Very Bad Idea of the Week: Google Abandoning China

Don Tennant

Google's threat to pull up stakes and leave China following a major hack attack from within the country has rekindled controversy over its decision four years ago to enter the China market even though it was compelled to abide by Chinese censorship laws. The reasons it was right to enter China then are the same reasons it would be wrong to leave the country now.

 

The attack was reportedly aimed at exposing the Gmail accounts of Chinese human rights activists, a matter of deep concern for all of us, and especially for anyone with business or other interests in China. Google's response was to announce that it will no longer censor search results on its Chinese search site, Google.cn, and that it's considering pulling out of the country altogether. The Wall Street Journal's take on the development is almost spot-on:

Google deserves praise for having a bottom line, but it's worth remembering that this is a lose-lose-lose scenario. The most likely outcome is that Google loses access to an important market, Chinese customers lose access to its services, and the government loses face. Google's decision in 2006 that entering the mainland market was a net positive for information flows was well reasoned. The tragedy is that the Chinese government became so aggressive in its repression that this is no longer the case.

I say "almost" spot-on because of that last sentence. The assertion that it's no longer the case that Google's presence in China is a net positive for information flows is wrong.

 

What I wrote on this topic in 2006 is every bit as valid today as it was then:

Many in the U.S. will cheer that [anti-Google] rhetoric, completely oblivious to its tragic shortsightedness. They'll echo the outcry [in opposition to Google's entry into the China market and agreement to abide by Chinese censorship laws] without recognizing that we simply can't be content with changing the lives of the 100 million Chinese who have the incalculable good fortune of gaining access to the Internet. They'll be incapable of appreciating the fact that we need to change the lives of 1.3 billion Chinese. And the best way to make that happen is to engage China and to expose the Chinese people to whatever positive Western influences we possibly can. We don't need to agree with that nation's government to abide by its laws, any more than we need to agree with our own government to obey it.

The Wall Street Journal cited research by China IntelliConsulting Corp., which found that 30 percent of the 338 million Chinese Internet users who use search engines log on to Google at least once a week. The research firm estimates that there are approximately 40 million frequent Google users in the country. Punishing those people for the actions of their government is unfair and unconstructive. Any company with an online presence faces the threat of a hack attack by government operatives and others in China and in any number of other countries, regardless of location. So pulling out of China is unlikely to have any demonstrable impact on Chinese hacking efforts.

 

Google was right to take a strong stand in the matter, and the U.S. government should take an equally strong stand in support of Google and any other U.S. company that's victimized by Chinese hacking. But taking its ball and going home would accomplish nothing, and would be cheered by no one in China other than those who want to prevent the Chinese people from being exposed to Western influence.



Add Comment      Leave a comment on this blog post
Jan 15, 2010 2:38 AM Wayne Wayne  says: in response to Dain

Dain: Sure, but you have to ask two things: (1) what percentage of the Chinese population is technically savvy enough to use a proxy, and (2) what percentage of the Chinese population will be able to benefit from the (essentially) all-English nature of Google's US services?  Percentage-wise, there is no doubt a substantial bilingual population in China who could use www.google.com, and of course there is Google Translate (http://translate.google.com).  But at the end of the day, access to the Internet should be a right, not a privilege.  Why should they have to jump through hoops -- or, flipping the question around and putting it another way, why the original outrage in 2006 if it was just a proxy issue?

Don: We understand your stance on whether Google should pull out -- but what's Google's motive to discontinue filtering?  Granted, that should absolutely be seen as a positive thing for all--Americans and Chinese alike are justified in their frustration with such an oppressive law.  It seems pretty clear, however, that Google's intent is to make the Chinese government lose face.  Doesn't this go against the WSJ argument against such a lose-lose scenario, and against your argument that you don't need to agree with a law to abide by it?

Reply
Jan 15, 2010 4:47 AM Don Tennant Don Tennant  says: in response to Wayne

Google's decision to discontinue filtering was wrong -- if it's going to operate in China, it needs to abide by Chinese law, as it said it would when it set up operations there. I failed to make that clear in my post, so thanks for pointing it out.

Reply
Jan 15, 2010 5:55 AM Drunken Economist Drunken Economist  says:

Donnie.Boy writes:

"So pulling out of China is unlikely to have any demonstrable impact on Chinese hacking efforts."

Insofar as the Google Shanghai staff won't have access to Google's VPN, sourcesafe, or general LAN I think you might be a bit incorrect on that one.

Google didn't close offices over a little burp in security. Google closed their offices because having COMPROMISED (from date of hire) staff in their offices didn't pencil anymore.

