Broadbandindia Magazine

Google recently threatened to stop censoring its search results in China and consider pulling out of the coun try completely after discovering that computer hackers had tricked human rights activists into exposing their email accounts to outsiders.The move, if followed through, would be a highly unusual rebuke of China by one of the largest technology companies, which had for years coveted China’s 300 million Web users.The professed change of heart heralds a sweeping shift for the Internet’s search leader, which has repeatedly said it will obey Chinese laws requiring some politically and socially sensitive issues to be blocked from search results available in other countries.

Move cheered freespeech advocates The acquiescence had outraged free-speech advocates and even some shareholders, who argued Google’s co-operation with China violated the company’s “don’t be evil” motto. But the tipping point didn’t come until Google recently uncovered hacking attacks launched from within China. The apparent goals: breaking into the computers of at least 20 major US companies and gathering personal information about dozens of human rights activists trying to shine a light on China’s alleged abuses.Google spokesperson Matt Furman declined to say whether the company suspected the Chinese government might have had a hand in the attacks.US secretary of state Hillary Clinton said the Google allegations “raise very serious concerns and questions” and America was seeking an explanation from the Chinese government. It’s “an incredibly significant move”, said Danny ’Brien, international outreach co-ordinator at the Electronic Frontier Foundation, an Internet rights group in San Francisco.

Game changed

This changes the game because the question won’t be ‘How can we work in China?’ but ‘How can we create services that Chinese people can use, from outside of China?’”Google’s threat is a rare display of defiance in a system where foreign companies have long accepted intrusive controls to gain access to a huge market. Google, Yahoo, Microsoft and others have acceded to pressure to block access to politically sensitive material.Many websites based outside China, including Google’s YouTube video site, are regularly blocked by the government. In China, search requests that include words like “Tiananmen Square massacre” or “Dalai Lama” come up blank.Google officials plan to talk to the Chinese government to determine if there is a way the company can still provide unfiltered search results in the country.

China operations “limmaterial”

If an agreement can’t be worked out, Google suggested it was prepared to leave China four years after creating a search engine bearing China’s Web suffix, “.cn”.Abandoning China will not put a big dent in Google’s earnings, although it could crimp the company’s growth. China’s Internet audi-ence already has soared from 10 million to nearly 340 million in the past decade.Google said its Chinese operations account for an “immaterial” amount of its roughly $22 billion in annual revenue. Some analysts put Google’s China revenue at $600 million a year.Although Google’s search engine is the most popular worldwide, it’s a distant second in China, where the homegrown Baidu.com processes more than 60% of all requests.

Will Internet majors rally behind Google?

The world’s dominant search firm may be hoping other search and email leaders, both global and domestic, will rally around it in calling for China to lighten a heavy-handed approach to the Internet. The move for Google would be relatively straightforward, as its main China businesses are currently mostly limited to search and e-mail, and are believed to account for a relatively small part of its global revenue. But global search and e-mail giants such as Microsoft and Yahoo, and big Chinese players have other factors to consider before joining ranks with rival Google.

Microsoft : bound by interest in PCs, R&D, research

The world’s largest software company has huge vested interests in China and is pumping more resources into the country. Computer sales there now top 40 million a year, many preloaded with legal copies of Microsoft’s Windows operating system, the company’s core franchise and main breadwinner. Microsoft has also invested millions of dollars in China, opening a network of research and development centres, all aimed at showing its commitment to the world’s No. 2 market for PC sales.

Most recently, Microsoft has launched a Chinese version of its highly hyped new search engine, Bing, and has said the market will be a top priority. Given all it has at stake in China, Microsoft could have a hard time withdrawing from part or all of the market, and could be reluctant to take any steps seen as hostile.

Yahoo : bound by multi-billion dollar stake in Alibaba

After a largely failed attempt at going it alone in the market, Yahoo invested $1 billion for 40% of Alibaba Group, parent of Hong Kong-listed Alibaba.com and operator of two of China’s leading online commerce sites.

Given the size of its Alibaba investment and Alibaba’s overwhelming reliance on the China market, Yahoo could find it difficult to take a tough stand against government Internet meddling in China and risk potential fallout for Alibaba.

Chinese Internet majors : bound by reliance on home market

China’s three oldest major Internet firms, Sina, Sohu and NetEase.com Inc, all operate services in China and are careful to steer clear of content and other actions that could raise the ire of government censors. From their original roots as Web portals, all three have diversified into other services, from online games and e-commerce to mobile addedvalue services and search. Given their almost 100% reliance on the China market, the trio would be the least likely to join hands with any movement by Google. Google’s main China rival, search engine Baidu, self-censors itself in accordance with Chinese law to avoid sensitive, mostly political topics.

China tells Google to obey laws

Google must obey China’s laws and traditions, Beijing said an indication officials won’t budge in negotiations after the search giant threatened to pull out of the country if Internet restrictions aren’t relaxed.

The comments from foreign ministry spokesman Ma Zhaoxu were the first from Beijing that referred directly to Google Inc since it threatened to shut down its China-based site over censorship and alleged e-mail hacking. “Foreign enterprises in China need to adhere to China’s laws and regulations, respect the interests of the general public and cultural traditions and shoulder corresponding responsibilities. Google is no exception,” Ma said.

The Chinese government imposes strict Internet controls that Communist leaders believe they need to protect their monopoly on power. Beijing blocks access to Websites abroad run by human rights groups and dissidents and material deemed subversive or pornographic.

Google has said it would hold talks with the government over the issue. Ma told a regular news conference he did not know if any talks had been held. A pullout would be awkward for China. Chinese and foreign businesses rely on Google’s e-mail, maps and other services, which could lead to disruptions if authorities try to retaliate for a Google withdrawal by blocking access to its US site.