Dramatic news from Google on “Chinese cyber-attack”

If this is accurate, it is quite a story. A sophisticated, large-scale cyber-attack from within China is causing Google to overhaul its Chinese operations and possibly stop censoring the search results on google.cn. The story has everything – human rights, censorship, America’s leading brand, cybercrime, intrigue and an unprecedentedly open statement from Google.

You can read a good summary of the breaking story over here.

Google is releasing information about a “highly sophisticated and targeted attack” on their corporate infrastructure that occurred last month. The attack originated in China and resulted in the “theft of intellectual property from Google.” In light of the attack Google is making sweeping changes to its Chinese operations.

Google is releasing some information about these attacks to the public. The company says that a minimal amount of user information was compromised, but has come to the alarming conclusion that the attacks were targeting the information of Chinese human rights activists. Google found that these attacks were not just going after Google’s data, but were also targeting at least twenty other major companies spanning sectors including Internet, finance, chemicals, and more. Google has also discovered that phishing attacks have been used to compromise the Gmail accounts of Chinese human rights activists around the world.

In light of the attacks, and after attempts by the Chinese government to further restrict free speech on the web, Google has decided it will deploy a fully uncensored version of its search engine in China.

At first I didn’t believe it. Then I saw it from the horse’s mouth, Google’s own blog:

We launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results. At the time we made clear that “we will carefully monitor conditions in China, including new laws and other restrictions on our services. If we determine that we are unable to achieve the objectives outlined we will not hesitate to reconsider our approach to China.”

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.

The decision to review our business operations in China has been incredibly hard, and we know that it will have potentially far-reaching consequences. We want to make clear that this move was driven by our executives in the United States, without the knowledge or involvement of our employees in China who have worked incredibly hard to make Google.cn the success it is today. We are committed to working responsibly to resolve the very difficult issues raised.

This is kind of slapdash; I wasn’t supposed to be blogging today as I’m on deadline. But this story is totally unbelievable, off the charts.

Thanks to the reader who alerted me to this.

Update – From the NYT

Google threatened late Tuesday to pull out of its operations in China after it said it had uncovered a massive cyber attack on its computers that originated there….

Google said that a primary goal of the attackers was accessing the Gmail accounts of Chinese human right activists, but that the attack also targeted 20 other large companies in the finance, technology, media and chemical sectors.

In a blog posting by David Drummond, the corporate development and chief legal officer, Google said that it had found a “highly sophisticated and targeted attack on our corporate infrastructure originating from China.”

“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,” Mr. Drummond wrote in a blog post.

He wrote that Google was no longer willing to censor results on its Chinese-language search engine and would discuss with Chinese authorities whether it could operate an uncensored search engine in that country.

“We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China,” Mr. Drummond wrote, adding that the decision was being driven by executives in the United States, “without the knowledge or involvement of our employees in China.”

Yeah, a very big story. I’m waiting for the conspiracy theorists who claim this is google’s creative strategy for exiting China, where things never went quite the way they expected, while making them look like the victim instead of the loser. (And no, I don’t necessarily believe that. I just know how the minds of some of my more strident commenters work. Being a PR guy, it was the first thing that crossed my mind when I heard the story – I couldn’t help it.)

Update 2: The Wall Street Journal is featuring this as their top story today, and they state:

Much of the data stolen from Google was its “core source code,” Mr. Mulvenon [director of a national security firm] said. “If you have the source code, you can potentially figure out how to do Google hacks that get all kinds of interesting data.” Among the data, would be the information needed to identify security flaws in Google’s systems, he said.

The attackers used at least seven different types of attack code to identify and steal data from Google, said Rafal Rohozinski, a principal at the SecDev Group, a Canadian security consulting firm that discovered a major Chinese spying operation on the Dalai Lama last year.

I bring this up because it calls to mind a comment I left in the earlier thread:

[D]on’t fool yourself about google. They may let you download a song for free. Would they hand you the source code for their search algorithm? No, because then they wouldn’t be Google anymore. They’d just be one of a trillions of other companies offering the same thing.

This was in response to a commenter praising Google for not caring about intellectual property and being a proponent of open-source technology (you can actually do both – be a proponent of open source and value IP). Obviously Google does care about IP, a lot – as it must. Its core source code is its bread and butter.

Post updated at 8:24pm Arizona time. Is it all a PR stunt?

______________

Richard Burger is the author of Behind the Red Door: Sex in China, an exploration of China's sexual revolution and its clash with traditional Chinese values.

