Google and China: A Win for Liberty and Strategy
Isaac Mao saw this coming. In early 2007, a year after Google (GOOG) launched a China-based version of its search engine that adhered to Beijing's strict censorship rules, the prominent Chinese blogger posted an open letter to founders Larry Page and Sergey Brin. Mao described the frustration he and other Chinese Google fans felt as a company with the informal motto "Don't be evil" obeyed policies forbidding access to sites deemed taboo by China's government. Google's self-censorship "hurts those loyal users a lot," wrote Mao, who said it was "high time to change Google policy back to the right track."
Now the 37-year-old Mao seems to be getting his wish. After Google's Jan. 12 announcement that it would stop censoring search results on Google.cn—in response to what the company called "highly sophisticated" hacking from China of its computer systems and the infiltration of Gmail accounts of human-rights activists—Internet users in China had new hope they might gain access to information on the 1989 Tiananmen Square crackdown, the Dalai Lama, and other banned topics. The company says it will quit China if it can't run a permanently unfiltered search engine. It's hard, though, to imagine the Chinese giving Google, or anyone else, that kind of autonomy.
An exit from the mainland would uphold the right of free expression and acquit Google in the eyes of those who protested its initial complicity with Chinese restrictions. "It's a smart move," says Mao. But before heaping too much praise on Page and Brin, it's worth noting that a pullout would also end a bruising commercial battle. In the U.S. Google has over 60% of the search market. In China its share of search profits is 35.6%, a distant No. 2 to local champion Baidu's 58.4%, according to China data tracker Analysys International. No wonder, says David Wolf, CEO of Beijing-based advisory firm Wolf Group Asia, "Google appears to be more interested in winning hearts and minds than in sustaining its business in China."
China, which has more than 330 million Web users, has not been kind to American Web giants. Instead of replicating their U.S. success, eBay (EBAY), Yahoo! (YHOO), and Microsoft (MSFT) portal MSN found they couldn't go it alone against such domestic rivals as Baidu, e-commerce leader Alibaba's Taobao, and instant messaging power Tencent. Even after U.S. players teamed up with local partners, they still trailed.
Google struggled from the get-go. Despite its submission to censorship, its YouTube business was regularly blocked, and censors still occasionally restricted access to the entire search engine, not just results to offending queries. After Google announced that it would alert Chinese users every time it provided them with a censored result, the government-run media attacked the company for allegedly operating without a license. Chinese Net users even mocked Google's Chinese name, a transliteration of the word Google that was rendered inelegantly as "Valley Song." Google also had to wage a bitter court battle in 2005 before winning permission to hire a brilliant Microsoft executive, Kai-Fu Lee, to head its China business. Lee quit in September.
Google says financial considerations have nothing to do with its challenge to the Beijing censors. Outsiders disagree. "Google is in a really tough spot," says Bill Bishop, a Beijing-based angel investor in Chinese startups. "There is no long-term potential." By citing the hacking and censorship issues as reasons for leaving, Google can end its agony and "get this incredible lift in brand equity," he says. Google won't lose much financially: Its Chinese business was on target for 2010 sales of $600 million, according to JPMorgan Chase (JPM). That's a fraction of Google's estimated overall sales this year of $26 billion.
The irony is that the main Google site, Google.com, is popular with China's English-speaking elite, who find local search engines insufficiently global. Sounds like the makings of a good business. Such logic doesn't always work in China.
Obama Backs Google In Dispute With China
Hillary Clinton, the US Secretary of State, demanded "an explanation" for Beijing of Google's allegation that its Gmail email system was infiltrated. "The ability to operate with confidence in cyberspace is critical in a modern society and economy," she said.
Robert Gibbs, Mr Obama's press secretary, emphasized that the President backed Internet Freedom and said that Google had coordinated with the Obama administration before it had acted.
The alleged cyber attacks have further strained China-US relations that are already fraying over issues of trade, currency, climate change and arms sales to Taiwan.
"We have been briefed by Google on these allegations, which raise very serious concerns and questions," Mrs Clinton said.
Mrs Clinton had also met executives from Google and Microsoft, as well as with Cisco Systems, which provides much of China's internet infrastructure, to discuss how to stop countries from "stifling" access to information, the state department added.
Next week the US is to launch a new technology policy to help citizens in other countries to gain access to an uncensored internet.
The Chinese authorities said they were seeking clarification over Google's demand it be allowed to operate its Google.cn search engine free from the increasingly draconian censorship of the Great Firewall of China.
China has spent millions trying to project it's 'soft power', however analysts said its rulers now faced a choice between protecting its power at home and suffering the embarrassment of being rejected by one of the free world's biggest brands with negative consequences for the investment climate.
"It is setting us up for a clash, and it's interesting to see who backs down. It's the US versus China, but the companies will be lobbying," said Chris McNally, a China analyst at the East-West Center in Hawaii.
A spokesman for Google said the company was 'in talks' with the authorities, while outside Google's offices in Beijing a handful of citizens braved the cold to lay flowers 'in mourning' at the prospect of Google's departure from China.
Despite hopes that China would start to relax freedom of speech restrictions after the 2008 Olympics, China has in fact tightened of internet controls, blocking popular as social networkings sites such as Twitter, Facebook and YouTube.
The issue of censorship was raised by the US President Barack Obama on his maiden visit to China last November when he told an online town hall that he was "a big supporter of non-censorship."
"I can tell you that in the United States, the fact that we have free internet – or unrestricted internet access – is a source of strength, and I think should be encouraged," he said, to the evident irritation of his hosts.
The decision by Google to break ranks from other big corporations doing business in China and openly criticize the country's autocratic leadership comes after four rocky years during which Google was forced to compromise its core belief in the free-flow of information.
Announcing its sudden change of heart on the company's blog site, David Drummond, Google's chief legal officer, said: "These attacks and the surveillance they have uncovered – combined with the attempts over the past year to further limit free speech on the Web – have led us to conclude that we should review the feasibility of our business operations in China.
"We are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all," he said.
Human rights groups, which have criticized Google's decision to submit Chinese censorship after setting up in China in 2006, applauded the company's stand. The New York-based Human Rights Watch described it as "an important step" to protect human rights online.
"Through international pressure, finally a big business in the West has come to realize its own conscience," said the prominent Chinese Dissident Wei Jingsheng who lives in exile in the United States after 18 years in prison in China.
"Some Western businesses thought that by making compromises with the Chinese communists' regime, they could do business as they wished.
However, this is impossible because the Chinese government would not be satisfied."
View Larger Map
Sources: Business Week, Telegraph.co.uk, CNBC, Google Maps
.jpg)
No comments:
Post a Comment