Recently 400 employees at Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) formed a union (this was through the Communications Workers of America Local 1400). For the most part, the impact on Google stock is likely to be minimal – at least in the short-run. Keep in mind that the company has more than 260,000 employees. And of course, this base will likely keep growing in the years ahead.
Unions in the technology industry are rare. A big reason for this is the lucrative salaries. Companies like Google, Facebook (NASDAQ:FB), Microsoft (NASDAQ:MSFT) and Oracle (NYSE:ORCL) routinely engage in aggressive recruiting and even poaching of employees. The compensation packages not only often include large salaries but equity option packages. It’s not uncommon for top technical people to be worth millions.
So what does this unionization at Google mean? And why did this happen? Well, interestingly enough, the reasons are not the typical ones. It does appear that the union will be more about giving employees a voice in the actions of the company’s senior management decisions.
So let’s take a look.
Society and Technology
Until 20 years ago or so, the technology industry was mostly about helping to improve the efficiency of companies and government organizations. The systems allowed for automation of core functions like payroll, human resources, sales, logistics and so on.
But with the growth of the internet, social media and smartphones, the technology industry has increasingly become an important part of the daily lives of consumers. This trend certainly provided many benefits like lower costs, convenience and better services. Just look at how we hail rides with Uber (NYSE:UBER), easily purchase airline tickets on Expedia (NASDAQ:EXPE), get food delivery from DoorDash (NYSE:DASH) or rent someone’s home via Airbnb (NASDAQ:ABNB).
Then again, the technology has its downsides as well. The hacks of our personal data have become commonplace.
But there are even potential threats to our liberty. A prime example is the use of artificial intelligence for facial recognition. What if it is used to identify a crime but the data is somehow biased? The consequences can be devastating.
No doubt, a company like Google is at the vortex of all this. The company makes much of its money based on leveraging people’s data, such as with the viewing of videos, sending email and checking out maps.
But for Google employees working on this technology, there can be anxiety. Might the innovations be used for bad outcomes? Could there be abuse? And who makes the ethical decisions?
It’s extremely complicated and the answers are not clear cut. So it should be no surprise that Google has made its share of missteps. For example, there was the recent departure of Timnit Gebru, who is one of the world’s top ethics researchers for AI. She alleged that she was fired because of one of her papers and the complaints she had about the lack of diversity within Google.
Now it’s important to note that the company’s CEO, Sundar Pichai, has apologized and will investigate the matter.
Bottom Line on Google Stock
There have been other unions at Google. One was for security guards and another was for employees at for the company’s cafeteria’s (yes, there are many on the main campus!) But the union with the Communications Workers of America Local 1400 is different because it covers most of the employees. This is even the case for non-Google operations like Waymo.
Of course, when it comes to unions, they are often a negative for companies. But in the case of Google stock, I actually think the move is a positive. Again, the company is already very competitive with its compensation and benefits. But more importantly, as technology becomes more essential and pervasive across society, there needs to be more responsibility. And this is why it is critical to have more people involved in this process.
On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling. He is also the author of courses on topics like the Python language and COBOL.