CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

Google girds for battle against its employees over military contracts—again

November 8, 2021, 4:40 PM UTC

I’m Jacob Carpenter and I’ll be shepherding Data Sheet for the time being. After 10-plus years in newsrooms across the country, most recently at the Houston Chronicle, I’m looking forward to filling your inbox five days a week. Feel free to email me at jacob.carpenter@consultant.fortune.com with any suggestions, tips, or Michigan State trash talk. Now, let’s get into it.

***

Google wants to get back in business with the Department of Defense on a lucrative project that the company abandoned three years ago—and Michael Brown thinks he knows why.

As word circulated last week that Google wants a piece of the Joint Warfighting Cloud Capability contract, a project similar to the $10-billion government plan that thousands of company employees successfully lobbied to kill in 2018, Brown, the director of the DoD’s Innovation Unit, suggested that Google leaders are better prepared for battle with workers this time around.

“I think they were caught flat-footed by the fact that a well-organized group of vocal protestors—who are a fewer number of employees than their own [military] veteran population and families of veteran members at Google, a very large company, obviously—started to dictate an agenda of activism, which I don’t think the management was 100% behind,” Brown told an Aspen Security Forum crowd last week. (His full comments can be seen here, starting at 33:50.)

Brown doesn’t speak for Google—company officials issued a generic statement to the New York Times, saying they are “committed to serving our public sector customers” and “will evaluate any future bid opportunities accordingly”—but his comments suggest the tech giant is readying for a skirmish.

Already, the seeds of discontent have been planted. The 800-member Alphabet Workers Union-CWA, fresh off a headline-grabbing effort to restore a bonus program for temp workers, tweeted, “Workers will fight this—& we will win again,” while Insider reported a smattering of memes mocking the news on internal forums.

But if Brown is right, it could take a bigger outcry than in 2018 to stop the contract this time. While 4,000 employees signed a petition opposing the potential DoD contract three years ago, they represented roughly 4% of Google’s workforce. To Brown’s point, about 5% of Google employees are veterans or active military members, per the company’s 2021 diversity report, though some might oppose the company’s plans.

If a public battle ensues, the rules of engagement might be different. Unlike the 2018 contract, which was awarded to Microsoft before the DoD scrapped it, the feds are scaling back the dollar figure and likely divvying up the work between organizations. Google’s potential role in the JWCC also remains unclear, so it’s not clear whether any work would violate the company’s artificial intelligence principles, which include a commitment to not design or deploy AI used “to cause or directly facilitate injury to people.” These guidelines were put in place following the 2018 revolt and largely tied to fears that Google’s AI would contribute to more drone strikes.

Brown also noted that the Defense Department will more forcefully come to Google’s defense, making a stronger public case for the company’s involvement.

“Why should the Google management sit there and say no while Microsoft and Amazon are very excited about bringing unlimited computer power,” Brown said. Expect a fair number of Google employees to conjure a few reasons.

Jacob Carpenter
jacob.carpenter@consultant.fortune.com

NEWSWORTHY

Twitter has spoken: Sell, Elon, sell. The never-boring Tesla top executive unexpectedly asked the Twitter masses Saturday whether he should shed 10% of his stock in the company, valued at an estimated $21 billion as of the weekend. With 3.5 million votes cast, the result was a resounding “yes” (57.9%). Musk said he issued the proposal because “much is made lately of unrealized gains being a means of tax avoidance,” presumably a reference to Congressional proposals to tax billionaires’ unrealized capital gains—which he panned last month—and ProPublica’s series of stories examining tax records of the nation’s wealthiest individuals. Though as Fortune's Eamon Barrett notes, a massive tax bill hangs over Musk in the coming months. Musk hasn’t said when the selloff would happen.

Sam Altman goes all-in on nuclear fusion. The OpenAI CEO announced Friday a $375 million investment in Helion Energy, an Everett, Washington-based company aiming to commercialize nuclear fusion, according to CNBC. The technology is a holy grail of the energy industry; it provides all the power of the better-known nuclear fission generators operating today, with far less risk from radioactive material. But it remains something of a pipe dream at this point. Helion Energy hopes to complete a fusion reactor that produces more energy than it consumes by 2024. It has plenty of motivation to succeed: Another $1.7 billion in commitments is tied to specific milestones, per TechCrunch.