The Discussion: 89 Comments

Story here too http://www.telegraph.co.uk/technology/google/6977627/Google-will-quit-China-unless-web-censorship-ends.html

Interestingly…http://www.wired.com/threatlevel/2007/11/are-chinese-aut/

“I recall when I first came to China, google was rarely accessible.
Although officially it was not blocked, but it would work for a few clicks, then die, then work, etc. Individual features such as google cache, google images, etc still do not work properly to this day. On occasion google.com and google.com.cn are redirected to their Chinese competitor Baidu, this even happened as recently as last week. It was also no coincidence that during the first month of Baidu’s operation in
China, google was usually inaccessible and unusable, and very often google visitors were redirected to Baidu.

Similar things have been happening to eBay, youtube, myspace and other blog services, etc. Any US website that makes money will be copied by the Chinese and the original site sabotaged. If you need any confirmation, head on over to China for a few months, or browse through the Expat forums where hundreds of expats are complaining about not being able to use popular US websites.”

January 13, 2010 @ 8:57 am | Comment

just saw this myself and wanted to tell you about the story! absolutely crazy, I am really curious to see how it will pan out…

January 13, 2010 @ 8:57 am | Comment

Actually, and not to sound like a tinfoil hat conspiracy theorists, Google has been putting an interesting emphasis on the safety that cloud computing and Google App Engine in particular provide it’s users.

More likely though theres a PR person who’s job it is to sell App Engine and if they didn’t spin real information like this they would be summarily fired.

One famous example of Google censorship in china is the tiananmen square image search, which returns tourists instead of tanks. A commenter on TechCrunch pointed this out : http://images.google.cn/images?hl=zh-CN&source=hp&q=tianamen%20square&um=1&ie=UTF-8&sa=N&tab=wi

(note some else has already pointed out that tiananmen is spelled wrong in the query, and that correcting that returns the result to the ‘expected’ one)

January 13, 2010 @ 8:59 am | Comment

Google was censored when I first went to China in 2002. So was the NYT and the Washington Post.

This sure dovetails nicely with our heated discussion in the post below on intellectual property in China.

January 13, 2010 @ 9:00 am | Comment

This is truly earth shattering news. More shattering headlines to be expected in the months to come.

Ultimately I think the question becomes:

1) Can China suurvive without Googles? and

2) Can Googles survive and thrive without China? Are we looking at the beginning of Googles demise? Can Google win in a war against China? I am not so sure unless Google has 8000 pounds gorillas behind it. Discuss…

January 13, 2010 @ 9:01 am | Comment

Just got the news too.

If Google, together with other already blocked services, get blocked in China, would it provide more fuel to a WTO violation claim?

January 13, 2010 @ 9:09 am | Comment

oÔ !
Yes it is a BIG news ! And with Baidu hacked yesterday (and offline during more than 5 hours, big crash) the internet in China is changing quite fast !
Let’s see what will happend, but if google leave China market, which company will take this empty place ? A chinese one ? Microsoft ?

January 13, 2010 @ 9:17 am | Comment

Whoever it is, they’ll have to sell out, I’m afraid. Business as usual.

January 13, 2010 @ 9:23 am | Comment

I get the feeling someone got mightly pissed off in Google. It seems they are bringing the nukes (figurately speaking)

Could this be another case of an entity within Chinese power structure acting too independently without central govt been aware?

There were already cases with such lack of coordination in the not too distant past.

It seems the CCP power structure is not so hierarchical/vertical as it seems from outside.

It is more like several groups (gangs?) jockeying for power and influence from within its own areas of influence, which leads to some coordination gaffes….. which sometimes may be intentionally provoked by one group or another for their own devious aims.

Strange Go match, with unknown players with unknown plans.

January 13, 2010 @ 9:23 am | Comment

Fascinating story. It begs the question: who needs the other more, China or Google? I find it almost inconceivable that the CCP could back down and allow Google to operate in China on its own terms. But imagine if it did, and what that would say about the staggering power that can be wielded by just one corporation.

January 13, 2010 @ 9:29 am | Comment

imho, having Google back down at this point is rather untenable. Before, they had a vague “do no evil” policy, and they were able to justify their entrance into China as not violating this policy by saying that access to some information is better than no information. I remember reading a fairly in-depth NYT article that discussed how they were not crazy about doing this, but felt it was for the better.

Now they have stated in no uncertain terms that (a) they are no longer censoring, and (b) are seriously reconsidering doing business in China because of these and other events. I don’t see how they could now turn around and renege on such wording, especially since they have come out so publicly and openly about it.

