Google's Not-So-Extreme Makeover - TheStreet

Is it OK to start liking

Google

(GOOG) - Get Report

again?

The pendulum shift in how the press and the public feel about the company has been in bizarre parallel to the approval ratings of the Bush administration. In the early part of the decade, it seemed as if Google could do no wrong. But a backlash that began in early 2005 has gotten to such a point that the company is hit with either criticism or cynicism about every significant move it makes.

Things have gotten so bad that if you had played a drinking game at Google's press day last week, taking a shot of Wild Turkey every time a journalist flung the three magic words -- "don't be evil" -- into the faces of Google's triumvirate, you'd do some serious liver damage. One of the entertainment highlights of the event was when a reporter from the

Asahi Shinbun

asked the trio, "You say, 'We are not evil.' But nobody believes they are evil. How can you guarantee you are not evil?"

It's a testament to Google's unique nature that reporters feel free to launch a philosophical thumbsucker like that at its executives. On the one hand, who hasn't scoffed at Google's naïve, hackneyed motto? On the other, who's not getting tired of seeing this poor dead horse being flogged again and again?

Sure, Google brought it on itself by trumpeting "don't be evil" in the founder's statement that prefaced its IPO prospectus and pointing investors, analysts and reporters to it time and again. But given all the flak the motto has generated, the company deserves at least a little credit for not abandoning it as a core principle.

In all of this back-and-forth, an important nuance has been lost -- one that appeared in a January 2003

Wired

magazine story that gave birth to the "evil" meme. The writer of the piece, Josh McHugh, asked Google CEO Eric Schmidt what exactly the company's credo was supposed to mean, and Schmidt replied cryptically, "Evil is what Sergey says is evil." In other words, Google never intended "evil" to have a meaning everyone could agree on.

On Wednesday, here's what Google co-founder Sergey Brin said about the whole 'evil' issue: "Lots of people have different opinions on different issues. Whether they're unhappy with the search results for a particular question or some specific ad policy, if they don't agree with it they assume Google is evil. In general, I think Google is doing a very good job of sticking with our mission ... We won't always agree with everyone."

That may not sound radical, but this is about as forthright as Google's top executives have ever been in public. And there was something in the way that Brin said it -- biting down on his frustration -- that made me wonder if Google wasn't finally getting serious about fixing its image.

I am among the legion of reporters who have

played the "evil" card with Google. I never had a problem with its search results or its technology. My beef was its sorry lack of transparency -- not just neglecting to give earnings guidance, but issuing opaque financial statements and refusing to answer questions that would give investors the basic information they needed to decide whether to hold the stock.

At its press day last week -- and its shareholder meeting on the following day -- Schmidt said Google was making a serious push for greater transparency and openness. Of course, open is as open does, but there were small but encouraging signs at both events. In place of the smug arrogance of a year ago, Google execs (with the glaring exception of senior VP Jonathan Rosenberg) employed a bit more humility.

At

last year's press day, when someone asked Google if opening an office in China violated its don't-be-evil rule (hold on while I pour that Wild Turkey), the answer was a terse, "We don't have anything else to announce now."

This year, Brin

went on at length on China, arguing that Google -- in contrast to rival

Yahoo!

(YHOO)

-- always resisted censorship in China until last January, when it reluctantly introduced the Google.cn search engine. But, Brin said, 99% of Google searches in China are still conducted on Google.com, which does not censor results but faces more networking glitches. Fewer than 1% of Web users in China are using Google.cn.

Google seems to be waking up to the costs of aloofness and the negative press it can bring. "We think it's just better from a business perspective to tell people what's up," Schmidt said, noting that Google's future rests on finding the best partners. Being clearer on its plans and intentions, he said, will make "others understand us and be more willing to work with us."

Bad press is also affecting the stock. One shareholder told Schmidt, "It seems like every time an executive from Google makes a statement -- which is rare -- it's something negative, and so by 7:15 in the morning I'm down 30 grand, going 'What the hell is going on?'" Schmidt replied that Google isn't responsible for the media.

But it's not entirely the media's fault. Companies that have receivedfar worse treatment from the press than Google --

Halliburton

(HAL) - Get Report

, for example -- have outperformed Google. Wall Street doesn't always react to bad press, and it doesn't care about Google's arrogance unless that arrogance is hurting business.

Google's image makeover won't be easy. The blog

Valleywag

has been reporting on the trouble the company is having hiring public relations people. Failing to win over the press is one thing; failing to win over people who could win over the press speaks to a big image problem.

Maybe it's not yet time for the pendulum to swing back in Google's favor. But it's very much worth watching how Google acts on this front. Because if and when it is OK to like Google again, it will mean that any good news will once again drive the stock higher.