Google CEO Sundar Pichai bowed to Trump during the company's earnings call — here's why that should concern you (GOOG, GOOGL)

Susan Wojcicki Sundar Pichai

Google CEO Sundar Pichai made a point of trumpeting the company's contributions to the US economy during the company's Q3 earnings call on Thursday.
It was an unusual move, likely aimed at appeasing criticism from President Donald Trump and his followers.
While it's great that Google is contributing to the US, the company's need to wrap itself in the American flag does not bode well.

Something interesting happened during Google's quarterly earnings report on Thursday and it had nothing to do with the cost-per-click, the traffic-acquisition-cost or any of the other arcane metrics that Wall Street folks love to geek out over.

In fact, what happened on the investor call wasn't intended for investors at all. The intended audience was the man in the White House, and Google didn't try to be very subtle about it.

As Google CEO Sundar Pichai neared the conclusion of his prepared remarks, he noted that Google parent company Alphabet is investing "closer to home." In the third quarter, he pointed out, "more than 80% of Alphabet's total cap-ex was in the US."

"Not only do these investments in datacenters, machines and offices allow us to bring great services to our users, they have a strong positive impact on the communities around them, supporting thousands of jobs and countless local businesses. This year to date we added more than 9,000 new employees in the US and we continue to grow faster outside the [San Francisco] Bay Area than within it."

It's not the kind of detail that Google — one of the least transparent companies when it comes to its business — typically goes into during its earnings reports. But these are not ordinary times, and Google, like many of its Big Tech peers, is doing whatever it can to wrap itself in the American flag and show what a good citizen it is.

Maybe it's because US Attorney General Jeff Sessions has said he wants to investigate internet companies for supposedly stifling conservative speech. Or maybe it's because Trump's 2020 campaign manager has called Google a "threat to the republic."Or perhaps because Trump himself has accused Google of rigging its search results against him (it didn't).

Trump tech meeting

Google is also on the defensive because of its decision not to pursue weapons-related contracts with the US Department of Defense, a policy which other Trump punching bags like Amazon CEO Jeff Bezos have pounced upon, as if to improve their own image with the president.

Let's be clear, the fact that Google is investing 80% of its capital expenditures in the US is obviously a good thing. Google spent $5.3 billion in cap-ex during the third quarter, so that's real money, and a lot of it.

But chances are that money was always intended to be spent in the US. One of the key line items of Google's capital expenditures are datacenters, giant infrastructure projects that take years of planning.

The only thing that's changed is the sudden need for Google to loudly proclaim its patriotic bona fides. For a company as powerful as Google, the unusual flag-waving is a stunning show of deference to, and likely fear of, the White House.

Yes, right now Google is singing to the commander-in-chief about some very laudable achievements. But there are lots of dangerous "Make America Great Again" policies of which Google has been a vocal opponent, from the travel ban that targeted people from Muslim-majority countries, to transgender rights.

A lot of vulnerable people depend on powerful entities, even profit-driven corporations, to champion their causes.

Now that Google has gotten used to bending its knees and kowtowing, what will it say, or do, the next time it needs to curry favor with Trump?

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