Sergei & Larry Will Control Google Forever

Moneybox
A blog about business and economics.
June 17 2013 5:13 PM

Google Ready To Roll Out an Exciting New Innovation—"Class C" Nonvoting Stock Shares

Larry Page, Google co-founder and CEO, speaks during the opening keynote at the Google I/O developers conference at the Moscone Center on May 15, 2013, in San Francisco.
Larry Page, Google co-founder and CEO, speaks during the opening keynote at the Google I/O developers conference at the Moscone Center on May 15, 2013, in San Francisco.

Photo by Justin Sullivan/Getty Images

Google just received legal clearance to issue an unorthodox new third class of nonvoting c-class shares in a move that underscores the connection between innovation and "bad" corporate governance.

Currently the company has two classes of shares—regular a-class shares and special b-class, which carry 10 votes each. Larry Page and Sergei Brin control the company by controlling the b-class shares. The c-class shares arose, however, because they wanted the ability to create new shares of stock in order to fund acquisitions without diluting their control over the company. Hence, a new class of shares that won't carry any votes at all ensuring that no matter how much stock they issue, the founders will still rule the company.

This is all, to my way of thinking, excellent news for America and for the world. Founder-controlled companies tend to be "mismanaged" by founders in precisely the Google way. Rather than taking search advertising profits and turning them into enormous dividends, Google has been on an empire-building spree driven by its founders' desire to prove that they are the smartest and most impressive people on the planet. And the consequences have been a bounty for humanity, most concretely in the form of Android's entry into the mobile OS marketplace, but perhaps down the road including autonomous cars. Meanwhile, a parallel form of grudge-based reasoning at Microsoft has led to Bing—whose private costs to Microsoft shareholders have been enormous, but whose public benefits in terms of keeping Google honest are incalculable.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Culturebox

The Ebola Story

How our minds build narratives out of disaster.

The Budget Disaster That Completely Sabotaged the WHO’s Response to Ebola

PowerPoint Is the Worst, and Now It’s the Latest Way to Hack Into Your Computer

The Shooting Tragedies That Forged Canada’s Gun Politics

A Highly Unscientific Ranking of Crazy-Old German Beers

Education

Welcome to 13th Grade!

Some high schools are offering a fifth year. That’s a great idea.

Culturebox

The Actual World

“Mount Thoreau” and the naming of things in the wilderness.

Want Kids to Delay Sex? Let Planned Parenthood Teach Them Sex Ed.

Would You Trust Walmart to Provide Your Health Care? (You Should.)

  News & Politics
Politics
Oct. 22 2014 9:42 PM Landslide Landrieu Can the Louisiana Democrat use the powers of incumbency to save herself one more time?
  Business
Continuously Operating
Oct. 22 2014 2:38 PM Crack Open an Old One A highly unscientific evaluation of Germany’s oldest breweries.
  Life
Dear Prudence
Oct. 23 2014 6:00 AM Monster Kids from poorer neighborhoods keep coming to trick-or-treat in mine. Do I have to give them candy?
  Double X
The XX Factor
Oct. 23 2014 8:51 AM The Male-Dominated Culture of Business in Tech Is Not Great for Women
  Slate Plus
Tv Club
Oct. 22 2014 5:27 PM The Slate Walking Dead Podcast A spoiler-filled discussion of Episodes 1 and 2.
  Arts
Brow Beat
Oct. 23 2014 9:00 AM Exclusive Premiere: Key & Peele Imagines the Dark Side of the Make-A-Wish Program
  Technology
Future Tense
Oct. 22 2014 5:33 PM One More Reason Not to Use PowerPoint: It’s The Gateway for a Serious Windows Vulnerability
  Health & Science
Bad Astronomy
Oct. 23 2014 7:30 AM Our Solar System and Galaxy … Seen by an Astronaut
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.