Lessons from Google CEO Sundar Pichai’s Congressional Testimony

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Wharton's Senthil Veeraraghavan and Northeastern University's Andrea Matwyshyn analyze the Google CEO's testimony before Congress.

Google CEO Sundar Pichai’s recent Congressional testimony revealed the face of a social media giant willing to resolve concerns over user privacy and transparency in how its data is used. The hearing covered issues such as a suspected political bias in its search algorithms and concerns that Google might be preparing for a relaunch in China by skirting around censorship and other restrictive policies. Yet, even as members of Congress grilled him for more than three hours, some issues escaped scrutiny or didn’t receive adequate treatment, according to experts from Wharton and elsewhere. These include Google’s efforts in user education and the level of freedom that its employees enjoy.

“The big takeaway is that trust is the currency of this generation of innovation,” notes Andrea Matwyshyn, professor of law at Northeastern University and an expert on information security and consumer privacy. She believes that while data may have been the driver of the last decade of building out new companies, “the challenge that exists now relates to maintaining the engagement of companies, products and services with the consumer base, and that is going to be driven by trust.”

Several important issues were conspicuous by their absence, or briefly raised, but not followed through sufficiently. One of the “smartest” questions came from Republican congresswoman Karen Handel from Georgia, about Google “asking users to opt in versus opt out from a variety of services,” according to Senthil Veeraraghavan, Wharton professor of operations, information and decisions. “That is very relevant to a lot of users,” [but that] question “didn’t go anywhere because Pichai didn’t want to broach that topic.”

Matwyshyn and Veeraraghavan discussed the takeaways from Pichai’s testimony on the Knowledge@Wharton radio show on SiriusXM. (Listen to the podcast at the top of this page.)

Earning Users’ Trust

Matwyshyn compared trust-building in the social media sector with the efforts of the Securities and Exchange Commission in regulating financial markets. “They analyze the ability of consumers to understand what’s going on with the products and services they use and whether the marketing practices are fair and not deceptive,” she said. “[It is about] how to converge the current fast-and-loose innovation economy with a robust trust architecture to ensure that the next generation of innovation doesn’t burn out the goodwill of the American consumer base for technology, but instead builds on the success stories that we’ve seen in companies like Google, Microsoft and Facebook.”

Pichai did well in stating Google’s commitment to building that trust, according to Matwyshyn. “He was trying to reinforce implicitly or explicitly the seriousness with which Google views itself as trying to build trust, whereas the testimony of [Facebook CEO Mark] Zuckerberg did little to create a feeling of reinforcing trust and created the sense of a company that is interested more in its bottom line than in defending its consumer base,” she said. “This is going to be the differentiator across the major technology companies that consumers will increasingly notice. The level of disgruntlement among consumers and regulators will map the trustworthiness of various companies and their brands driven by the headlines of privacy issues, security breaches and the general transparency with which users have a fair shot at understanding what is going on with their information.”

“The big takeaway is that trust is the currency of this generation of innovation.” –Andrea Matwyshyn

Matwyshyn explained how social media users might struggle with the lack of transparency in how exactly information about them is used. “Today, the vast majority of users – myself included, and I study this stuff for a living – cannot tell you at any given moment which apps are doing what on our phones,” she said. ‘If some weird command gets executed, I’m not sure which app initiated that and why data that started in app 1 suddenly appears to have triggered advertising in app 2.”

The challenge for companies like Google is to bring transparency to those flows of information “so that average consumers can understand what’s going on,” Matwyshyn said. “That’s what consumers would view as a transparent model, and that helps them trust the companies that they’re doing business with. That’s at the heart of what the members of Congress who were seeking clarification on privacy were getting at.”

Veeraraghavan agreed with Matwyshyn. “Having operational transparency is one of the keys to improved trust, and firms need to be very clear about what kind of data they collect, what is important to them, how they use that data and how it benefits consumers,” he said. “It’s not that the consumers object to data being collected all the time. It’s just that understanding how it is used and in what ways is important for consumer experience.”

Google’s China Syndrome

Among the most engaging exchanges between Pichai and his questioners was on Google’s activities and plans in China. The issue became controversial after The Intercept magazine published a report in August that Google is working on a project codenamed “Dragonfly” in preparation for a launch in China. According to that report, Google is planning to launch “a censored version of its search engine in China that will blacklist websites and search terms about human rights, democracy, religion, and peaceful protest.”

Pichai told Congress that Google at present does not have plans to reenter China, but he did not rule it out. Google pulled out of China in 2010, a decade after launch, after much wrangling with the Chinese government over censorship issues. Pichai clearly knew this was sensitive territory. “That was the one place where Pichai was seeking to choose words carefully and to minimize the length of time that the discussion continued,” Matwyshyn noted. A group of Google employees has publicly asked their employer to cancel Project Dragonfly.

Veeraraghavan noted that Pichai’s responses to questions about Google’s China plans reminded him of former Google CEO Eric Schmidt’s recent comment that within the next decade there would two distinct internets – one led by the U.S. and other by China. “Google seems to be moving in that direction a little bit,” he said. “I wish I had heard more on that; we did not get much clarity on that story.”

Matwyshyn agreed with Veeraraghavan. “This may hint at a fundamental shift in Google’s corporate position on engagement with less free regimes,” she said. “If that is what’s happening internally – a conscious shift in what Google’s engagement [with China] has been in the prior decade – certainly shareholders will be interested in hearing directly.” At the same time, she noted that it is “not necessarily something that leadership would want to advertise – that they have gone from where they started with the ‘don’t-be-evil’ motto all the way to maybe engage with some regimes that many people would view as evil.”

