Comments on: Google's resistance and corporate social responsibility

By: Conrad

Conrad — Mon, 23 Jan 2006 07:02:03 +0000

"my beef is with those who see a moral imperative here. Google has no obligation to resist stupid government actions at its shareholdersâ€™ expense."

I entirely agree. My only point here is that a short-term decline in share price is not proof that such resistance is indeed contrary to its shareholders' interests.

By: Michael Guttentag

Michael Guttentag — Mon, 23 Jan 2006 05:45:14 +0000

Notwithstanding your causal empiricism, I think you raise a valid and interesting issue here.

By: Geoffrey Manne

Geoffrey Manne — Mon, 23 Jan 2006 03:24:05 +0000

I don’t doubt that resistance might be in shareholders’ interest — see, e.g., Larry’s post here (http://busmovie.typepad.com/ideoblog/2006/01/google_corporat.html). And I would concede that defense of Google’s brand might support resistance here, even if its product weren’t actually affected. And with respect to drawing inferences from share price changes, although I think the casual empiricism here is warranted, caution is also warranted, as Mike Guttentag suggests in response to Larry’s post (the one I just linked).

But my beef is with those who see a moral imperative here. Google has no obligation to resist stupid government actions at its shareholders’ expense. Social welfare — even on the internet — will be served by businesses acting like businesses, not law professors (see #3 and #4 above).

And yet, I hasten to add, there are many in the blogessoriate (is there any word that can’t be combined with “blog” to great effect?) who seem to seek at every opportunity to tar the participants in the “new economy” with obligations of precisely this sort, as if internet businesses are uniquely responsible for maintaining someone else’s vision of a utopian cyber world. I think that’s a mistake. And maybe the collective wisdom of Google’s shareholders does, too.

By: Billy

Billy — Mon, 23 Jan 2006 02:47:32 +0000

Could it be that the move is, in the long run, better for the bottom line, and that Google is in fact looking out for its shareholders? There’s certainly an argument that a service that protects its users’ privacy from unjustified government searches will garner more use, and thus more advertising revenue, which will eventually be reflected in the market price of shares.

At any rate, I think Google’s management is entitled to the benefit of the (business judgment rule) doubt. I know -I’m- more likely to search on it than Yahoo or MSN (not simply because of this, but the move certainly reinforces the fact that I’ve been consistently making the right choice).

By: Conrad

Conrad — Mon, 23 Jan 2006 02:45:05 +0000

Your discussion assumes that a firm’s share price accurately reflects the long-term effect of Google’s resistance on Google’s profitability. Perhaps it does. Or, perhaps Google’s management, in possession (as they are) of non-public information, have concluded that the firm’s resistance will have no, or even a long term positive, effect on Google’s profitability.

A Company’s management makes a decision that it believes is correct. The market disagrees and reacts reacts by selling of the firm’s stock. It happens all the time and sometimes, it turns out, that management was right and the market was wrong.

By: Ideoblog

Ideoblog — Sat, 21 Jan 2006 23:18:27 +0000

Google, corporate social responsibility, and reputation…

On Googleâ€™s resistance to a government subpoena of its records, Dan Solove applauds Googleâ€™s action on principle. Geoff Manne says Google does not have a duty here to saddle its shareholders with the cost of saving the world from itself….