Six Delusions of Google's Arrogant LeadersS

Google's CEO went to Abu Dhabi this week and preached. He sermonized about Google's exceptional virtue — its indifference to profit and supreme trustworthiness. His speech should have been shocking. Except that delusional self-righteousness is now routine at Google.

Eric Schmidt's comments at the Abu Dhabi "media summit" certainly sound especially cocky even considering the Google CEO's past haughty pronouncements. Schmidt, Fortune reports, implied Google is more trustworthy than any government on the planet after he was was asked asked about the company's worrisome stash of private data on its users, Schmidt :

"All this information that you have about us... Does that scare everyone in this room?" The questioner asked... "Would you prefer someone else?" Schmidt shot back... "Is there a government that you would prefer to be in charge of this?"

Schmidt also said Google has been known to curb its own creepy impulses:

"There are many, many things that Google could do, that we chose not to do... One day we had a conversation where we figured we could just try to predict the stock market. And then we decided it was illegal. So we stopped doing that."

Fortune wonders if Schmidt's comments are a sign of "a dangerous culture of self-righteousness." They are.

But the CEO's remarks are just the latest in a series of prominent self-righteous statements from Googlers. There have been plenty of similar cases just in the past couple of months alone. It's worth cataloging them, given Google's deep relationship with its millions of users, and given that the Mountain View internet company doesn't seem to be getting any more humble.

Delusion 1: It's not about the money

In Abu Dhabi, speaking to a diverse international audience, Schmidt said Google "sees itself really differently from other companies" because "we see ourselves as a company with a mission about information and not a mission about revenue or profits."

Here's what Schmidt said to a different crowd, of Wall Street analysts, in an October conference call: "We love cash." That's the full sentence he uttered. He had nothing to say on the call about Google's noble information "mission.

Come on, St. Eric: Google did not make $15 billion in profits over the past year on accident. The company exists to make money for its investors and executives. Period. And that's not something you'd have to apologize for if you'd drop the old saw about how Google is too virtuous to chase money and how it really just wants to make us all smarter.

Delusion 2: Google's wealth means Google "gets it"

Above is an extraordinary clip of Matt Cutts, a search engineer and defacto spokesman for Google. Asked on the podcast This Week in Google to address the disturbing privacy lapses in Google Buzz, which exposed one user's location to her abusive ex, and to address Schmidt's ham-fisted response, Cutts says he believes in Schmidt's handling of Buzz and "a lot of stuff" because Google's stock price is no longer "very very low" and thus the CEO "absolutely does get it."

It's a truly bizarre moment, in which Cutts defends some horrendous management decisions based on Wall Street trades. If the last two years have taught this country anything, it's that the connection between stock performance and executive competence is pitifully weak. UPDATE: Cutts has responded on his blog.

Yet Cutts is hardly alone in revering Google's financials. Schmidt looked at Google's unexpectedly strong third-quarter profits and said they made him "very optimistic now about the future," gave him "the confidence to be optimistic about our future" and made him "very, very happy with Q3." After a blowout fourth quarter Schmidt said "we are back in business full blast."

But at Google financial gains have not been correlated with innovation. The company still gleans nearly all its profits from its core, longstanding contextual advertising business; its many many side projects and acquisitions add little to the bottom line. So Google shouldn't get too excited to see its stock is up 77 percent the past year versus 59 percent for the S&P 500, or to be accelerating its hiring while national unemployment is stuck at 10 percent.

Profits do not mean you're connecting with users' most pressing needs. If that were the case then Microsoft, flush with revenue from its old-line Office and Windows businesses to this day, would have clobbered Google in Web search years ago.

Delusion 3: Google must sacrifice user privacy to grow

Google wanted a big debut for Google Buzz, its attempt to copy the likes of Twitter and FriendFeed. So it bypassed an established "beta" testing system and launched Buzz with no external trials. It also built Buzz into GMail to get more users. This ended up screwing users over on privacy; Buzz was automatically sharing their lists of most-emailed friends with the world.

And yet Google's contrition has been limited. The company response boils down to, "well that's unfortunate but it's also the way the world works now."

Original Google Buzz product manager Jyri Engstrom repeated this view in the above This Week in Google clip, in which he states it was "brave" of Google to risk users' trust for the benefit of Buzz, since it needs that trust so badly. See the clip above. He added:

What we're going to have to come to terms with is this stuff happening more. I honestly don't think it's a bad thing for people to be exposed to the issues this way.

So terrible privacy violations like sharing your location and work address with an abusive ex-husband and other unauthorized parties are the necessary costs of progress and not "a bad thing," according to one of the key engineers behind Google Buzz. In fact, they are learning experiences.

