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1/12/2010 6:58:38 PM - Google pulling out of China...but what's the real reason?

Years after I harshly criticized Google (in 2006) for bowing to the Chinese government's demands to censor their search results, it appears that Google has finally come around to my way of thinking...or at least professes to have come around.

I argued at the time that by acceding to the Chinese government's censorship demands, Google was in fact strengthening the position of the government and simultaneously weakening the hand of Chinese dissidents pushing for greater political freedom. I first wrote about this concept - the acceptance of a government's oppressive policies making one an unwitting enforcer of that policy and government - back in 1994-1995 when I created Crusader: No Remorse (and even mentioned the idea specifically in the accompanying clue book.)

I said that Google did not actually believe what they were saying - that by simply "being there" that they would help to gradually open up Chinese society, even if they had to "temporarily" help the government enforce the very policies that would make it more difficult for the Chinese people to learn, organize, and eventually dispel such policies. I said that Google was accepting the government's censorship demands - and making a mockery out of their apparently meaningless "Do no evil" corporate motto - for purely commercial reasons.

Google announced this evening that they will no longer filter their search results due to major cyber attacks originating in China whose purpose was, they say, to gain access to the Gmail accounts of human rights activists.

This sounds great. Finally, a worldwide corporation is taking a moral stance - profitability be damned - and doing "what's right". Unfortunately, it's not so simple and there are several reasons why I'm not buying it.

First, in almost the same breath in which he stated that Google might be pulling out of China, Google's chief legal officer, David Drummond, also stated that doing so would not affect their profitability or revenues in any material way. Ok, so Google's doing "the right thing", but only because they're not really making any money in China anyways. That doesn't sound as impressive as my "profitability be damned" statement, but whatever.

Second, Google has always been a distant second to Baidu in Chinese search. In China, Baidu is the Google and Google is the Yahoo. Now, if I were a cynical man (but as I always say, "I'm not cynical, I'm realistic"), I might stop and think about this for a moment. If you're burning a ton of time, money, and effort on search in a country with major censorship requirements that hurts your worldwide brand image (loads of organizations still rail on Google because they think that it betrayed its "Do no evil" motto by acceding to censor its search results) but doesn't generate any significant profits or revenue now or in the foreseeable future, then simply shutting it all down might start to sound pretty good.

Now, Google did try to turn things around a while back. In 2005 they hired Kai-Fu Lee - a high-profile Microsoft Corporation executive - to lead its China operation. Guess what...he left in September 2009, and I suspect that Google corporate has been wondering who's going to drive the show over there now.

If you're running Google, simply giving up on the Chinese marketplace might thus be sounding pretty good, but you know that the corporate image is going to take a beating if you simply concede defeat. After all, Google executives repeatedly said that they were "helping" the Chinese - even with the censorship restrictions - by simply "being there". After making all of that noise, you're then going to simply walk away because a local search company cleaned your clock and rendered the hope of significant profits a distant memory?

So...what could you do to pull victory from the jaws of defeat if you were Google? It's easy.

First, you claim that "someone" - without ever explicitly saying that it's the government, but by inferring as much with the use of words like "major attack" - has been trying to obtain the Gmail account passwords of human rights activists. That's easy. After all, "someone" is pretty much always trying to gain access to email accounts whether you're in China, the US, Europe, or floating on a piece of flotsam in the Pacific. Then again, it's China, so of course they're doing everything that they can to keep an eye on those that they don't like. Duh. Did Google somehow forget that China executes thousands of political prisoners every year, or miss the fact that people are routinely imprisoned for simply saying that there ought to be more political freedom, or simply marching in protest of oppressive policies? Did they somehow forget about the Tiananmen Square massacre in 1989? That's China...and Google knew it in 2006 just like it knows it now. The only real question is why Google has chosen this moment to draw a line in the sand, when previously they were willing to acquiesce to whatever demands were made of them so that they could gain access to the fastest growing modern economy in the world.

Second, you link two unrelated issues in a way that no matter what the outcome you come out ahead. claim that due to "unsuccessful attacks" (because it doesn't help your reputation if they succeeded) on Gmail accounts of human rights activists, you're no longer going to filter search results. These two things are totally unrelated, but you know that a major corporation signaling that it may leave the fastest growing marketplace in the world for "moral" reasons will occupy everyone's attention and you won't get called on it.

The beauty, of course, is that there are only two possible outcomes to this scenario and both of them are great for Google. One, the Chinese government accedes to some minor changes in censorship and Google looks like a hero...despite, and I guarantee you this, the fact that any such changes would be immaterial and inconsequential. As a side benefit, Google's share of Chinese search would almost assuredly increase as Chinese users flocked to the site because they think that Google stuck up for them. The second option, of course, is that the Chinese government simply boots Google out of the country for refusing to accede to its censorship demands, making Google look like a heroic corporation standing up for the oppressed Chinese citizenry, adding a ton of value to the worldwide Google brand, and, of course, accomplishing the original objective of getting Google out of a losing situation.

Interestingly, this will also put pressure on Yahoo and Microsoft - Google's main search competition in many parts of the world - to follow suit. If they don't, their brands will almost certainly suffer and Google's would probably skyrocket even more since they'd be the only major corporation willing to forgo profits for least according to Google and their public relations army.

I think that Google is doing this because they see the writing on the wall and know that they've lost the search war in China unless they can pull a rabbit out of their hat and jumpstart their search percentage (by, say, obtaining a huge dose of goodwill by standing up to the Chinese government.) Do you really think that Google would be taking such a hard line if they were the #1 search provider in China? Or if they were making a lot of money in China? Or that Gmail accounts in China just started getting hacked? Or that refusing to censor search results has anything to do with email accounts getting hacked?

I saw what happened when Google had to choose between money and morals back in 2006 when it first entered China. Google is only taking the "moral" road now because it sees more benefits - financial and otherwise - by going in that direction, and not because it's simply "the right thing to do".

- TZ

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