in the exclusive club of the world’s most valuable companies. (Amazon was also once in the coveted group but has since dropped in value.)

But while Google, which raked in $136.8 billion in revenue in 2018, instills more and more confidence in investors, it’s plagued by rising dissent among its employees. With a new trillion-dollar feather in its cap, the burning question remains: How important is it for Alphabet to fix its internal culture clash?

If you ask Googlers, the answer is extremely. Employees have been outspoken about various issues including the company’s work on secret projects like a censored search engine for China and its reportedly poor handling of sexual harassment claims. In November, Google fired four activist employees, claiming that they broke company policies. The employees deny the allegations, saying the company was retaliating against their organizing work.

In the latest chapter of the culture war, on Jan. 2, Google’s former head of international relations Ross LaJeunesse wrote a Medium post detailing the company’s alleged dwindling concern for human rights and its mismanagement of diversity and inclusion issues.

“I’m not just telling a story of, ‘Gee, look at this shitty company that acts a different way,’” he told me a day after his post. “I’ve lived through the transformation. I didn’t change. Google changed.”

The situation got even stickier after Alphabet chief legal officer David Drummond recently stepped down following Alphabet’s investigation of the executive’s alleged inappropriate relationships with coworkers.

Meanwhile, Alphabet CEO Sundar Pichai has spent the last several weeks transitioning from his former role as CEO of Google and will now ultimately be charged with resolving employees’ concerns.

I spoke to a few former Googlers following the announcement of the change in leadership. While they relayed confidence in Pichai’s technical prowess and business acumen, some worried he isn’t available to handle some of the more sensitive issues as it relates to the company’s culture. (“There is … no better person to lead Google and Alphabet into the future,” the letter announcing his new role read.)

I’ll be interested in whether Pichai addresses any of the company’s culture concerns when Alphabet announces its third-quarter earnings on Feb. 3. But my bet is he’ll likely stick to what investors want to know: the bottom line.

* * *

Speaking of Google and parent company Alphabet, they finished at number seven on Fortune’s 2020 list of the World’s Most Admired Companies, which was released today. Tech dominated, as it has in recent years, with Apple topping the list, followed by Amazon and Microsoft.

Danielle Abril

Twitter: @DanielleDigest

Email: danielle.abril@fortune.com

This edition of Data Sheet was curated by Aaron Pressman.

NEWSWORTHY

Leave the gun, take the cannolis. Some smaller tech companies, including speaker maker Sonos and phone accessory maker PopSocket, testified at a Congressional hearing on Friday about their difficulties working with larger tech companies. Apple, Amazon, and Google were criticized for alleged anticompetitive behavior.

Avoiding a HAL scenario. As some of tech's top leaders head to Davos for the World Economic Forum, IBM is asking them to consider how best to regulate artificial intelligence. The company says rules are needed to eliminate biased A.I. and that companies should appoint a chief A.I. ethics officer. Alphabet CEO Sundar Pichai agrees. He gave a speech in Brussels on Monday calling for "a proportionate approach, balancing potential harms with social opportunities.” IBM CEO Ginni Rometty will be on a panel on the sidelines of the forum on Wednesday to discuss the proposal. 

The wheels of justice grind slowly. Speaking of international relations, Canada this week began extradition hearings to decide whether to send Huawei's chief financial officer Meng Wanzhou, who is also the daughter of the company's founder, to the United States to face fraud charges. Meng was arrested in Vancouver just over a year ago.

Clipping their wings. Worried that your TV is spying on you? Yes, that's a real thing now. But Samsung has your back, with a new app called Privacy Choices that allows customers to see and stop what data their TV is collecting.

On a diet. Now-public Uber is looking for ways to trim its losses, including by getting out of some businesses. On Monday, the company said it would sell its Uber Eats business in India to rival Zomato in exchange for an almost 10% stake in the startup, which was recently valued at $3.6 billion. Uber is also testing a feature in California to allow drivers to set their own prices, as the company moves to avoid having drivers classified as employees.

Over the transom. The new CEO of Best Buy, Corie Barry, is facing an investigation by the company's board into allegations of personal misconduct from an anonymous letter. The letter claims Barry had a relationship with another high-level Best Buy executive before she became CEO, the Wall Street Journal reports.

FOOD FOR THOUGHT

Beyond bitcoin and cannabis, one of the hottest sectors for startups last year was the fertility industry. As women have delayed having children until older ages, the challenges of getting pregnant have increased. Fortune's own Beth Kowitt reports on the $15 billion business of babymaking in a feature story called Fertility Inc. Reproductive endocrinologist David Sable has started a fund to invest in some of the new startups.

A prime example is the antiquated technology used to store frozen embryos and eggs. Historically, many embryologists started out in animal husbandry, and they brought their storage system with them when they began working with human embryos: glorified farm tanks full of liquid nitrogen, sometimes labeled by hand.

One of Sable’s portfolio companies, TMRW, is attempting to bring that system into the 21st century with robotic cryostorage. Better freezing technology for eggs and embryos has resulted in a spike in usage, leaving the old infrastructure struggling to keep up. TMRW estimates that the number of U.S. patients storing eggs or embryos ballooned from 17,000 in 2005 to nearly 700,000 in 2017. By 2025, the company expects that number to hit 2.6 million.

ON THE MOVE

Uber VP and head of new mobility Rachel Holt is leaving the company to co-found a new venture capital firm with former New Enterprise Associates partner Dayna Grayson. Their new firm, Construct Capital, will be based in Washington, D.C....One of Fortune's Most Powerful Women, lawyer Lisa Ellman, is joining Apple as a lobbyist. It isn't yet known what Ellman, who worked in the Obama White House and later co-founded the Commercial Drone Alliance, will focus on for Apple...Google hired tech entrepreneur Jewel Burks Solomon for the newly created position of head of Google for startups for the U.S. She keeps her role as managing partner at the investment fund Collab Capital...Cloud monitoring firm New Relic hired Adobe and former Microsoft exec Bill Staples as chief product officer.

IN CASE YOU MISSED IT

Facebook wants better A.I. tools. But superintelligent systems? Not so much. By Jeremy Kahn

A.I. is transforming the job interview—and everything after By Maria Aspan

Apple TV+ shows streaming-wars clout with renewals for series that haven’t yet debuted By Stacey Wilson Hunt

These new rules might end tech’s reliance on Chinese investors By Mira R. Ricardel

The free streaming option offered by NBC’s Peacock is a real threat to Hulu By Lance Lambert

5G’s side streets will be empty without fiber’s interstate By Jeff Storey

Yandex, Russia’s biggest search engine, is an on-ramp for child sexual imagery, experts say By David Z. Morris

BEFORE YOU GO

If you have never had the pleasure of experiencing the works of the Japanese artist Yayoi Kusama firsthand, you may want to make plans to visit Washington, D.C. starting in April. The Hirshhorn Museum is putting on an exhibit titled "One with Eternity" featuring much of her best art, including several of her iconic Infinity Rooms filled with mirrors. Smithsonian Magazine has a preview with some pictures, but it's really something best experienced in person.

Aaron Pressman

On Twitter: @ampressman

Email: aaron.pressman@fortune.com