Google & China: Internet Freedom vs. Hard Core Business Bruising?


China-US Flags.jpgThe threat by Google to pull out of China because of Chinese espionage efforts to hack into the gmail accounts of human rights activists has captured enormous attention. Of course, anyone who has paid any consistent attention to China and its massive growth would know that the Google revelations are really nothing new. What is new, perhaps, is Google’s willingness to turn an economic battle into one that looks like a moral stand.
My friend Zachary Karabell has an outstanding snippet on the Google China mess in Time Magazine titled “Silicon Valley is No Longer King.” Karabell is also author of Superfusion: How China and America Became One Economy and Why the World’s Prosperity Depends On It — but to some degree his article, excerpted in part below, argues that there is less fusion between the US and China than there is that China is eating our lunch on a lot of fronts.
His piece starts:

The furor surrounding Google’s bombshell announcement that it was contemplating withdrawing from business in China has centered on long-simmering issues of privacy, government control, and censorship. Google, a company whose DNA dictates that it “do no harm,” is particularly well-cast in the role of defender of western values of freedom of expression and open access to information against a Chinese system that brooks no political dissent and reserves the right to forcibly prevent certain types of information ranging from political expression to porn.
But there is another story here, more prosaic but no less important to the future arc of global business and the global balance of power. Google has not been doing all that well in China, as many have noted in recent days, badly trailing the domestic Chinese search company Baidu. But it isn’t just that Google has struggled. All of the New Economy western companies in the media and information business have failed to establish themselves in China. Before Google, eBay and Yahoo both made investments of years and millions upon millions of dollars to tap the fast-growing Internet generation in China, and like Google, they could not gain traction. Both companies ended up pulling the plug on their China ventures, with eBay losing out to domestic Chinese auction company Taobao, and Yahoo ceding its operations for an ownership stake in (which also controls Taobao).
The failure of these New Economy players in China is in stark contrast to the success of brick-and-mortar companies. Consumer stars like Nike, food franchises like Kentucky Fried Chicken, industrial giants like General Electric and United Technologies, and technology behemoths ranging from Microsoft to Intel to IBM have prospered in China. In fact, mainland China has been the most impressive growth market for hundreds of global companies for the past decade. So how did Google stumble so badly?

On Wednesday next week, the New America Foundation is teaming up with Slate for an event on Google, China and Internet Freedom (register here if you would like to attend) featuring Open Society Institute fellow Rebecca MacKinnon, Foreign Policy contributing editor Evgeny Morozov, Columbia Law School professor and Slate contributor Tim Wu, and Clinton’s senior adviser for innovation Alec Ross. Atlantic Monthly correspondent and New America board member James Fallows will moderate.
I have been saying for some time that America’s challenge versus China is that the latter, in a national sense, has looked like Google — full of promise and growth in the future and thus China has been given a political weight that its substantive realities in real time today don’t justify. America, in contrast, looks like a large, well-branded, underperforming asset — like Xerox or General Motors.
Clearly, no matter what the outcome of this standoff, I think China looks less like Google now and perhaps more like Goldman Sachs — which I’ll explain another day.
— Steve Clemons


13 comments on “Google & China: Internet Freedom vs. Hard Core Business Bruising?

  1. Carroll says:

    Posted by JohnH, Jan 17 2010, 2:57PM – Link
    Oh gawd!…well, we sure are going to trust the gov more now that we know they are going to do covert ops for truthiness on the public.
    As if this kind of shit isn’t one of the reasons we don’t trust the “Gov” to begin with.
    What idiots.


