CSR as a Buffer for Reputational Risk? Hey, It Works for Google

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On July 18, 2018 the European Commission hit Google with a whopping $5.1 billion, or €4.34 billion, fine for illegal practices and abuse of the Android platform for market dominance.

In the eyes of the EU, Google has become too big.

In its press release, the European Commission claimed that Google breached EU antitrust rules, specifically:

• Requiring manufacturers to pre-install the Google Search and Chrome app as a pre-condition for the Google app store
• Making payments to manufacturers and mobile network operators on condition that they exclusively pre-install the Google Search app; and
• Preventing manufactures from selling devices running on alternative versions of Android not approved by Google

The Commission gave Google 90 days to bring an end to the outlined activities or face a penalty amounting of up to 5% of Google’s parent company, Alphabet Inc.’s, daily earnings.

How does this impact Google’s reputation?

This fine raises questions regarding Google’s reputational standing and ethical practices.

Google has traditionally topped RI’s rankings, consistently placing as one of the most reputable companies in the world, and the 3rd most reputable company as of 2018.

What has really made Google stand out, is its commitment to and delivery of corporate social responsibility (CSR). Globally, since 2014 Google has consistently been a leader in CSR, ranking 3rd in Reputation Institute’s 2017 Global CSR report and 2nd in the governance dimension, right behind The LEGO Group.

Google fares well worldwide. In the EU, however, Google’s standing is far more vulnerable.

Europe’s standards and regulations are more stringent compared to the US. Of late, US tech giants have been put through the wringer by European regulators, and Google is no different.

Compared to its global performance, Google is trailing in Europe. In terms of its reputation, CSR score and governance, Google’s European scores are at an average 1.5 points lower than the global (Figure 1).

Figure 1: 2018 Google Reputation, CSR and Governance Scores (Global vs. EMEA)

emea.PNG

Google’s pain points in Europe are its lack of emotional connection and perception of governance.

Google’s emotional connection with the European general public (Reputation in Figure 1) is 1.2 points lower than its rational score — Google’s products and innovation, workplace, leadership, financial performance.

Having a strong emotional connection, in addition to delivering on all rational dimensions, is a considerable catalyst of support, risk mitigation, and business results. Lagging in emotional connection in Europe impacts the levels of support Google receives from the public.

As depicted in Figure 2, the levels of support do not put Google in dire straits; nevertheless, they are lower than the company’s global standings. This indicates that in terms of trust and benefit of the doubt in a time of crisis, there is some work to be done in Europe.

Figure 2: Supportive Behavior – Percentage of Respondents Who Strongly Agree (EMEA, 2018)

fig2Across the 7 dimensions of reputation, Google passes with flying colors excellent scores in products, innovation, leadership and performance, and strong scores in workplace and citizenship (Figure 3). The only dimension that fails to hold up to standard is governance. When it comes to ethical and fair behavior, only 27% of respondents strongly agree that Google is in fact an ethical company and fair when it does business, while over 60% are on the fence or not sure.

Figure 3: Google EMEA Reputation and Dimension Scores for 2018

fig3

A CEO with a Clear Voice

Following the fine announcement and attack on Google’s governance practices, Google CEO Sundar Puchai immediately responded to the accusations and attested that Google will appeal the Commission’s decision.

Such quick, genuine, and fact-based responses are key in reputation management. Mr. Pichai, an outspoken CEO and activist in his own right, is a model in quality CEO behavior.

sundar.PNGThe world’s most reputable CEO in 2018 is using his voice to positively impact Google’s reputation. Based on our CEO RepTrak® report, Mr. Pichai has positively impacted Google’s reputational lift by 11.9 points.

Globally, Google’s longstanding strong reputation, established CSR practices, and highly reputable CEO have laid out a foundation for high levels of trust and benefit of the doubt in times of a crisis.

Yet, the question remains: will it be enough during this crisis and will Google come out of this unscathed?

Stay tuned for the development of this story as we track Google’ reputation over the coming months.

anaAna Angelovska                                                                                                    Research Director

Reputation Institute                                    aangelovska@reputationinstitute.com

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