I think merging Waze and Google Maps teams is actually smart, whether it cuts cost or not seems like they have similar goals as a product.
That said, doesn't mean Alphabet won't head some investors letters or something, so its always possible
[0]: https://capital.com/alphabet-shareholder-who-owns-most-googl
These people are not forced to make more money at the expense of others. It's their choice.
If the threat is that unloading a position will cause a dip in shareholder value of $X, but those actually in control believe their own thesis and operating model is worth more than $X, then they can choose to weather the storm, believing their way will negate the loss of $X.
If they really don't have an answer to the activist investor's thesis, then yea, they'll roll over.
Don't be that kid.
More likely, though I haven't read their letter in depth, is that their beliefs actually aren't that far out there - I mean, you probably aren't going to get pushback from anyone if you say "Google is bloated and needs to trim and focus". So they write a letter and make some noise, and then when Google makes some rather unsurprising changes they can say something like "look how influential and prescient we are", and that has value in the investment world.
Only if the Waze teams takes over for the Maps team..
Google Maps is TERRIBLE app, I hate it. and if the Maps team is going to start messing with Waze it will be ruined
Then in my last trip I tried using it to find gas stations on my drive and it was a huge pain in the ass. It was once again impressive in how bad it was.
Waze has some nice features, but it's janky af. Google Maps is considerably better in almost every way. Waze is useful to see speed traps and has more information about gas prices. (Much less helpful in getting you TO those gas stations, though.)
I would never use anything other than driving directions
I only walk to and from my car, and i do not own a bike, and if a business does not have parking less than 300ft from the door I am going to a different business
Seriously, Google Maps being a all-caps TERRIBLE app? Come on. It's basically the gold standard.
In NYC, it often makes absurd suggestions - I once got in an uber on 33rd and 2nd trying to get to penn station on 31st and 7th avenue. Far and away the most straightforward path is to head west on 31st street all the way to 7th avenue, but there's always a backup between 5th ave and 7th avenue - but that's still the fastest route. Waze directed the uber to head north on 3rd avenue to 39th street, head west, make a left on 5th avenue, then make a right on 35th, then make a left on 7th. It took twice as long, but we were always moving - it just wasn't taking into account how long it can take to make a turn on nyc streets.
Waze seems more willing to save time even if the path gets more complicated. Maps on the other hand even exposes a "greener" path that minimizes fuel when it won't cost too much time.
Yes, they can. It’s called fiduciary responsibility, and shareholders sue for it all the time.
Management can just say “in our judgement X is the right thing to do, not Y”. Google is too big for TCI to try to gain control over.
https://corpgov.law.harvard.edu/2021/12/01/dodge-v-ford-what...
Firstly, if an executive says "we believe this is in the interest of long-term shareholder value", the courts basically just defer to their judgement. You can't get the courts to run a company for you.
And second, the precedent has been softened since 1916 (or wasn't even true at the time), and for example some corporations like B-corps explicitly reject it, without any legal consequences.
TCI has a trivial stake in Google — at most, less than half of one percent of the company[0]. By voting shares, Larry and Sergey alone control >50% voting power[1]. TCI has nowhere near enough influence to move the needle in any appreciable way here.
[0] $6B / $1200B market cap (edit: to clarify, this is an upper limit, in practice it's even less because of super-voting shares owned by the founders)
[1] https://capital.com/alphabet-shareholder-who-owns-most-googl
Class A shares (such as TCI have) have regular voting rights. Class B shares (such as Larry and Sergey have) have 10x voting rights. Thus, as I understand it, TCI's voting voting power is at most roughly ~0.5. In practice, it's way less than that due to all the class B shares[0], reinforcing my point.
[0] https://capital.com/alphabet-shareholder-who-owns-most-googl
>GuruFocus data, as of 29 November 2022, revealed that 59.13% of Alphabet’s stock was owned by insiders, including the two founders, while 22.21% of common shares were owned by institutions including brokerage firms, hedge funds, pension funds and asset management companies.
Ownership percentage is only important because of how it lets them impact the stock price.
It’s like when you’re annoyed about something local government is doing and you show up with 50 other people also annoyed. Now you’re part of a news story and a stakeholder faction. But you all got there because of your individual desires.
Also, the letter is a public artifact. The investor is also meeting formally and/or informally with Google or individual directors.