January 13, 2010 @ 9:37 am | Comment

(point being, it’s not a question of who needs who more. Either the government backs down [or remains silent], or Google pulls out. Either way, Google isn’t taking part in the censoring. Perhaps they can lead the way for other multinational corporations.)

January 13, 2010 @ 9:38 am | Comment

I don’t think the issue is about intellectual property rather it is about the 2 dissidents’ gmail accounts. I’m sure that the Chinese Authorities came to google and asked for the passwords for the 2 dissidents accounts and google refused. Whereas I’m sure that google would work with the FBI if there is someone involved in some terrorist case if the suspects have gmail accounts.

I doubt that the Chinese government would care if google.cn would operate in China anyways. Ultimately, since the West supporting China’s dissidents, companies like google have to choose between doing business in China or get grilled by the Westerners for helping out China.

January 13, 2010 @ 9:48 am | Comment

how could you possibly be ‘sure’ that thats how the situation unfolded?

I realize this could boil down to a he said she said style argument between some yet unnamed Chinese interest and Google and if that becomes the case it’s entirely up to the reader to decide who did what and when but in lieu of evidence or a Chinese response of any kind how can you be ‘sure’?

January 13, 2010 @ 9:54 am | Comment

“Whereas I’m sure that google would work with the FBI if there is someone involved in some terrorist case if the suspects have gmail accounts”

This is, however, conjecture and not backed up by any facts…or even rumour. I put it to you that Google wouldn’t as I have not read of one report stating that anyone accused of terrorism by western countries has been even identified by their Gmail account…

It’s a bit of a leap, in my opinion, to call dissidents terrorists. As it was, the last one I read that the CCP jailed was merely stating in a letter that the Chinese people deserve the rights that the Chinese constitution already guarantees….if I read the news correctly.

January 13, 2010 @ 9:55 am | Comment

Looks like Google already made up its mind; besides China most probably will not likely backs down; either do my way or the highway; saving face is very important to the government. What will follow from hereon?

January 13, 2010 @ 10:00 am | Comment

Google are right this time. Beijing keep chipping away at their operations and now the predictable evidence of espionage.

Time to take a stand. And if that means a China exit, so be it.

Well done, Google!

January 13, 2010 @ 10:05 am | Comment

This is great news for netizens in China. This is a big step towards a China only internet for China. It will be independent of anything else in the world. Totally self contained. There won’t be information that upsets the harmony in China, moving a big step forward for the perpetual reign of CCP on China.

January 13, 2010 @ 10:06 am | Comment

[...] from Google themselves (hat tip to Richard @ TPD, where a discussion is underway): We launched Google.cn in January 2006 in the belief that the [...]

January 13, 2010 @ 10:09 am | Pingback

Mike,

When Nidal Malik Hasan was caught in the Fort Hood shooting, it didn’t take long for the FBI to have access to his email account. And this guy has multiple e-mail accounts yet the FBI has no problems accessing his accounts.

http://abcnews.go.com/Blotter/hasan-multiple-mail-accounts-officials/story?id=9065692

If google wants to do business in China, they have to comply with China’s laws. Since google didn’t have the information on these dissidents’ e-mail accounts, it has to come to this. Google probably don’t want to be in the same situation as Jerry Yang when he got grilled for handing over some dissident’s e-mail account information.

January 13, 2010 @ 10:11 am | Comment

may I be so bold to say this may spark the beginning of the mass exodus of MNC in next couple of years from china back to the west or other more friendly countries?

Seems in these economic hard times America is starting to rediscover who are her true friends.

January 13, 2010 @ 10:14 am | Comment

Not sure if they will really pull out from China, but why would they stay in a market that forces them to run a second-rate censored Google and cripples most of their key products such as Google Maps, Documents and Youtube?

January 13, 2010 @ 10:19 am | Comment

Pug – if I recall, Malik was dead by the time these accounts were disclosed. If Google had complied in the fashion you say it should, surely the shootings would not have occurred. As it is, is writing a letter stating that the guaranteed rights of people in a country is being compromised the same as shooting people dead? Is having a difference of opinion the same as shooting people dead?
Google did comply with Chinese law. I also believe theft and espionage is illegal in China (Stern Hu will be able to tell you all about it) so who broke the law in this case? Google or the hackers (the implication being that they are CCP employed, as I read things)?