Engstrom said this, by the way, on the same podcast where the abusive ex-husband was discussed, so it's not like he didn't grasp the full implications of what had happened.

But he was hardly alone in framing privacy abuse as inevitable and necessary. In a later podcast, Cutts said that while Buzz perhaps needed more testing, rapid deployment allowed Google to get rapid feedback on Buzz and "iterate" quickly and "try out a lot of different things" (see latter half of clip above).

Translation: It's very effective for Google to use the actual relationships of actual humans to test unproven social networking code. And conveniently, Google doesn't have to endure the sometimes painful cost of this testing!

Of course, there's a more ethical alternative: Use consenting beta testers like the "Trusted Testers" Google has already organized to test innovative social products, rather than rushing into something to get big fast.

Delusion 4: Users are hungry for Google synergy

When Google launched Buzz, it thought people would by dying to see the product pop up all over the place: in Google GMail, Google Maps even Google search. Google VP Vic Gundotra openly talked about using those properties to promote Buzz in an interview with Silicon Valley blogger and startup advisor Louis Gray. See the short clip above.

But this sort of integration proved to be Buzz's biggest weakness: The combination of Buzz and Gmail cluttered up people's inboxes and, quite controversially, made it possible for Buzz to compromise users' privacy by combing their email logs. Google should have known such deep integration would be a bad idea because, as we noted the day Buzz launched, the company experienced a very similar controversy when it hooked Google Reader up to GMail two years ago.

It seemed unfair and sleazy, not convenient, when Microsoft started using its operating system to promote its online services, streaming media technologies and Web browser. Google isn't quite as suspect as Microsoft but, in the eyes of the public, it's increasingly getting close. Especially when it comes to search. And the public will be increasingly hostile to Google product bundles that are more about promotion than functionality.

Delusion 5: Google is a worker's utopia

Google brags about finding, and keeping, "the world's best engineers;" it even avoids offering jobs to some top coders to avoid an over-concentration of awesome. It takes pride in its notoriously lengthy and rigorous interview process, and in coddling workers once they clear it. The company certainly gets tons of free press for the free food and massages.

But the system seems increasingly broken.

Management has flip-flopped on the perks for example; Google honchos originally said posh benefits "save employees considerable time and improve their health and productivity... Expect us to add benefits rather than pare them down." Also, "these things [benefits] cost nothing." But come the next recession, Google was cutting way back and battling what executives described as presumptuous worker entitlement. "The culture was misinterpreted," Sergey Brin told a reporter. "That grew up into everybody's expectation... We decided to... significantly cut down all the snacks."

The hiring system, it turns out, was nearly rejecting Google's best employees and riddled with bizarre or terrible questions. And as for retention, some of Google's most ambitious employees saw their work buried; some complain until they quit.

Delusion 6: The outraged users are confused

Whenever Google's actions spark criticism, the first response of the self-regarding Google priesthood seems to be to insist the critics are simply bewildered at the company's complicated brilliance.

For example, in December Schmidt made a rather chilling statement on CNBC about secrets (which we were the first to highlight): "If you have something that you don't want anyone to know, maybe you shouldn't be doing it in the first place." The quote set off a firestorm of controversy.

Google rather absurdly argued that Schmidt had been misunderstood and taken out of context; in a statement circulated at the time its flacks claimed Schmidt was "talking about the US Patriot Act." Sure he was — after he gave his little lecture about the villainy behind secrets. There's plenty of context in the video clip we ran, reproduced above.

Schmidt also absurdly claimed to be misunderstood over Google Buzz. Speaking at the Mobile World Congress in Barcelona a couple of weeks ago, Schmidt went so far as to falsely deny any privacy breach occurred with Buzz, saying in effect that users were hysterical:

"People thought that somehow we were publishing their email addresses and private information, which was not true [it was]... It was our fault that we did not communicate that fact very well, but the important thing is that no really bad stuff happens in the sense that nobody's personal information was disclosed [it was]."

Schmidt said this after a civil liberties group had already issued a warning about Buzz's "serious problems" with "private information" and after Google's own Todd Jackson had said Google was "very very sorry" for getting millions of users "rightfully upset."

Schmidt was right that there's a lot of confusion around Google. Unfortunately for him, much of that confusion seems to originate in the company itself. Hopefully the Todd Jacksons of the company will have a chance to educate their peers on the realities of life outside the Googleplex. Eric Schmidt included.

(Matt Cutts picture by Andy Beal; Jyri Engström picture by Esther Dyson; Gina Trapani picture by Jared Goralnick)