Chrystia Freeland

The uprising in Egypt has provoked the familiar “realism-versus-idealism” foreign policy debate in many Western capitals, as diplomats and politicians struggle to balance their ideological sympathy for the protesters against fears of chaos and the threat of a future anti-Western and anti-Israel policy from Cairo if the people do win.

What we have paid less attention to is that the demonstrations have forced some of the world’s hottest technology companies to engage in a very similar debate. The conclusions these technorati end up drawing may be as significant as the verdicts of Western governments. This new intellectual battleground is a further sign that in the age of the Internet and the global economy, foreign policy doesn’t belong just to professionals or to states any more.

The quandary Egypt poses for technology companies – particularly the power troika of Google, Facebook and Twitter – goes far beyond the classic corporate social responsibility concerns that have become standard operating practice at big multinationals.

On one hand, the Egyptian revolt and the ways in which it has been facilitated by the Internet is the apotheosis of hacker culture and its worldview. That is the powerful conviction of the digerati: that they are on the side of freedom, small-d democracy and of doing good in the world. This self-image is easy to mock – that Google pledge to “do no evil” makes a pretty juicy target for satirists – but it is also deeply felt.

Egypt has helped confirm this view of technology companies being on the side of angels. For example, Wael Ghonim, the Google executive who helped organize the protests, was jailed and has emerged this week as an important face of a movement looking for leaders. Before that, there was the much publicized workaround that Google and Twitter technologists devised to help evade the Egyptian government’s communications crackdown. As Adrian Chen noted on the Gawker blog, “the amount of positive press generated [for Facebook] by Egypt’s uprising … could only be greater if Mark Zuckerberg had parachuted in and started beating back riot police himself.”

On the other hand, the problem for technology companies in many parts of the world is that doing good – or even doing no evil – is very much in the eye of the beholder. The views, and the self-interest, of twentysomething programmers in Silicon Valley, or in Bangalore, India, are unlikely to coincide with those of eightysomething dictators. And that can spell trouble for companies intent on building a global business.

“Facebook is trying to expand into China, so it is hard for them to take the side of the protesters,” said Evgeny Morozov, author of The Net Delusion, which argues the Internet will not necessarily make the world a freer, better place.

“They don’t want to be considered the digital equivalent of Radio Free Europe,” he explained. “If they take the side of the protesters, their global business model will come under pressure.”

Mr. Morozov is pretty certain that in this conflict between “the hacker ethos” and “the capitalist ethos,” it is the hackers who will have to compromise.

But even if he is right that technology company shareholders and executives, like any others, care overwhelmingly about maximizing profits, Mr. Morozov may be underestimating the expectations users and employees have of companies whose founding premises are the empowerment of the individual and the democratization of information.

Facebook, in particular, has been blasted by the Internet’s emerging punditocracy for failing to adapt its no-pseudonyms policy to the needs of democracy activists in authoritarian regimes who, for obvious reasons, can’t use their real names.

Facebook has a sophisticated policy team that understands these concerns. But they are also worried about weakening the “real names only” policy, which is crucial to the power of the platform, by administering a policy that permits some people to have pseudonyms and not others.

Richard Edelman, the boss of the PR firm that carries his name, works with businesses around the world. In his firm’s annual survey of which institutions people trust, technology companies are near the top. They are “seen as legitimate forces for good,” he said.

That halo brings many benefits. But as technology emerges as a force for real good in some of the grimmest parts of the world, that reputation may force technology firms to stick with their idealism even if realism might be better for the bottom line.

“There is a higher expectation of technology companies than of any others,” Mr. Edelman said. “There would be a lower expectation of resource companies, for instance. It is why, ultimately, Google walked in China.”

We used to say that Western missionaries came to do good, and ended up doing well. Technology firms could find themselves forced to do good, even if it sometimes means doing badly.

Saying ‘yes’ is one of the dominant tropes of American life. America’s favorite politicians are the sunny optimists: think Ronald Reagan and “Morning in America.” In fact, the culture is so insistent on looking on the bright side that, as Barbara Ehrenreich complained in a recent book, injunction can be heard on the cancer ward. You might even say — and some historians have — that Americans themselves have been pre-selected for their optimism: you or your ancestors had to have a powerful faith in the New World and the opportunities here to make the trek over in the first place.

That’s why when I interviewed Nikesh Arora, Google’s head of sales, operations and business development at a media conference last week, one of his comments had particular resonance with the live midtown Manhattan audience and in the blogosphere shortly afterwards. Google, Arora said, works hard to create “a culture of yes.”

Arora described the Google approach as an “inversion” of the attitude in more traditional companies, where “everybody in management is trying to look at where the flaw is when somebody is presenting. Everybody is trying to figure out what’s wrong with their plan.” At the Googleplex, by contrast, “we’re going to say what’s right with it, let’s find a way to say yes.”

According to Arora, creating a culture of yes is central to creating a culture of innovation. As he put it: “the more times you say yes, the more you create a culture of yes, the more likely you’re going to have people innovating and coming up with great ideas. The more you say no, people will absorb that, anticipate that and say, ‘What’s the point of me trying to innovate, management is going to say no anyway’.”