January 13, 2010 @ 10:22 am | Comment

http://community.nytimes.com/comments/www.nytimes.com/2010/01/13/world/asia/13beijing.html?permid=79#comment79 sums up what I think

The article/post does not do a very good job of explaining the situation. Here it is. Google and Baidu are competitors in the Chinese market with Baidu being the leader. Baidu has received help from the state like when DNS (a component of the internet that can direct web traffic) was altered by the Chinese government to redirect Google traffic to Baidu. Like all businesses in China, Baidu very likely has investments from the Red Army. So, 1) Google realized that China has no intention of having a fair market based fight between Google and China. (2) China is actively helping steal Google’s intellectual property via these cyber attacks.

My theory is that Google’s move has little to do with protecting human rights and more to do with protecting business interests. Once the Chinese government managed to penetrate into Google’s infrastructure, they might have looked at people’s emails while mostly using the breach to steal intellectual property. Obviously, Google is using the Human Rights pretext to make this move. Planting Red Army spies in local offices of foreign corporations is standard modus operandi for the Chinese government. Typically, a foreign company will have a few expats that run an office filled with locals. As an expat their, you don’t know the language, the customs or the people. You cannot run any trusted background checks on the employees. Then how do you trust them not to steal for the government? Even if they don’t steal but are just aware of what’s going on, they won’t tell anyone for fear of retribution from the government. The end result is that a foreign company opens a local office in China or gets into a joint venture, has it’s intellectual property stolen which is used by the Chinese Red Army to start a replica business and run the victim company out of business. Remember Cisco vs Huawei?

January 13, 2010 @ 10:26 am | Comment

Mike,

It is not about whether the deaths at the Fort Hood is avoidable, but it is rather how the accounts are being accessed without being much of an issue.

Don’t be so sure that Google has compiled with laws in China. I’m sure you’ll see China’s side of the story in a few days. Theft and espionage is probably illegal in every country, unless the government does it; that includes in China and the US.

January 13, 2010 @ 11:04 am | Comment

Pug, you are so predictable (not that there is anything wrong with that). You swallow the party line on everything. I’ll withhold judgment until I hear what they have to say – but I won’t declare either party right or wrong ahead of time.

If you think Google is involved in theft or espionage, you have another thing coming. They are just about the richest company in the world. They have no motive to commit theft or espionage, and if you think they do, show us the money. I.e., what do you think they did and why do you think they did it and where’s your evidence?

January 13, 2010 @ 11:11 am | Comment

its smells and feels a little like a new cold war. I hope not!

January 13, 2010 @ 11:16 am | Comment

Pug, as most things seem to indicate, Google has been shafted in China. And what does China have to offer that Google would consider worth stealing? Google wanted netizens, not intellectual property. Google has the IP – it wants monetary rewards for owning this IP. China, on the other hand (and we have already discussed the CCPs attitude to IP), wants the technology….

January 13, 2010 @ 11:17 am | Comment

I’ve updated the post and added some more links. Especially interesting is the last one pondering whether this may have been a big PR stunt. After all, what does Google have to lose? It wasn’t doing well in China. I’m withholding judgment for now.

January 13, 2010 @ 11:27 am | Comment

“I’m sure you’ll see China’s side of the story in a few days.”

And a fine story it’s sure to be.

“its smells and feels a little like a new cold war.”

Newsflash: China never left the old one.

January 13, 2010 @ 11:39 am | Comment

@Richard Mike,

I never said google stole IP, or accused of espionage. I was replying to Mike’s comment that most governments has some kind of spy agency that is involved in espionage.

Mike, you haven’t discussed what was actually stolen from google by the Chinese government. Second, internet attacks come from China all the time, as there are alot of unprotected computers there, and there is no proof that it originated from the Chinese government. Besides, in google’s accusation of China “targeting at least twenty other major companies spanning sectors including Internet, finance, chemicals, and more” How does google know that China are doing it? Does google own part of the internet backbone within China? I would be surprised if they did.

January 13, 2010 @ 11:47 am | Comment

Mike, I really have to disagree about some of your generalizations. ALL businesses in China are likely to have investments from the PLA? The PLA might indirectly own some shares through mutual funds, but come on… Red Army spies in almost every MNC? Do all MNCs even have tech worth stealing? I wonder if Richard has figured out who the Red Army spies are in his company… I’m sure most of the theft in the past has been by JV partners, back when all MNCs were required to have partners; when it comes to PLA tech espionage, most of it is probably related to weapons technology. But I guess it sounds a lot scarier to say your toy-making technology has been stolen by the “Red Army” than by Chinese toy manufacturers…

And while I too have -suspected- parts of the Chinese government intentionally create problems for American internet companies, there are plenty of examples of them failing in China due to their own arrogance, lack of local knowledge, and lack of the “first to market” advantage they had in the U.S. You mention Ebay. How the hell could Ebay think they could compete with Taobao when Ebay insisted on charging commissions, while Taobao was free? The expats at Ebay should have been ashamed of themselves.

