Power

How Google workers secretly built a union

And why one labor leader says Google organizers have 'sparked a fire that is going to spread throughout the entire tech industry.'

How Google workers secretly built a union

Google employee holds a sign as thousands of employees walk off the job to protest the company's handling of sexual misconduct claims on November 1, 2018, in Mountain View, California.

Photo: Mason Trinca/Getty Images

More than a year ago, activists inside Google began to seriously investigate how they could go about creating a union. Frustrated with conflicts over fair treatment of workers, sexual harassment and equal pay, and facing punishment for organizing a massive walkout, some workers started to talk quietly about more official organizing. In January 2020, a group reached out to the Communications Workers of America to learn the first steps, and began quietly discussing structure and bringing more workers on board without tipping off Google leadership. Recruiting was limited to a group of closely-connected friends, peers and colleagues and secret word-of-mouth discussions, meaning that most Google workers had no idea the union was being formed.

Dylan Baker, a software engineer who joined the recruiting process in October, described a careful process fearful of Alphabet retaliation. "We needed to keep things under the radar. We added one person at a time, very incrementally," they said. Almost every worker they approached about the union agreed to join. "From here, I think every single person has a lot of reasons and a lot of things that they want to change," they said.

After a year of secret organizing, more than 200 Google workers launched their unusual minority union on Monday, citing their collective disillusionment with the company's claims that it does good for the world and its workers. More than 225 Googlers signed union cards with the CWA, formally creating the Alphabet Workers Union and marking the official birth of one of just a few unions in the tech industry. AWU is a non-contract union, meaning that it does not have the legal certification of the National Labor Relations Board and instead has collective bargaining protections under U.S. labor laws that apply to all groups of workers.

Over the last two years, Google has been roiled by employee protests against the company's handling of sexual harassment allegations, controversial projects like the drone computer vision Project Maven and the recent firing of AI-ethics leader Timnit Gebru. After conversations between disillusioned Googlers and CWA representatives, the nascent group agreed to affiliate with CWA Local 1400, which will provide legal advice and connections to the Google workers as they develop their own structure and priorities.

"People have this idea of Google as being a force for positive change in the world, and their products as products that are for the public good, and that has been shattered somewhat," said Beth Allen, CWA's communications director. Lots of Google workers joined the company because of its "don't be evil" mantra, Allen and several union members said, and their disillusionment with that mantra's gradual disappearance was part of the motivation behind the union formation. "It feels like the people who I came to Google to work with are slowly leaving the company," said Raksha Muthukumar, a union member and software engineer. She believes that the collective solidarity of the union could push the company to return to its foundational ideals.

"Of course our employees have protected labor rights that we support," said Kara Silverstein, Google's director of people relations. "But as we've always done, we'll continue engaging directly with all our employees."

The AWU's interim executive team, elected last month, will lead the group over the next few months as it recruits and accepts any of Alphabet's 120,000 North American employees who choose to join, including temporary and contract workers. Another round of elections could be held in a few months, when the number of new union workers has stabilized. Software engineers Parul Koul and Chewy Shaw are AWU's first executive and vice executive chairs, respectively, and make up two of the seven-person interim elected executive council. The council members campaigned for the roles and were elected through a democratic instant runoff process in which almost all members participated, according to Baker.

Specific actions, like protests or petitions, have not yet been planned, and will be determined by employee working groups once the union is more established. "They'll really be building their membership a lot in the next few months," Allen said. "They'll be building out what structures are the best in terms of their internal process as they figure out how many workers they have in different locations." Union members told Protocol that interest and enthusiasm from Google workers was overwhelming the morning of the launch, though they don't yet know how many workers joined on the first day. The few that declined to join at Baker's invitation before the launch all did so for the same reason: fear of retaliation from Google.

But now that the union is public, both Baker and Muthukumar believe that immediate retaliation is unlikely, in part because it's explicitly illegal for companies to try to suppress worker organizing, but also because any reports of retaliation would create a PR disaster for Google. "It's not PR-savvy of Google to openly retaliate, so we're not expecting a big crackdown. But at the same time, we're watching them," Muthukumar said, citing her shock at Gebru's recent firing as evidence that Google could respond more harshly than anticipated.

Google is not the only tech company with rifts aplenty, nor is it the first where workers decided to unionize (workers at Kickstarter and Glitch unionized last year, and a formal unionization process is underway in an Amazon warehouse). Other unions are on the way for similar reasons, Allen said, though Google is the company with the most obvious divide between ideals and reality. For a long time, "tech paternalism" convinced workers that they didn't need to advocate for themselves, she explained, because companies promised everything from food to massages. Only massive growth exposed issues like nonstop working hours, unequal pay and benefits for people from minority groups, and the harsh reality that beneficent founding ideals don't last forever. "We've certainly been talking to a lot of different folks in the tech and game world, some of whom are facing specific issues and not quite ready to unionize, some of whom are in various stages of moving forward," she said.

"This has really sparked a fire that is going to spread throughout the entire tech industry," said Steve Smith, the spokesperson for the California Labor Federation, which represents more than 1,200 California unions.

Traditional bargaining groups are uncommon in the tech industry for a number of reasons, including generous pay and benefit packages that make workers reluctant to organize, geographic dispersion that challenges the traditional manufacturing-floor organizing playbook, and differing priorities that would make it hard to convince at least 51% of Alphabet employees to elect to unionize without years of effort. To get around these challenges, the AWU is not a typical union with exclusive contract-negotiating power limited to specific Google employees. Instead, it's a non-contract union open to all types of workers, including third-party contractors. Some union staples are the same: Members will still pay dues (1% of their salary) and they can still file complaints with the NLRB if Google illegally retaliates. But there's one very important takeaway here: Unlike a more traditional union legally recognized by the NLRB, it cannot exclusively negotiate worker contracts with the company.

Non-contract union formation is an emerging tactic in a number of industries and makes even more sense for tech, which faces different organizing challenges than traditional manufacturing, Smith said.

The CWA representatives taught the AWU founders that unions don't need legal authority from the NLRB in order to act on behalf of and in favor of workers, according to Baker, who became involved in the planning process about three months ago. This opened the door for the group to formalize and support worker activism without the difficult legal wrangling that usually accompanies contract-union formation.

And while many software engineers and corporate Google employees don't need or want the pay and benefits protection of a traditional union, temporary and contract workers at Google do. Under U.S. labor law, those workers are legally prohibited from organizing in an NLRB-recognized union, meaning that a non-contract union is the only group that can advocate on behalf of both official Google-employees and third-party contractors. "If they had gone through the traditional NLRB process, the bargaining unit would have been quite restricted geographically or by job process," Allen said. That was the opposite of AWU's goal: to stand in solidarity with contract and temporary workers, who generally make less money and receive fewer benefits than traditional employees.

"There are advantages and some disadvantages to that approach," Smith said, "but I think the way that they're doing it is really smart, given the workforce that they're dealing with. By forming a non-contract union, they can exert pressure on Google in a lot of different ways without having to go through a formal contract negotiation." While people typically think about unions in terms of pay or benefits, they can exert pressure via collective power without negotiating a contract with a company, especially in terms of equity, health and safety goals, he added.

"The idea was much more focused on building really strong connections and a culture of care, rather than trying to spread as quickly as possible right from the get-go," Baker said. If they had tried to do so, "We're not going to get to 100,000 workers in a way that's sustainable and effective, and without getting totally squashed."

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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