Google entered into a quid pro quo relationship with China. Obviously the Chinese weren't worried about losing face when they upped the ante with the hacking, most Chinese people don't care about Google that much anyway: E tu, Baidu? And the only loser here is Google: for finally learning the lesson of 'if you hire in China, your employee works for the government first and you second.'

Reply
Jan 15, 2010 12:01 PM Dain Dain  says:

Don, I think a main point lost in your article is that Google may shut down the google.cn site.  Google services and google.com would still be available to them (if their government allows access - I am not sure); but they could use a proxy.

Reply
Jan 15, 2010 12:15 PM Ronda O'Bryant Ronda O'Bryant  says:

Google should DEFINITELY cut all ties with China!  They have proven over and over again in many areas of our trade relations that they can't be trusted!

Reply
Jan 16, 2010 3:15 AM Wayne Wayne  says: in response to Dain

Dain: "I agree the internet should be a right, but is it the responsibility of a private company to supply it?"

Fair enough.  Even if you consider it a "right," that doesn't mean that a private corporation (no less a U.S., i.e. foreign, corporation) has a responsibility to provide that right.  With that said, Google has repeatedly made the case that "What's good for the internet is good for Google," and its bevy of products and services, many of which are only indirectly related to its core business concepts of advertising and search, are designed to service as entry points to the internet.  (This is the point repeatedly made by industry observers such as Jeff Jarvis, http://www.buzzmachine.com.)  Therefore, it is in Google's own interest to cater to the Chinese market.  More eyeballs = more advertising revenue, which leads to the corollary: Fewer eyeballs in China = lost advertising revenue opportunity.

Bottom line: No, it's not Google's responsibility, you're right.  But it's still good business.  And that ends up being good for China AND the U.S.

Good discussion.

Reply
Jan 16, 2010 8:49 AM Jerome Thorson Jerome Thorson  says:

"Google deserves praise for having a bottom line, but it's worth remembering that this is a lose-lose-lose scenario. The most likely outcome is that Google loses access to an important market, Chinese customers lose access to its services, and the government loses face. Google's decision in 2006 that entering the mainland market was a net positive for information flows was well reasoned. The tragedy is that the Chinese government became so aggressive in its repression that this is no longer the case."

I find it interesting that you consider an ethical stand a lose-lose-lose scenario, provided it is an ethical stand by Google.  Further, have we forgotten that the Chinese government is a dictatorship and that every large business is owned by the government.  Are we really that surprised that they would try to undermine a large American company?  Surely not!

We are long overdue for companies from other parts of the world to stand up and tell China enough is enough.  We should take on the US government while we're at it.

Reply
Jan 16, 2010 12:08 PM Dain Dain  says: in response to Wayne

Wayne: Great points!  Also, I agree the internet should be a right, but is it the responsibility of a private company to supply it?  Either way, they just provide a search engine and some services.  (They don't operate and own the connections and internet it China.)

Reply
Jan 16, 2010 12:10 PM Dain Dain  says: in response to Don Tennant

Don: I agree if they want to operate in China then they need to abide by their laws; which is why I think the pull out.  Let me go to an extreme, if Google had the same operations in a country that came under the control of a terrorist organization and required Google to filter it's results...and they stayed for the money...what would be the perception of Google?

Reply
Jan 16, 2010 12:44 PM Don Tennant Don Tennant  says: in response to Dain

I would argue that the people of that country need to be exposed to as much outside influence and information as possible. If the good guys all pull out, what happens to the people? If a country isn't engaged with the rest of the world, it's the people who suffer, not the government leaders.

Reply
Jan 17, 2010 10:35 AM Valerie Tan Valerie Tan  says: in response to Jerome Thorson

Every countries have their own rules and regulations and we are all brought up in different cultures. One that is "taboo" maybe "normal" to others. Anyway, there are many government that does some form of monitoring under the declaration of "homeland security" and it's either they declare it openly or kept under wrap.  Sometimes I really wonder which is better - openly or secretly?

Reply
Jan 26, 2010 8:25 AM Drunken Economist Drunken Economist  says:

Don, you need a serious schooling on Google's and China's motivations. Luckily I'm here to help.

http://mindtaker.blogspot.com/2010/01/china-v-india-v-japan-inc-and-how-they.html

China is where Japan Inc was about 20 years previous to their 'lost decade'... If China has what they want (for Baidu and other gov't projects) then it doesn't matter whether Google 'stays' or 'goes'. At least to the middle kingdom.

-Drunken Economist

  http://mindtaker.blogspot.com/

  http://twitter.com/drunk_economist

Reply

Post a comment

 

 

 

 


(Maximum characters: 1200). You have 1200 characters left.

 

null
null

 

Subscribe to our Newsletters

Sign up now and get the best business technology insights direct to your inbox.