Two Sided Tango

James Damore was probably right in most of what he wrote in his famous memo that got him fired from Google, but this is, I think, incorrect:


The $250 million Damore refers to here is the amount Google has spent on diversity initiatives since 2014, to very little effect:  the percent of female and black employees have not budged at all.

Since nobody actually thinks it’s impossible to hire more black or female employees, this isn’t exactly about pretending Santa Claus is real. It is instead about Google making choices, presumably based on a covert acknowledgment of the kinds of differences in behavioral traits that Damore discusses in his memo. Diversity involves real tradeoffs, and increasing the representation of some groups is going to mean lowering hiring standards, something Google is evidently unwilling to do beyond a limited extent.

But that still leaves the question of what that quarter-billion dollars in diversity initiatives is for. From Damore and others’ accounts, it sounds like it went to a large extent to implicit bias trainings for employees and lots of retraining throughout the company to get people to “commit to diversity” in various ways.

But the main purpose, one would assume, is to get articles like this written.

Google is not atypical among tech companies in its lack of diversity- or more specifically, in not being very representative of the American population, since nobody cares how many different kinds of Asian and Eastern European immigrants Google hires. But Google is fairly distinctive, apart from being one of the largest and most profitable companies in the history of the world, in the nature of its business model. The vast majority of people using Google’s online services- whether web searches or Gmail or Drive or Blogspot- are not paying for them. Unlike Apple, which really mostly sells expensive hardware, or Microsoft, which until recently made all its money selling overpriced software, Google is in a “two-sided market.”  From the perspective of Google or its Alphabet holding company, in purely revenue terms, users of the company’s services are not customers, they are the product, the eyeballs and data streams that Google then sells, mainly to advertisers.   This distinction becomes obvious if you ever have to deal with Google’s non-existent customer service for its web services, as I did when Google marked an old blogspot blog I used for teaching high school science as spam and deleted it.

As Mo Tkacik wrote in 2010, in the 21st century the real money is all in demand, not in supply.   You could say that Google becoming the world’s largest company by becoming the world’s largest advertising firm is a good example of that, along with Facebook making Mark Zuckerberg $70 billion on a very similar business model. Google is slavishly devoted to “diversity”- or more specifically to black American culture- on its demand side, not on its supply side. As Steve Sailer noted, an absurd percentage of the top results  on Google for “American Inventors,” “American Scientists,” and “American Mathematicians” are black (the Wright Brothers don’t even make the top 50 results for American Inventors), and the highly visible Google Doodle is regularly focused on celebrating black culture.

Google Doodle 2Fab 5 Freddy

Google needs diversity, or at least well-off people who care about diversity, in the audience for the advertisers who pay its bills, but is still only 2% black among its employees. It’s not alone- of the big tech companies, only Amazon (which has a larger low-education workforce at its warehouses) and Apple (which has a more diverse staff at its retail stores) are significantly higher, and Facebook (another two-sided market winner) is a measly 1% black:

black employees

In general, the New Tech/Hollywood Economy of California has been lousy for black workers; here are black male and black female wages as a percentage of white male and white female wages, respectively:




This is not pro-white racism in any simple sense; for example, black wages have fallen as a fraction of Asian wages in California even faster:




Damore and I would probably agree about the major reasons for this collapse in relative black wages- in politically correct economisty terms, this is “skill-biased technological change” at work (along perhaps with rapid immigration into California disadvantaging low-education workers more.) But ironically, Damore is letting his former employer off too easy. Rather than spending $265 million on Santa Claus, and even aside from avoiding the icy grip of regulators and civil rights law suits, Google knows what it is doing quite well. Both sides of the two sided market- the advertisers who pay its bills and the users of its services- want to believe in diversity, and the $265 million and pointless bias trainings let them think that Google believes in it, too, regardless of the truth.


12 thoughts on “Two Sided Tango

  1. Or one could think of it like a “Potlatch”.

    Spending (or setting fire to) $265 million, as an alternative to actually sacrificing hiring standards (and presumably the quality of their products), Google is signaling that they believe in diversity.

    Liked by 1 person

  2. Very interesting graphs. How does California differ from the national trends and how does it differ from an old economy state without much immigration such as Ohio?


  3. I worked out the anomaly on searches for ‘American XXXX’. Most of the direct hits are as a result of the term ‘African American XXXXX’ in the source text. It’s just as innocuous as Google’s AI misidentifying pictures.


    1. Sounds like Alta Vista in 1998: you have to enter the search terms exactly correct if you want the result you are looking for!

      Google has devoted immense amounts of effort to finetuning their search engine so that you don’t have to watch out for persnickety issues. They just don’t care to do it in this case.


  4. If you want to see Google results for american inventors, make sure to add “-african” or you will mostly get results for african american inventors. The same goes for scientists and mathematicians. It’s not a result of bias on Google’s part, just common sense.


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