I personally knew some American expats who moved to Shanghai to work for Paypal, and that was another operation that was doomed from the get go. I wanted to tell them “Do you think people are going to use your service when Chinese banks here are already offering it?”

I also don’t understand your reply to Pug_ster. Are you saying that if the Chinese wanted access to the email of a mass murderer instead of a dissident, you’d have no problem with that?

But yeah, I would not be happy to see Google close up shop here if it is in order to uphold their principles. Not to mention the many Chinese employees they have in China. Perhaps they can get jobs at Baidu…

January 13, 2010 @ 11:48 am | Comment

Richard, I’m not sure whether that link points to a PR stunt so much as a rationale for Google leaving China to her own (de)vices.

There really seems little reason for Google to stick around, unless it enjoys being browbeaten and compromised. They may as well take a swing at their tormenters on the way out the door.

January 13, 2010 @ 11:49 am | Comment

Stuart, if this is a rationale for Google leaving and not the actual reason why they are leaving, then I would have to put it in the category of PR stunt – in other words, if they are leading you to believe they are leaving out of moral indignation, when in fact they are perhaps leaving because they aren’t doing well in China, then it’s a PR stunt. Note there are lots of “if’s” in that explanation. I really have no idea, yet.

Okay Pug, sorry if I misunderstood.

January 13, 2010 @ 12:06 pm | Comment

Yes, You’re right. Point taken.

January 13, 2010 @ 12:19 pm | Comment

What negotiating cards does Google have against the CCP? To the CCP, google is just a dust on the finger (their market share is 20% in China in the internet search area). Most people in China use Baidu anyway. Google think this “public threat” will be effective in getting some “concessions”? Hahahaha, laughable, naive, childish. CCP will just say “Ok, you want to leave China? Go ahead, have a safe trip home. Bye bye.”. Even the US gov’t has no cards against the CCP these days, what does Google think it can do? Baidu stock is already up in after market trading after this news.

Stop joking me.

January 13, 2010 @ 12:37 pm | Comment

Feel the love.

Red Star, why are you putting some words in quote marks as though Google said them? That’s a dirty trick.

And I promise, it’s not as simple as you portray it. If Google isn’t posturing and it really leaves China, it will damage China whether you want to believe it or not.

January 13, 2010 @ 1:03 pm | Comment

[...] might say some more about the news later. For now, Just wanted to say I’ma bit baffled with those who take Google’s announcement at face [...]

January 13, 2010 @ 1:10 pm | Pingback

CNBC interviews Google’s Chief legal Officer.

January 13, 2010 @ 1:23 pm | Comment

Google China has been a failure in China, only 20% market share and cannot compete with Baidu. So they made a business decision to exit China. But they want to find a good cover story, a good way for them to exit without admitting their own failure. So anti-censorship is the perfect story. It reinforce their image of “don’t do evil”, and will win great praise from their “fans” in the US and the world (liberals, who think they are the most educated and most enlightened in the world). So this is a one bird kill two stones strategy: exit China due to bad business, and create great reputation for them in the minds of their fans.

So this just theater, nothing else, making yourself to be a tragic hero, a martyr.

Too simple, too naive.

January 13, 2010 @ 1:25 pm | Comment

This has implications that go well beyond google, Red Star, if you bother to do your reading. This will create a major business headache for China.

January 13, 2010 @ 1:30 pm | Comment

My belief is that Google’s exit will be good for Baidu, for Microsoft, for Yahoo. Business is business, people exit and enter all the time. China does not lack Google.

I advise you to buy some stocks of Chinese internet companies right now, Baidu and Alibaba especially.

January 13, 2010 @ 1:34 pm | Comment

Baidu is soaring up, predictably. However, in the longer term this will create big business problems as other American companies that have a greater impact on China’s economy are forced to respond to the cyber-attacks. Google’s position makes it much harder for them to just brush it off. I predict this will hurt China sooner rather than later, and I’m currently shorting Chinese the Xinhua index.

By the way, 20 percent of the China search market is absolutely nothing to sneeze at. And I hear it’s closer to 29 percent.

HongXing, I deleted your repellent comment to Stuart.

