Home > Uncategorized > Google Already Enforces A Right to be Forgotten–It’s Called Being a Shareholder

Google Already Enforces A Right to be Forgotten–It’s Called Being a Shareholder

May 17, 2014

The Google press continues to stoke the fires about the European Court of Justice ruling on the “right to be forgotten,” and some Google Shill Listers even go so far as to say that the U.S. will never have a comparable right to be forgotten.

That’s so untrue–Google already recognizes such a right in the U.S.  For its shareholders.

Yes, that’s right.  If you own a share of Google stock (assuming your name isn’t Schmidt, Page or Brin) you are as good as forgotten because you have no chance at having anything to say about how the company is run.

Google recently had a stock split–a very particular kind of stock split.  Before the split, Google had two classes of common stock:  Class A and Class B.  Class A is what you could buy from your stock broker and traded under the symbol GOOG.  Class A shares had customary voting rights, one share one vote.  Voting on issues like, say a new board of directors who might do something like…fire the executive team.  Sounds fair, right?

What about the Class B shares?

There were certain rules about the Class B shares.  According to a pre-split filing with the SEC, Google disclosed that:

Our Board of Directors has authorized two classes of common stock, Class A and Class B. At December 31, 2009, there were 6,000,000,000 and 3,000,000,000 shares authorized and there were 243,611,368 and 74,160,683 shares legally outstanding of Class A and Class B common stock. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to 10 votes per share. Shares of Class B common stock may be converted at any time at the option of the stockholder and automatically convert upon sale or transfer to Class A common stock. We refer to Class A and Class B common stock as common stock throughout the notes to these financial statements, unless otherwise noted.

Very Googlely–doesn’t signal anything particularly significant right?  “The rights of the holders of Class A and Class B common stock are identical, except with respect to voting.”

So the rights are identical except they’re not.  Do you call “identical” having 10 times the voting power of the other class?

And how do you get to own Class B shares?  You have to be named Eric Schmidt, Larry Page or Sergey Brin.

Because, you know, some animals are more equal than others.

Page and Brin each own about 15% of Google’s outstanding stock, but they hold 56% of shareholder voting power because of the 10x power boost of their Class B stock.

So Google–that is, the Class B stockholders–came up with a plan to issue nonvoting Class C shares in Google–say that again–nonvoting stock.  This means that anyone who buys a share of Series C will never be able to vote on something like whether the company should spend $500,000,000 to keep the Series B holders from being indicted.

Of course it should.  What are you thinking?

And here’s the added bit of transparency–the new Series C will trade under the ticker symbol GOOG.  That was the same ticker symbol that was used from inception for the voting–but gelded–Series A.  The old Series A will trade under a new ticker symbol, GOOGL.  In fact, the S&P will shortly remove the GOOG ticker–Series A–from the indices and replace it with GOOGL, the nonvoting Series C.

Meaning that if you said, I think I’ll buy some of the Google stock I’ve heard so much about, it’s entirely possible that you would buy GOOG without any idea that you were just handing over your money to Google only to be forgotten.  Because after two years of litigation with its stockholders over the fact that Google has never paid a dividend of the billions it is sitting on top of, the split IS the dividend.

So how did they get away with it again?  Very Googley:

The Class C stock was proposed by Page and Brin and it was reviewed by a special committee of independent directors, according to court documents. The lawyers for the plaintiffs had argued that the special committee never really considered rejecting the plan.

The settlement comes after the judge overseeing the case, Leo Strine, said he would be looking closely at whether the special committee members were overly chummy with the founders. “During the negotiations, were they arranging a fishing trip to Alaska? That stuff is actually, can actually be substantively relevant,” Strine said, according to a court transcript.

Many of the court filings were heavily redacted, leading some to question whether Google settled to avoid putting its founders on the witness stand.

So let it not be said that Google doesn’t acknowledge the right to be forgotten.  The insiders apply that right to all of the other stockholders every day.

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