Google’s culture of yes extends to the pay-checks of its employees: a couple of weeks before I interviewed Arora, Google had given all of its 20,000 staff members a $1000 holiday bonus and decreed a company-wide 10 per cent pay raise.

Before the financial crisis, Google’s gung-ho commitment to innovation, and even its $1 bn company-wide retention bonus, would have been perfectly in tune with what I can’t resist calling the national zeitgeist. But what made Arora’s comments so striking this month was their sharp contrast with the mood of America, and even most of the developed world.

Google’s chiefs are striving to build a culture of yes, but most of America is living in a culture of no: banks aren’t lending, businesses aren’t hiring and consumers aren’t spending. That’s true of much of Europe, too: the latest act in the sovereign debt crisis has pushed the continent deeper into its new age of austerity.

That contrast points to one of the deeper consequences of the recession and slow-motion recovery: after two generations of plenty, the developed world has abruptly shifted to a culture of no. That includes even the homeland of the optimists, America. The culture of no is already being reflected in American politics, where the Republican legislative strategy of just saying no has proven spectacularly successful politically.

The two exceptions are the emerging markets — already re-branded fast-developing economies by some of their fans — and the technology sector. These countries, and this industry, remain cultures of an emphatic, even accelerating — remember that 10 per cent pay raise — yes. And even in nations that have been pushed into the no camp, anyone smart and lucky enough to surf the waves of the technology revolution and the rise of the emerging markets is still living in the land of yes. That’s why the New York Times this week announced the return of conspicuous consumption on Wall Street, even as Main Street is experiencing, at best, a prolonged period of slow growth.

We are living in at time of unprecedented international interconnection and access to information. But it is also a moment when different parts of the world, and different groups within societies, are moving at very different speeds. A good way to understand the divide is between the cultures of yes and the cultures of no.

One reason this recession is so tough on the American middle class is that by habit and by inclination, it belongs to the culture of yes. But high unemployment, a stalled housing market and less access to consumer credit has trapped the middle class in the culture of no. That is turning out to be a social and political problem as much as an economic one.

Nikesh Arora, Google’s President of Global Sales Operations and Business Development, spoke to Chrystia yesterday at a panel during the Paley Center for Media’s November International Council meeting. Arora explained how Google is able to keep its garage-workshop spirit of innovation even as the company swelled to 20,000 employees. The key, he said, was to establish a “culture of yes” where the default option is for management to approve employees’ new ideas andprojects rather than trying to nitpick and say no. Several of Google’s most recent initiatives, from driverless cars to a new offshore power grid to promote wind power, were the byproduct of this bottom-up process.

In response to Chrystia’s question about whether Facebook’s new e-mail service will steal users away from Google, Arora said the “internet is not a zero-sum game.” He predicted that in five to eight years, 80 to 90 percent of people’s time will be spent on internet-enabled devices, and in such a world, it would be impossible for any one company to dominate all online behavior.  Arora foresaw a future in which there are 15 to 20 players that provide the most popular online services, and that he would include Google and Facebook in that list.

Finally Arora shared his outlook for what areas Google is investing in most heavily.  He said the company’s focus on advertising, while sizable, is aimed only at the 10% of the $600 – $700 billion ad market that is online.  In five to eight years, he predicted 30 to 50 percent of the ad market will shift to online.  Google will be poised to take advantage of that shift, as well as the shift to personalization and interactivity in ads that will occur in the near term.

Posted by Peter Rudegeair.

Earlier this week at the Google Zeitgeist conference, the company’s chairman and CEO Eric Schmidt said there was a divergence between his sector and the rest of the economy. While high-tech firms are currently receiving new investments, rolling out new products, and hiring new workers, the broader economy is at a standstill. “The damage that was done by the recession was much more severe than people acknowledge,” Schmidt said.

As the head of one of Silicon Valley’s most profitable companies and an ally of President Obama, Schmidt defended the White House from the charge that it is anti-business. He said recent events like the financial crisis and the BP oil spill showcased the need for government regulation of the private sector.

That said, the Google chief argued his own industry “should be as unregulated as possible,” given the pace of change and the plurality of options available to consumers.

He’s also pushing for an overhaul of America’s visa system and described Arizona’s controversial new immigration law as “nearly racist.” He said the guiding principle for the U.S. visa policy should be to let all smart people stay in the country. He added that the cap on H-1B visas for educated workers was “the stupidest thing we’ve ever done.”

Schmidt congratulated Facebook for their success and dismissed the idea that the two were fierce rivals, noting that Facebook users visit Google more frequently than non-users. He also praised Apple, in particular the iPhone and iPad, for demonstrating that “purpose-built applications really do work.”  Schmidt said Google incorporated that lesson into its Android operating system.

Regarding his own business plans, Schmidt is excited about Google TV, the company’s effort to bring the power of the internet to television programming. When asked if he saw a parallel between this project and the online music stores that crippled record companies, he responded that Google TV will likely increase demand for content-providers and cable companies. For the same reason, he believes the company’s forays into the news business will ultimately drive more traffic to newspapers and magazines.

When Chrystia asked Schmidt about Google’s decision to withdraw from China, he explained it was a decision based on values and that he was disappointed that other companies did not follow Google’s lead. Countries like China and the United Arab Emirates, which recently suspended the use of BlackBerrys, simply “don’t understand what has been unleashed by technology.”