January 13, 2010 @ 1:46 pm | Comment

If it is a PR stunt, it is be a bad one and could come back to haunt them.

By admitting their websites have been hacked, they are admitting that data hosted on google is not secured. So, how are they going to convince business people to hand over their data center and move to google Web App (and ChromeOS)

January 13, 2010 @ 2:13 pm | Comment

Danfried, my humblest apologies…I forgot the quotation marks. I was merely quoting the link I provided. I actually agree with you in some respects…though would have thought that Google would have had the clout to get some decent folk in to help along. However, other information in the links seem to suggest the playing field was not the most level….unlike this utter pillock http://www.telegraph.co.uk/finance/china-business/6962490/Come-back-Not-for-all-the-scooters-in-China.html (and no, I am not laying blame on the Chinese for this one!)

January 13, 2010 @ 2:23 pm | Comment

The more I think about it, the more baffling I find Google’s statements. If you’re hacked — even if the hackers are backed by the government — is that really a reason to cut and run? Shouldn’t their response be to improve security? If they’re doing this because they think they can’t protect the privacy of their users anymore, does it make sense to abandon them to the other even worse email alternatives?

If this is a PR stunt, it is terribly self-destructive — Google is burning its bridges with the PRC government. If they think they can blackmail the gov’t into respecting privacy rights — well, good luck with that. While I find the internet censorship a pain in the ass (I’m forced to use Tor to access this site), I also know the gov’t doesn’t respond well to blackmail…

I guess I’ll reserve judgement until more info comes out. I would hate it if they explanation is that this is an emotional decision made by a few of Google’s top management.

And Richard, that was a pretty bad post if you were trying to show that China needs Google more than Google needs China. The article ends with a quote from a VC:

“I don’t think anybody is going to run away from China,” said Joe Schoendorf, a partner at Accel Partners, a Silicon Valley venture capital firm with a major presence in China. “Google has Microsoft on the ropes, and China is arguably the world’s most important market outside of the U.S. You don’t walk away from that on principle.”

January 13, 2010 @ 2:24 pm | Comment

“This has implications that go well beyond google … This will create a major business headache for China.”

Fallows agrees:

“China … seems to be entering its Bush-Cheney era. For Chinese readers, let me emphasize again my argument that China is not a “threat” and that its development is good news for mankind. But its government is on a path at the moment that courts resistance around the world. To me, that is what Google’s decision signifies.”

As ever, well worth reading the whole thing:

http://jamesfallows.theatlantic.com/archives/2010/01/first_reactions_on_google_and.php

January 13, 2010 @ 2:36 pm | Comment

And Rebecca Mackinnon has weighed in:

http://rconversation.blogs.com/rconversation/2010/01/google-puts-its-foot-down.html

January 13, 2010 @ 2:48 pm | Comment

No need to apologize Mike. It’s not that I don’t believe Chinese companies sometimes get preferential treatment — what I object to is how failing American companies often use it as an excuse as to why they are failing in China. While some are not doing well, other American companies in China are KICKING ASS.

When Subway first came to Beijing, I could think of a dozen reasons why they did poorly. For example, I read their Chinese language menus, and the translations were totally artless in comparison to say, KFC menus, which tried to name their products in an appealing manner. (The Subway translations were all direct, literal translations.)

KFC, by the way, is an example of an American company that mostly did the right things. Gain local knowledge, have good relations with central AND local governments, market to Chinese tastes while keeping your core product — it’s not surprising they have totally trounced McDonalds. And there aren’t any Chinese fast food chains that come even close.

I’ll admit thought that some of the reasons Google hasn’t done well didn’t have easy solutions. For example, Baidu has long had MP3 search — you could easily use it to find pirated music. Google couldn’t do the same, and had to struggle to negotiate to offer its own FREE but legal music service (which I love, BTW). But I think that took years, while Baidu entrenched itself as one of the easiest ways to get music.

The only thing I would predict about the gov’t response to Google’s threat is that they’ll say “All companies — foreign or domestic — must obey Chinese law.” Right now, with their home markets stagnating or collapsing, foreign companies need China way more than it needs more foreign investment. Indeed, too much hot money sloshing in is a major worry for the gov’t right now. But the gov’t also looks to the long term, where China might in the future might again want to encourage FDI, so I doubt they will do anything that will really spook investors outside of the online search business…

January 13, 2010 @ 2:54 pm | Comment

I will truly applaud Google if it decides to pull out of US market due to the war crimes in Iraq and Afghanistan committed by US government.