It’s not like sending a letter cost them anything, but now they are famous.
But there is no evidence that this change is related to their letter (especially since none of the changes made in this case match any of the specific requests in the letter).
"Google Combines Maps and Waze Teams Amid Pressure to Cut Costs"
"...as the search giant faces pressure to streamline operations and cut costs."
"The activist hedge fund TCI Fund Management called on Alphabet to aggressively cut costs last month, writing in a letter to management that it thought the company’s head count was too high."
Are you suggesting that the WSJ is totally off base by drawing the conclusion that pressure from TCI, via this letter, is not the cause of the restructuring?
What a masterclass in logical fallacies.
The implication of the article is that generally investors think Google is too liberal on spending (anecdotally, I will tell you this sentiment is very real).
The WSJ used a specific and public example of someone putting that into writing, but if you think a non-Top 20 shareholder can convince Google to do something (that Google doesn't believe most of its shareholders want), then you really don't understand how corporate governance works.
Even the more aggressive well-known activists rely on the idea that they can convince more than 51% of shareholders to agree with them
Google is doing this because it thinks the majority of shareholders agree with it, otherwise they'd tell TCI to kick rocks (as often happens with activists, Google knows that no-one can actually buy enough shares to influence their management decisions, unlike some SMID caps.)
I'm glad we agree. That's almost precisely the argument I made throughout this entire thread.
That's a misrepresentation of what the WSJ piece says. All the article is doing there is highlighting that there has been external pressure on Google to cut costs.
The excerpt you highlighted points out TCI's request for reduced headcount, while a few paragraphs earlier, the article says that there is no plan to reduce headcount.
Yes. In fact its off base enough that I don't think they actually make that claim in the article.
TCI holds something like .5% of alphabet market cap, that's less than is held by multiple individual human investors in Google, and likely less than rank-and-file employees hold collectively. It'd be weird to pay any attention to such a group.
Like perhaps there is a pressure to fire people, but Google isn't firing anyone, so they are pretty clearly ignoring said pressure.
>The company has too many employees and the cost per employee is too high.
>Headcount is too high.
>... the business could be operated more effectively with significantly fewer employees.
Yeah, cash-hungry hedge fund calling for layoffs. Got it. Yet here's an excerpt from the WSJ article on this restructuring:
>Google said it planned to maintain Waze as a stand-alone service and didn’t plan to conduct any layoffs as part of the reorganization.
Counterpoint - why would Google announce layoffs to the WSJ before it even happened? It’s possible that it’s in the works…
I suspect you mean, "at that point", talking about after "the coming months". If you do indeed mean today (at this point), then I'm actually curious why you think forming the opinion now isn't hasty.
The subtleties of this and that sort of elude me, just like these and those.
1. Google did the Waze Maps/Maps merger to appease TCI so they could prevent layoffs
2. The Waze Maps/Maps merger is unrelated to the TCI memo
>In September, Mr. Pichai said he wanted Google to become 20% more productive and indicated the company could merge teams working on overlapping products.
TCI's memo highlights five areas they think need to be adjusted, none of which Alphabet acquiesced to with this restructuring.
TCI
- Sent letter to Alphabet in mid-November
- Holds a mere .5% of Alphabet's market cap
- Asked for headcount reduction
- Asked Alphabet to pay employees less
Alphabet
- Publicly commented in September that they intended to combine overlapping groups
- Combined overlapping groups
- Didn't lay anyone off
The genesis here was me keying off of related phrases within the WSJ piece:
"...Amid Pressure to Cut Costs"
"...faces pressure to streamline operations and cut costs"
Ok, great. So, my question is where is this pressure coming from?
"The activist hedge fund TCI Fund Management called on Alphabet to aggressively cut costs last month, writing in a letter to management that it thought the company’s head count was too high"
This is the WSJ suggesting that there is a link (granted they do not give confidence intervals) between these things. You could argue that perhaps WSJ is just poorly suggesting that there is a general "background radiation" of "pressure" related to Google.
So it's not like I'm just fabricating this link :)
But since you asked, the larger point and the particular axe I have to grind (that is permanently attached to my hand) is that investors have more power than the collective google employees do, do not have employee interests in mind at all, and Google management and the board will always align with investors NOT employees.