It isn’t easy for Google to decide whether to reenter the Chinese market. “This is a tremendously large market with nearly a billion smartphone users” that has the potential for further growth, Veeraraghavan said. “Google has had to somehow triangulate between its policies on freedom and privacy on the internet versus monitoring, censorship and regulation in China.”

Veeraraghavan noted that the company’s market share in China is “very low” compared to homegrown rival Baidu, for example, and that it “is a struggle” for many internet firms to penetrate that market. Amazon has had problems in China, and Uber has withdrawn from that market (after selling its business to local rival Didi Chuxing), he pointed out. Greater clarity will emerge on Google’s strategies in China and in other areas as the U.S. Congress continues to engage with the company, said Matwyshyn.

Digital Divide

The exchange between Pichai and members of Congress revealed also “the digital divide between Congress and the government [on the one hand], and how Silicon Valley is,” said Veeraraghavan. Silicon Valley’s technology companies have long been targeted by Congress over issues of privacy, fake news and political bias. He noted that most of the questions directed at Pichai were about political bias in Google’s search results, which many Republicans believe favored Democrats.

However, there were “kernels of constructive suggestions for Google to ramp up operations in a way that better engages with users to help them receive the services that they want and to understand what’s going on,” said Matwyshyn. She pointed to a “valid critique” from one congressman that when he clicked on his Google News timeline, he doesn’t see the most recent news reports first, and that his television interviews don’t show up in his news feed.

“Having operational transparency is one of the keys to improved trust.” –Senthil Veeraraghavan

Members of Congress were able to pin down Pichai in a few instances. Matwyshyn pointed to the “pushback” that Pichai received on user education, which she thought was “rightfully placed.” The terms of use and privacy policies on all the major websites are in many cases “not at all understandable to an average person,” She noted. “I’m sure Google spends millions of dollars a year in ‘usability testing’ of some of their products, but probably zero or [little on] usability testing of the terms of use – the legal language that requires meaningful consent from consumers.”

A few members of Congress didn’t come across as being “technologically sophisticated,” said Matwyshyn. Some questions about political bias were “potentially disingenuous and lacked a robust understanding of how Google’s corporate culture works,” she added. For instance, they seemed to overlook the fact that “the company has a right to a political opinion.”

Unfinished Agenda

Matwyshyn saw a need to pursue issues related to employee freedom at Google. She pointed to Pichai’s exchange with Pramila Jayapal, a Democratic representative from Washington state, over Google’s policies on the so-called “forced arbitration” provisions in its agreements with employees. That means employees cannot go to court in the event of disputes with Google and must resolve them through arbitration. “While that sounds boring and legal, that is an issue that resonates with workers throughout the country,” she said. Google is not alone here; employees at other Silicon Valley companies have pushed back against their employers on this issue.

According to Matwyshyn, forced arbitration extends more broadly to “worker conditions and workers’ free speech,” and has “meaningful ramifications for employees who are treated unfairly in the workplace” or who may want to talk about their employment after leaving their jobs or starting new businesses. Pichai told Jayapal that Google is looking into this issue.

At the same time, Matwyshyn thought Pichai was less forthcoming in addressing questions about Google’s corporate culture. “Pichai could have been a little more aggressive in explaining that the corporate culture of some technology companies such as Google is to create a welcoming environment for employee exchange,” she said. In such environments, employees from both ends of the political spectrum would have the freedom to air their views. In fact, the company would be cited for violating labor laws if it tamped down on employee rights to free speech, she noted.

Veeraraghavan said Pichai may be able to successfully address nagging issues related to Google’s corporate culture. “Pichai grew through the company, understands its culture, intends to change it and I see him as a person who could move to resolving some of these problems, compared to other companies run by founders.”

Data Privacy and Regulation

On data privacy, Matwyshyn wasn’t satisfied with the level of clarity that emerged at the Pichai hearing. Google has been experimenting with different kinds of dashboards for users and is also “willing to more directly engage with Congress on privacy regulation,” she noted. She also said that Google has “traditionally been pretty good on security and a concern for privacy, because of the way its business model is structured.” Its business model depends on pairing audiences with advertisers, she pointed out.

However, she saw “room for improvement” for Google in user education. She compared Google’s dashboards with Apple’s Genius Bar, a tech support station inside Apple’s retail stores. “There is a physical place where a human being can personalize a tutorial to help a user understand how to engage with the product,” she said. One Congress member’s complaint to Pichai that Google’s dashboards are hard to operate “is a valid critique,” she added.

Designing appropriate regulation for companies like Google is one of the next steps after such hearings, according to Veeraraghavan. “These firms have been great for consumers,” he said, explaining that consumers have benefited from access to more products and transparency on prices. “But there are other concerns like data privacy. There needs to be more examination of this. What we learned from the congressional testimony brings out salient points that we as consumers haven’t thought about. These continued examinations are a good way to constantly rethink these companies and how they position themselves in the world.”

Matwyshyn thought Pichai came across as “far more respectful of members of Congress” than Facebook founder and CEO Mark Zuckerberg in his Congressional hearing in April this year in the wake of a scandal involving data analytics firm Cambridge Analytica improperly accessing and using Facebook users’ personal data.

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