China to Google: "That's not a knife"

In an extraordinarily public game of geopolitical trade chess, Google is finding out that China holds the trump cards.

Our story begins on Tuesday, January 12th, 2010. On the official Google blog, David Drummond, Google SVP and Corporate Development and Chief Legal Officer, makes some startling claims:

  1. That Google China is under cyberattack, along with at least 20 other large companies
  2. That the attacks appear to be focused on Chinese human rights activists
  3. That additional attacks are occurring on non-Chinese advocates of human rights in China
  4. That the attacks, their associated surveillance, and increased censorship in China are causing them to review the feasibility of doing business in that country at all.

Drummond continues on to say that Google is no longer willing to censor results in China, but stops short of saying they've already opened up the search engine. Instead, he says, "...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." Wouldn't you love to know the sequence of events leading up to this post? A public accusation of the Chinese government is a big deal. Disregarding China's censorship policies is a big deal. Pulling out of China is a big deal. We can be reasonably confident that this blog post is not Google's first response to this situation, but rather an attempt to up the ante. So what, exactly, was Google’s first response? Unfortunately, we're unlikely to find out. On Friday, the New York Times did a pretty good job of outlining the discovery of the attacks -- but failed to mention whether there were conversations between Google and Chinese officials prior to the public announcement. The Chinese government's official response to Google's ultimatum can best be described as, “Be my guest.” Or, as Bloomberg reports: the Chinese government has stated that they're behaving in strict accordance with their own laws, which are all justified, and there’s no way they’ll be able to compromise on this one because of the dangerous precedent it would set. In other words, play by our rules or take a hike. Their position is reasonably unsurprising. I’m no China expert, but even I know they don’t appreciate brinksmanship. Meanwhile, in the Financial Times, Microsoft’s Steve Ballmer scoffed at the idea of departing China. “I don’t understand how (pulling out of China) helps anything. I don’t understand how that helps us and I don’t understand how that helps China.” None of the other 33 alleged corporate victims of the attacks have stated they’re leaving China, either (although Yahoo!, safely stateside, expressed their support of Google’s position). The U.S. government has supported Google’s resistance to censorship, but hasn’t taken their side in accusing the Chinese government of hacking. And even the American press -- who you’d think would be lauding Google’s moral high ground in standing up to oppression -- is expressing cynicism about the Mountain View search giant’s ulterior motives. “Google wasn’t winning in China anyway,” says Advertising Age. “Google’s pull-out of China might make the overall human rights situation slightly worse,” says Fast Company. In short, Google is finding out that, in some ponds, even they aren’t a big fish. At this point, they’ll either have to back down or pull out, and even though ‘loss of face’ doesn’t tend to be cited as a motivator for American companies, in this case I think it will play a big part. If they back down, their credibility as a force for global good is pretty well shot. If China backs down, their domestic informational floodgates are open. Neither of those seems to be an acceptable alternative to the two players. So we’re left with Google pulling out. That same Bloomberg article quoted Duncan Clark, the Beijing-based Chairman of BDA China, as saying, “ is toast. Just keep pressing refresh on your browser and see what happens.” What do you think will happen?

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