  2. JohnH says:

    Glen Greenwald on Obama’s likely initiative to make people trust the government more:


  3. JamesL says:

    Regarding governmental restriction or bias of information for political reasons, there’s not a lot of difference between China and Texas:
    08:57 AM CST on Saturday, January 16, 2010
    By TERRENCE STUTZ / The Dallas Morning News
    AUSTIN – Texas high school students will have to learn about leading conservative groups from the 1980s and 1990s – but not about liberal or minority-rights groups – under U.S. history standards tentatively adopted by a politically divided State Board of Education on Friday.
    The Republican majority on the board also gave a thumbs down to requiring history teachers and textbooks to provide coverage on the late Sen. Edward Kennedy and new Supreme Court Justice Sonia Sotomayor, as well as leading Hispanic civil-rights groups such as LULAC and the Mexican American Legal Defense and Education Fund.
    Led by the board’s social-conservative bloc, Republicans left Democrat Hillary Rodham Clinton and former U.S. Supreme Court Justice Thurgood Marshall, the nation’s first black justice, on the list of important figures that will have to be covered in history classes.
    But they also added, on a 7-6 vote, Eagle Forum founder Phyllis Schlafly, the National Rifle Association, Moral Majority and the Heritage Foundation to the list of persons and groups that students will learn about.


  4. Pahlavan says:

    Google will continue to refine its search algorithms until people’s search queries produce links that only Google and it’s largest advertisers want people to see. I see cases where a single click (not even a purchase) is generating $12 for Google.


  5. Joe says:

    Long time TWN reader, first time poster.
    There is a degree of naivety that seems to exist concerning Google’s threat to pull out of China. Yes, Google is failing to capture market share where as Baidu has propspered.
    Rational adults must ask themselves: What could force Google to close up shop and leave China?
    Are a few hacked e-mail accounts a valid excuse to pull out of the worlds largest internet market, or does Google have larger concerns to contend with?


  6. ... says:

    i am not sure what freedom and google have in common… not much as far as i can tell..
    “Views on privacy
    Schmidt was asked in an interview on CNBC whether Google’s users should treat the search engine as a “trusted friend.” Schmidt’s reply was, in part, “Judgment matters.[…] If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place. If you really need that kind of privacy, the reality is that search engines — including Google — do retain this information for some time… it’s important, for example, that we are all subject in the United States to the Patriot Act and it is possible that all that information could be made available to the authorities.”
    sounds very chinese gov’t in some obvious respects….


  7. PissedOffAmerican says:

    Yes, Carroll, I have noticed. Features that used to appear when doing basic searches now have to be performed on an “advanced search” basis. For instance, the “sort by date” option used to appear on a standard news search. Now, you have to open a dfifferent option window and manually choose the option.


  8. JohnH says:

    “Difficult to access” allows for plausible
    deniability, a cornerstone of US intelligence policy
    for 60 years.


  9. JohnH says:

    Carroll–why do suppose that the US government would
    act any differently from the Chinese in terms of
    what’s acceptable to access? And why would Google
    respond to US Government “requests” any differently
    than it responds to Chinese government ones? I think
    the difference may amount to how ham fisted the
    government chooses to be–impossible vs. very
    difficult to access information.


  10. Annias says:

    @JohnH – The reason the US government does not behave in a sane way is because during the Reagan years we switched from a Bretton Woods economic policy to a neo liberal one.
    Not to be humorous but “google” neo liberal and you’ll understand what the US government is doing to us and how that benefits China.


  11. Carroll says:

    Maybe it’s just me ..but it looks like google has changed the way searches work over the past several months right here in the US.
    Something is definitely different in what key word searches bring up in the news category.
    Am I imagining this or has anyone else noticed it?


  12. JohnH says:

    You are right to look past the “long-simmering
    issues of privacy, government control, and
    censorship.” The bottom line is that any sane
    government will preference its own and let
    important foreign companies twist in the wind,
    particularly after local companies have backward
    engineered anything of value from the foreigners.
    What’s interesting to note is that US policy seems
    to be all over the place. Defense, energy,
    finance, and agriculture (Monsanto), seem to
    receive clear preference, while wide swaths of
    other industries, even hi-tech ones, are free to
    off-shore whatever they want and expose themselves
    to backward engineering and theft of technology.
    Obviously, short term corporate interests check
    any effort to engage in any form of strategic
    industrial policy. Bottom line: the US government
    does not behave in a particularly sane way.


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