Google Gears Down for Tougher Times

WSJ discusses the tougher times has Google gearing down.

MOUNTAIN VIEW, Calif. -- Corporate austerity is reaching one of the most extravagant spenders of the boom years. Google Inc. has begun to tighten its belt.

For much of its 10-year history, Google spent money at a pace that was the marvel of Silicon Valley. It hired by the thousands and dished out generous perks, including three free meals a day, free doctors, ski trips and laundry facilities, and subsidized personal trainers. It let engineers spend 20% of their time pursuing pet projects. The company's goal was to develop new products that would reduce its nearly total reliance on selling ads connected to Internet searches.

The Data Center group has been effected as well.

Google used to build with abandon new data centers to house its computer servers. It figured that demand for the company's products would inevitably catch up with capacity. Mr. Pichette has made the company pay more attention to aligning its capacity with its needs, say people familiar with the matter. Google's operating committee recently decided to delay opening a new facility in Oklahoma that was planned during flusher times.

Who is Mr. Pichette?

Google recently hired a new chief financial officer, Patrick Pichette. Trained in "Six Sigma" management practices -- a rigid quality-control system designed to eliminate waste -- Mr. Pichette is looking to reduce inefficiencies and delay spending when possible.

Besides slowing things down, these times are forcing shifts in priorities.  If you are a PUE fanatic, your efficiency projects are getting more attention.  Just wait until energy prices start rising.

This messiness is about to spill into public view on two levels. Globally, diplomats are convening over the next two weeks in Poland for a climate-change conference, where the official purpose is to protect the planet and the subtext is to shift the cost to someone else. In the U.S., the same basic battle soon will heat up as President-elect Barack Obama, who has pledged to push for deep cuts in U.S. emissions of global-warming gases, moves into the White House.

One lesson from all this is that regulatory sticks aren't likely to be enough. Financial carrots also will be important to try to convince polluters, whether companies or countries, that cleaning up their act is in their economic interest. Here again, however, those interests are being defined in narrowly local terms.