The taxman could be coming for crypto. The odds of cryptocurrency investors getting hit with a big tax bill increased Friday, as Democrats took a major step toward securing support for their multi-trillion-dollar climate and social benefits spending plan. The proposal, which gained steam following passage of a $1 trillion infrastructure package, would add cryptocurrency to the type of assets taxed through two rules already on the books. Bloomberg reports that the change would curb investors’ ability to hedge against potential losses to ease capital gains taxes, costing them an estimated $1.6 billion per year.

What’s old is new again in semiconductors. Got an aging chip-making machine sitting around the office? Might be time to dust it off and sell, the Wall Street Journal reports. The global semiconductor shortage is leading to demand for older equipment that can still churn out chips—many of which can still be produced on outdated machines. The chips can help power cameras, factory equipment controllers, and phone sensors, among other devices.

FOOD FOR THOUGHT

A Meta cautionary tale. As the former Facebook prepares to drive head-first into the future of virtual reality, Mark Zuckerberg and crew could learn a thing or two from another big corporate reimagination, writes Katie Canales at Insider. Six years ago, Google’s restructuring into Alphabet included big bets on novel, ambitious technology—much of which hasn't yet borne fruit. Makani and Loon were scrapped, Waymo is mired in leadership upheaval and DeepMind is bleeding cash. Those projects have sapped billions of dollars from Alphabet coffers with little to show, though perhaps it’s too early to judge their ultimate impact. Nevertheless, Meta would benefit from a bit more discipline than Alphabet.

From the article:

When Alphabet stood up, Google and its "Other Bets" endeavors—devoted to futuristic tech— were split into two buckets and housed under that umbrella. The latter included the Waymo self-driving car initiative and Loon, slated to transform broadband access with solar-powered hot air balloons.

But in the six years since, Google has moved at a glacial pace to drive some of its "moonshot projects" into mainstream use, as CNBC recently noted. While some have shown promise, others have been reabsorbed into Google, sunk loads of cash, spun off as separate entities, or been shuttered altogether.

And as Meta gears up to pour billions into its metaverse mission over the years, "we're seeing history repeat itself," Whitney Tilson, a former hedge-fund manager and the CEO of Empire Financial Research, told Insider.

Tilson says a major weak point for Google was creating an overarching framework in Alphabet. Instead, the company should have spun out its ambitious projects instead of keeping them under a parent company, where they were insulated from the market with Alphabet's pile of cash.

"Because it had access to unlimited capital with very little oversight, it has not achieved what it could have achieved as an independent company with its own board of directors where it had to go back to the market for capital by showing milestones," Tilson said.

IN CASE YOU MISSED IT

Last year, advertisers boycotted Facebook over hate speech. Today, they’re silent, by Felicia Hou

Beeple’s record-breaking $69 million NFT makes its public debut at NYC’s Dreamverse event, by Kylie Logan

New York City’s next mayor says crypto should be taught in schools, by Yueqi Yang and Bloomberg

Ethical leadership requires 6 qualities — and Mark Zuckerberg lacks two of them, argues a management expert from NYU, by Jane Thier

What scooter company Bird has planned after its public debut and a rocky 2020, by Jessica Mathews

Air purifiers and CO2 monitors are the new pencil and paper in classrooms, by Zara Stone

Facebook went ‘too far on the revenue side and not enough on the judgment side,’ says ex-Google CEO Eric Schmidt, by Emily Chang and Bloomberg

Peloton shows its tired legs after 2020 climb, by Phil Wahba

Jack Dorsey’s Square reports disappointing third-quarter sales due to a drop in Bitcoin-related revenue, by Kurt Wagner and Bloomberg

Some of these stories require a subscription to access. Thank you for supporting our journalism.

BEFORE YOU GO

Could Netflix be liable for libel? Six years after everyone and their brother watched Making a Murderer, the streaming giant is still battling a libel lawsuit filed by a retired Wisconsin police sergeant. Turns out, the villains of Netflix’s highly-watched narrative documentaries don’t always go quietly. Per The Hollywood Reporter, Netflix faces more active libel lawsuits than CNN, Fox News, The New York Times, and other traditional news organizations. The cases partially rest on what, exactly, Netflix is. A mere product distributor, like a movie theater? A tech company that can fall back on Section 230 protections? Or a content producer subject to sanctions for breaking libel laws? While Netflix faces lawsuits tied to When They See Us, Operation Varsity Blues, and its Jeffrey Epstein doc, Joe Exotic hasn’t yet joined the fray.

This is the web version of Data Sheet, a daily newsletter on the business of tech. Sign up to get it delivered free to your inbox.