Earnings calls are an opportunity for executives and analysts to discuss everything from revenue drivers to tax rates, and increasingly, for Big Tech, the state of regulation and legislation aimed squarely at, well, Big Tech.
As a rule, commentary on those subjects remains general commentary. Management rarely delves into the legal minutiae, rarely predicts what will happen, and executives play things relatively close to the vest.
So it was Tuesday (Feb. 1), when Google parent Alphabet put up its latest earnings results. During the customary customer question and answer period, C-suite executives, including CEO Sundar Pichai, weighed in on what they’d like to see (if in somewhat vague terms) come from Capitol Hill and from the regulatory agencies.
Alphabet, like its large tech brethren, has been in the cross-hairs. And a slew of hearings, of lawsuits, of fines are dominating headlines and shaping the confines of how platforms and marquee names, from Alphabet to Microsoft, can compete with smaller firms and with one another.
See also: US Department of Justice Hits Google With Antitrust Lawsuit
During the Q and A, Pichai was asked about what such scrutiny, particularly with the legislation that is before the Senate, gets “right” and gets “wrong” about Big Tech.
Pichai stated the company is open to “sensible, updated regulated” regulations, which implies that the company sees (or is resigned to) the fact that there is, and perhaps should be, change on the horizon. We contend that Alphabet and other companies would prefer to see incremental change rather than sweeping mandates.
Pichai noted that the company has called for “privacy regulations, particularly at the federal level, updating protections for children and so on.” Current legislative and other proposals don’t address those issues — and Pichai warned that much could be done on the regulatory field to “break” the services that are on offer from the firm.
Read also: US Needs Privacy Standard Like GDPR, Alphabet’s Pichai Says
Pichai also warned that the antitrust proposals on the table “can hurt American competitiveness by disadvantaging solely U.S. companies.” He stated that when building features, Alphabet (and, we would think, other firms) have to think about compliance on each and every feature — and whether they need proactive approvals. The implication here is that setting up a broad range of regulatory hurdles that must be leapt before anything comes to market can have what Pichai called “unintended consequences.”
To get a sense of scale and the way those hurdles can mass as a hindrance to innovation, Pichai noted on the call that “we ship 3,000 features in Search alone, every year.”
To offer up a hypothetical scenario, as seemingly has been implied through Pichai’s commentary, the unworkable situation is when each bit of the connected economy, as it’s being formed, is held up to be viewed from all angles and only then put out into the field.
The legislative and regulatory pressures are gathering. The American Innovation and Choice Online Act makes it unlawful to unfairly preference a platform’s own products, services or lines of businesses over those of another business user and to limit the ability of another business user’s products or services to compete on the platform.
See more: Big Tech’s Three Biggest Regulatory Threats
The Open App Markets Act would effectively ban the tech companies from requiring developers to use in-app payment systems as a condition of being distributed on an app store. And the Federal Trade Commission (FTC) and the Department of Justice (DOJ) are working together to review mergers and acquisitions, particularly within tech.
For now, Alphabet’s earnings call commentary reveals less about strategy and is simply asking the powers that be to tread carefully.
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