Google threatens to pull out of China

Last month Google’s operations in China noticed that a sophisticated hacking operation had illegally attempted to access the records of dozens of targetted Gmail users — specifically those of prominent human rights activists, based in China, Europe, and the United States. This information, which obviously aroused great concern within the company, wasn’t made public until yesterday, when Google announced a significant change in how it would operate in China.

In a press release posted on its web site Tuesday, Google explained that it would cease to comply with China’s internet censorship provisions, which had prevented users of China.cn (Google’s China web portal, launched in 2006) from accessing "sensitive" sites:

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 have decided 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. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

On Wednesday late morning Beijing time, Internet users in Beijing and Shanghai reported being able to access — for the first time — formerly forbidden images and web links, including photos of 1989 Tiananman Sqaure demonstrations and links to freetibet.org, through Google.cn searches. This led to speculation that Google had already removed filters.

Google’s apparent defiant stand — that it will operate freely within China, or not at all — quickly launched a heated debate. Many applauded the company’ principles; others wondered how much Google really has to lose if it does exit China, given that business there has not met expectations.

Writers on technology web sites, such as Slashdot.org and Techcrunch.com, were quick to point out the company’s bottom-line concerns. As Techcrunch technology reporter Sarah Lucy wrote:

I’ll give Google this much: They’re taking a bad situation and making something good out of it, both from a human and business point of view. I’m not saying human rights didn’t play into the decision, but this was as much about business….

Google’s business was not doing well in China. Does anyone really think Google would be doing this if it had top market share in the country? For one thing, I’d guess that would open them up to shareholder lawsuits. Google is a for-profit, publicly-held company at the end of the day. When I met with Google’s former head of China Kai-fu Lee in Beijing last October, he noted that one reason he left Google was that it was clear the company was never going to substantially increase its market share or beat Baidu. Google has clearly decided doing business in China isn’t worth it, and are turning what would be a negative into a marketing positive for its business in the rest of the world.

Meanwhile, Wired reporter Kim Zetter traces some of the steps Google has taken between when it discovered the cyber attacks and now, both to protect its own employees in China and to warn the international human rights activists targeted.

[A] source who is knowledgeable about the investigation [said] that Google’s decision to disclose the attack on Tuesday was also partly due to a decision made by the other targeted companies to keep the attack under wraps.

“They made a specific decision not to go public,” the source said. “You can either go out [with the information] or not, and for whatever reason, they’ve decided not to [disclose].”

He said Google felt it was important to alert the people who are potentially affected by the attack — the activist community.

Among many looming questions, one key one is: How will Microsoft, Yahoo, and other web portals react? Is Google setting a new precedent?