... so, 16.33% headcount reductions?
You don't have much experience with corporate acquisitions, do you?
The Acquiree CEO always leaves after a year or three, unless Acquirer is a company like Cisco that's really good at it. Why?
Because Acquirer has middle manager drones, who continually complain about the how Acquiree is not "aligning with our strategy." Eventually, Acquiree's CEO gets sick of it and quits.
But you're right - they won't maintain it as a separate app. Because those drones can wear anyone out.
Also I’m very familiar with acquisitions particularly at Google.
Not sure what Google ultimately got out of Zagat rather than maybe a bit of kickstart for restaurant ratings.
Tim Zagat invited us all to visit him if we were in MYC, to get a good restaurant recommendation (and reservation? I'm not sure if he said that).
... I'm not arguing whether or not they intended to keep the apps separate? If you want to know why he left, he's already told you[1].
>Knowing Google, I find it hard to believe that Waze under the Google maps lead will get resources and continue.
Sure. Agreed. That's not what this comment chain was discussing, though. You sure you responded to the right post?
[1]https://www.linkedin.com/pulse/why-did-i-leave-google-stay-s...
The article clearly states that SHE left with no explanation why:
Waze CEO Neha Parikh will exit her role following a transition period
You're referencing an article that is over a year old about a completely different person.
https://www.linkedin.com/pulse/why-did-i-leave-google-stay-s...
Now, if Blackrock, Vanguard, Fidelity, Schwab, and all the pension funds got together, that might add up to something.
Which is true. And "many others" is a vapid, meaningless phrase.
However, proxies are voted in accordance with the "recommendations" of a very few advisory firms. That means that if you buy 10 million dollars worth of ETFs, all of those many, many shares are voted without your input. I'd certainly support legislation to give the "final" owners of those shares the right to vote the proxies themselves.
Maybe that's what you meant.
In the UK, being a salaried employee means you pay a rather high rate of tax, compared to other schemes used by rich people - like for example having some of the work done as charitable work, having mostly stock, getting paid via a company, etc.
TCI, who do not actually run the business, are threatening the CEO (addressed to Sundar) that they will move their money if Google doesn't do what they say - namely cut costs etc...
Is it more likely that TCI investors know how better to run Google than Google does or that they don't care and are blindly seeking alpha with no care for the people that run it?
This group of investors however can compel Google to do things differently and as George Carlin once said: "It's a big club, and you ain't in it"
You can generalize that to say the average HN reader knows how to run anything better.
90% of management is equal to or worse than calling random() to make decisions. If the margins are large enough, and the competition is asleep, anyone can be a successful CEO.
What does "move their money" technically mean in this situation? Google is not a bank, they don't keep TCI's money. Is this a threat of tanking the stock price by selling all $6B at once? TCI would hurt themselves too if they do that.
Sell GOOG and buy META (or whatever)
>Is this a threat of tanking the stock price by selling all $6B at once? TCI would hurt themselves too if they do that.
The act of liquidating their position is what reduces the price. So they drop their ask to the lowest bid price that liquidates their position net positive and in theory that action would cause a price cascade. It's a threat, not a guarantee.
Larry and Sergey own 51% of GOOGL. Owning GOOG doesn't give you any control over the behavior of the company.
Why would Google care? This fund owns Google stock; it isn't giving money to Google, it gave money to whoever it bought that stock from.
Selling a fraction of a percent of the total in the market might move the stock price a little, but probably not much.
'Moving their money' just means transferring that stock to someone else who may have more faith in the company's strategy.
The story seems about the same everywhere: When money was pouring and people were spending more time on their devices than usual, the projection was that people will just resign from the physical world and live in VR so hire as many people as possible but that projection looks silly now.
This creates a pressure on Google to try and raise their profitability, and one way to do that is cut on areas where it seems wasteful.
The letter mentioned above is just a trailing sign of this in my opinion.
TCI is making the news for being an activist investor calling for layoffs because 1) the media is frothing at the opportunity to announce Google layoffs, even though none have been announced 2) the goal of an activist investor is to drum up support to make their activist wish happen.
Source: been on receiving end of such messages (bit smaller endeavor than Google though :-)).
Are "Property rights just for losers"?!
If you don't want to be banned, you're welcome to email [email protected] and give us reason to believe that you'll follow the rules in the future. They're here: https://news.ycombinator.com/newsguidelines.html.
