- Sundar Pichai took control of Alphabet late last year, inheriting a company with a bruised reputation. Now, he is leading it through the biggest storm of the company’s history.
- Pichai is grappling with a major hit to Google’s ad business, while juggling problems around hiring, regulation, and how the company manages its vast workforce of full-time employees and contractors.
- This week we’ll see the first effects of the pandemic on the company’s financials, with earnings to be announced on Tuesday.
- Visit Business Insider’s homepage for more stories.
Google’s weekly “TGIF” meetings used to be a place where employees would come together to discuss their work, ask executives questions, and share a drink, but late last year CEO Sundar Pichai announced that Google was scaling back these all-hands events.
What Pichai didn’t expect was that, a few months later, on March 26 2020, he would broadcast what might have been the most important TGIF session ever held to employees in their homes.
And he would be doing it as the CEO of Alphabet, not just its Google subsidiary.
Pichai, who was joined on the video call in late March with several product managers and health experts, discussed the importance of social distancing and how Google was adjusting expectations of employees across the company.
It was the first all-hands the company held since the outbreak — and the most obvious signal that the company was headed through its biggest storm yet, with Sundar now at the helm.
This week, when Alphabet announces its first-quarter earnings, we’ll see the first evidence of just how bad that storm might be for the company. Although Alphabet doesn’t give forecasts, Pichai’s recent memo to the company that it would slow hiring for the rest of the year served as a bellwether for what might be coming.
The company is also slashing its marketing budget for the second half of 2020, another sign that even Alphabet, with its massive war chest, isn’t safe from this. Business Insider first reported that the company could even see its ad revenue decline for the first time ever.
But there are parts of Alphabet that also will benefit from the current global situation. In its 4Q19 earnings, the company broke out its YouTube and Cloud earnings for the first time, and top Wall Street analysts tell Business Insider they have earmarked both of these as areas to grow as the world works from home and consumption of video content skyrockets.
At the same time, Pichai, whose 2019 compensation was worth $281 million, also has hinted at pulling back investment in some of the company’s “other bets,” telling Fortune earlier this year that the company might sell stakes to outside investors, similar to how it has with Verily. As the company learns to operate more frugally, the pressure to pull back on these longer-term bets will no doubt increase as the months go on.
All of this presents an extraordinary challenge for Pichai, who inherited a company with a bruised reputation. In the last two years, employees have protested several of the company’s practices, from its plans to build a search engine for China that complied with the country’ censorship rules, to revelations that the company reportedly handed Google executive Andy Rubin a $90 million exit package following a sexual-misconduct investigation.
As CEO of Google since 2015, Pichai was already handling some of these problems, but it wasn’t until last December — when co-founders Larry Page and Sergey Brin stepped aside — that he took control of the entirety of Alphabet.
Some current employees tell Business Insider they believe Pichai has already done a good job in making changes since Brin and Page departed, but said there was a growing distinction within the company between older employees with an axe to grind, and newer employees who don’t see the same problems.
Now, as Pichai steers the ship to safer waters, he is also grappling with Alphabet’s – and big tech’s – role in helping the world return to normal. In an interview earlier this month, the CEO said tech companies shouldn’t “get carried away” with tackling the coronavirus, and that it was ultimately up to governments and health organizations to lead the way.
But just days before this, Google and Apple announced an unprecedented partnership on a contract tracing technology that will work across iPhones and Android smartphones, telling users if they have come into close proximity with someone who tested positive for COVID-19.
Google has also begun providing anonymized location data to show which countries and regions are abiding by stay-at-home orders, and which aren’t.
But the more that Alphabet steps up, the more Pichai will be thinking about how tech regulators are perceiving its behaviour. Regulation shows no sign of backing down during the pandemic, and Google is already under investigation by the Department of Justice in a probe that extends across various parts of its business.
In a recent interview with Wharton, Pichai said “the best advice I can give is that when you’re working at scale, adopt a long-term view, listen to feedback, and make sure you get things right.”
With so many uncertainties, it will be difficult for Pichai to see the distance, but he may be exactly the steady hand that the company needs right now as it battens down the hatches for the weeks and months to come.
Google will announce its earnings after markets close on Tuesday. We’ll be following and covering the news as it breaks.