January 13, 2010 @ 2:56 pm | Comment

Yanno, if China wants to be a leader in the global economy, then it has to participate in the global conversation. And you know what, that means using Google.

Sure, things change overnight. Companies come and companies go. Maybe in a couple of years, Baidu will be the arbitrator of global dialog.

But I don’t think so.

January 13, 2010 @ 3:13 pm | Comment

@wk

Except for that the US government doesn’t then censor out all dissenting opinion from the public record on threat of imprisonment in an attempt to falsify a kind of unity in the public consciousness.

January 13, 2010 @ 3:27 pm | Comment

@Geoff
Wait a second, let’s first compare the two governments. US government sent army to Iraq and Afghanistan, which has deprived some people’s most basic human right-living, it is true that the criticism from some dissidents hasn’t been censored in Chinese way, but that hasn’t stopped the atrocity committed by US government, and yet we are seeing more US troops being sent to Afghanistan. On the other hand, the Chinese government censors, sometimes arrests dissidents, blocks some foreign websites and also forces some foreign business to comply with its rules. If human rights are as universal as claimed by people from western world, then people from all over the world should be treated equally, so in terms of violating human rights, which government is more evil?
If Google is so concerned about human rights, then it should not have stepped into China in the first place, when it decides to confront Chinese government, it should do the same thing to other governments, including US to truly make it a company with ethics. To me, the move by Google is more like a business decision, I really doubt its Chinese segment generates any meaningful revenue, in the near future, it is hardly to see that Google can compete with local rivals, like Baidu.

Personally I have been a faithful user of Google for many years and believes competitors like Google can only do good to the health of Chinese internet market, but business is business, politics is politics.

January 13, 2010 @ 4:24 pm | Comment

pug_ster,

The Google blog does say intellectual property was stolen. Are you calling Google a liar? Do you have evidence to the contrary? What proof do you have that Chinese authorities went to Google and asked formally? How do you even know they were dissident’s accounts? Are you saying if Google abided by their privacy clause, the Chinese government is then justified to attack and hack Google’s database? Assuming they were indeed dissidents, do you think dissidents and terrorists are the same thing?

The only important thing is how much money Google will lose if they go through with this. What is clear is that China has always adopted discriminatory policies against foreign companies, especially internet companies like Yahoo, eBay, Amazon, etc while at the same time calling out others for being protectionist.

January 13, 2010 @ 4:26 pm | Comment

I’ve said it before and I will say it again:
Don’t forget how the Qing dynasty government rotted in (similar) ignorance and arrogance.

January 13, 2010 @ 4:43 pm | Comment

Cypher, they’ll just blame it on the fact that the Qing was run by evil foreign Manchus and therefore “real” Chinese have nothing to do with its failures.

January 13, 2010 @ 4:45 pm | Comment

@wk

I can appreciate how the concept of society being comfortable with their mistakes so long as the government isn’t allowed to dictate the terms on how and when those mistakes may be presented may seem like an extraordinarily bourgeois point of view.

But I hope you can appreciate that the idea of a society where if something is going wrong you may not have the right to dissent about it seems to us draconian. We may simply need to agree to disagree.

January 13, 2010 @ 4:48 pm | Comment

wk
I think you’ll find, in the case, at least, of Afghanistan, the US army (and allies) allowed many Afghans to return home after exile. It also allowed many groups in Afghanistan to breath freely (Hazaras spring to mind).
Iraq was a clusterf*ck in many ways but most of the atrocities commited there were not by the Americans or allied forces but by home grown terrorists (seemingly predominantly Muslims). Sure, the US should have foreseen that but….
The Chinese government does a bit more that just arrest a few dissidents, block a few sites and other stuff you mention. A few Uyghurs, etc, might dispute what you say – but then they can’t as they’ve been arrested (and killed, in some cases) or driven to exile and hounded by CCP stooges (some of whom are, I am sorry to say, elected western politicians).
So, which is more evil? China, no doubts about it. Which is more ignorant? The US, I’d say. But evil, sorry, it’s the CCP. Ask any FG organ donor…
In which direction to most refugees travel? East or west?

January 13, 2010 @ 4:50 pm | Comment

Hooray for Google!! (Whatever their motives)

Poo to you with nobs on, CCP!