6 billion dollars worth or 0.5% of the market cap. Not so big
1) All shareholders will benefit including the employees who were well paid in stock.
2) When you sell an ownership stake you have to listen to owners. You might as well blame whoever decided to go public or sell the activist a stake.
3) Larry and Sergei have super voting shares and can block it if they want. But they probably want their shares to increase too.
Also, are letters like this normal? I have never seen a letter like this, but you always hear that all shareholders care about is money. And yet, here we are with a letter that brazenly says something just below “fuck all employees, we want more money just because we have you some money”. I mean, part of their argument is some random person’s quote that companies could be smaller. For one, that’s a weak and amateur argument for an investor to make. And sure, that’s probably true, but the tone of this email is extremely flippant towards anyone that isn’t themselves.
But TCI didn’t do that.
Misallocation of resources is bad for broader society. Great for those who benefit from the misallocation though
If I was Google I would tell them to take a walk if they want to.
Case in point: Why has Google had two navigation apps with entirely separate redundant teams for almost ten years?
How dare they. :rollseyes:
I doubt S&L will care.
The board and Zuck as fiduciary responsibility to the majority of shareholders. There is a reason why ever board member gets directors insurance.
If Zuck doesn't do the right thing and continues to make irresponsible gambles, the shareholders can sue him.
This is also not theoretical either, there are already suits (unrelated): https://www.politico.com/news/2021/09/21/facebook-paid-billi...
This is not theoretical. The most infamous example of one sided dual class shares is Meta. Zuckerberg decided to throw the middle finger to the board and share holders, highest employee growth in FAANG..
He ignored activist shareholder letters like the one from Brad Gerstner and now the stock is collapsing, way beyond the corrections the rest of big tech faced.
He has already began course correction but lets say he instead Zuck decided to double down. You can easily see more rounds of shareholder rout.
Because that is unethical
No I reject your assertion and assert the opposite. It would be unethical not to fire them.
Google has a fiduciary duty to its shareholders.
Google has no duty to retain an employee hired at-will.
Is it more ethical to reject a duty by favoring the employees? Deontological ethics suggests otherwise.
"Shareholder Primacy" is the biggest most unethical scam that continues to go unchecked as though it were law, which it is most certainly not. It is an unethical and outdated relic of rapacious greed
"On August 19, 2019, 181 CEOs of America’s largest corporations overturned a 22-year-old policy statement that defined a corporation’s principal purpose as maximizing shareholder return" [1]
On the contrary, Andrew, corporations are chartered through a particular state's corporate code. In every case I'm aware of, the shareholders are the ones who own the company. The "stakeholders" (employees, customers, neighbors) have legally defined rights, which do not include ownership. So it most certainly IS law.
From https://short-facts.com/how-many-major-corporations-are-ther...:
The US Constitution was interpreted by the US Supreme Court to allow corporations to incorporate in the state of their choice, regardless of where their headquarters are. Over the 20th century, most major corporations incorporated under the Delaware General Corporation Law, which offered lower corporate taxes,
These 181 CEOs: did they have any rule-making authority? Or was that result just the opinion of 181 people?
What about all the corporations and single-proprietor businesses that were not part of that? Or the state of Delaware, whose laws govern most of them? Not to mention the Congress and the courts.
Google is still growing revenue YoY despite 2021 being a huge year for online services due to pandemic shifts.
They’re making hundreds of thousands in net profit per full-time employee.
A dumb CEO would do layoffs at this moment. They don’t need to financially, and the morale hit (and lost productivity) could be disastrous for the company.
But yeah, since other companies are doing layoffs, Google should too.
Not really. TCI doesn't even appear in the top 10 [1], and even if they were, the Founders still hold controlling interest.
[1] https://money.cnn.com/quote/shareholders/shareholders.html?s...
TCI sent Google a letter [1] telling them they need to cut people to get higher margins (>40%) as well as pay the investors more (stock buybacks).
Google is choosing to do what this group of investors says instead of supporting it's employees.
Just so you know.
[1] https://www.tcifund.com/files/corporateengageement/alphabet/...
Edit: This data came from me asking myself of the headline "ok who is it that is putting "Pressure to Cut Costs" on Google." Luckily TCI made it really clear