January 13, 2010 @ 4:50 pm | Comment

@wk
Yeah right,the American dissidents can’t stop the US government from bombing Iraq and other counties,so they’d better STFU to make American society more harmonious?Then why bother eating your snacks?You will get hungry soon enough anyway.The point is:the world is not always a good place,but we can always try to make it better.The US dissidents can protest right outside the white house for the tortured prisoners,and such attempt will most likely be “harmonized” before you can say “protest” at this side of the pool.(Yay that old soviet joke can no longer be used to mock our great country!What a improvement!)

January 13, 2010 @ 5:11 pm | Comment

Go Google!
I think it’s going to be a global PR disaster for the Chinese government… if Google boycotts China for it’s government’s bully boy mentality and tactics many millions will follow.

January 13, 2010 @ 5:25 pm | Comment

[...] of people bringing flowers to Google’s China headquarters in Beijing Global Voices Online The Peking Duck Shanghaiist China Hearsay [...]

January 13, 2010 @ 6:06 pm | Pingback

[...] More photos of people bringing flowers to Google’s China headquarters Global Voices Online The Peking Duck Shanghaiist China Hearsay Possibly related posts: (automatically generated)Hot, Flat and [...]

January 13, 2010 @ 8:19 pm | Pingback

No surprise, I guess. But wow! Get a load of this:

http://www.chinahush.com/2010/01/13/gmail-security-breach-want-some-proof/

January 13, 2010 @ 10:31 pm | Comment

Jeremy Goldkorn’s article on Google’s extraordinary announcement.

Amazing link, Stuart. Proof positive of China’s censorship. Of course, Imitation Crabmeat will say it’s a technical problem with Gmail’s server. Right.

January 13, 2010 @ 11:21 pm | Comment

Daesong,

pug_ster,

The Google blog does say intellectual property was stolen. Are you calling Google a liar? Do you have evidence to the contrary? What proof do you have that Chinese authorities went to Google and asked formally? How do you even know they were dissident’s accounts? Are you saying if Google abided by their privacy clause, the Chinese government is then justified to attack and hack Google’s database? Assuming they were indeed dissidents, do you think dissidents and terrorists are the same thing?

As I said, Google says that their IP was stolen but did not specify what. Google wasn’t specific enough on what was stolen, so unless they don’t specify what was stolen, then they are not exactly forthcoming. You are asking questions that nobody has answers to, but I can only speculate based on Yahoo’s past dealings with the Chinese government concerning Chinese dissidents using yahoo accounts years back. Google has to comply with China’s laws and regulations and it supersedes your privacy, as there are laws like this in many Western countries.

The only important thing is how much money Google will lose if they go through with this. What is clear is that China has always adopted discriminatory policies against foreign companies, especially internet companies like Yahoo, eBay, Amazon, etc while at the same time calling out others for being protectionist.

You have some kind of proof that China adopted discriminatory policies toward Western Companies? Chinese and Western internet companies operating in China has to comply with laws there and either they can’t compete with local companies or can’t has problems complying with the laws there.

January 13, 2010 @ 11:55 pm | Comment

Pug, please don’t be ridiculous. Everyone knows the hoops China makes foreign companies jump through. If you want a detailed look at the specificsread Joe Studwell’s great book China Dream. Discriminatory policies are a matter of fact and can’t be debated. This is no secret. Every Westerner doing business in China knows this, though they don’t like to discuss it in public because that only makes their work harder. But it has been discussed on the record many, many times.

January 14, 2010 @ 12:05 am | Comment

It is a good time to invest on VPN and proxy providers companies?

1.4 billion customers are waiting.

Any tips?

January 14, 2010 @ 12:24 am | Comment

Richard,

I disagree with what Joe Studwell says because his mentality is that any company who has alot of success in Western Countries thinks that they can go to China, replicate their business model there and reap huge profits. That is simply not true. The local completion are willing to do it cheaper and faster. Many companies pour money and manpower into China but couldn’t make money there, got frustrated and left. Some companies are surviving there knowing that they won’t make money there, but rather they are focusing on getting market share. Other companies who are making money are above the ‘cheaper and faster’ model and focus on quality and service model. To name a few of the companies who are making it in China are GM, Ford, Ikea, Walmart, and Carrefour.

January 14, 2010 @ 12:45 am | Comment

[...] censorship.  Put another way, as an expat friend of mine succinctly notes amid a typically lively discussion on his PekingDuck blog, “Whoever it is, they’ll have to sell out. Business as usual.” [...]

January 14, 2010 @ 1:27 am | Pingback

I disagree with what Joe Studwell says because his mentality is that any company who has alot of success in Western Countries thinks that they can go to China, replicate their business model there and reap huge profits. That is simply not true.

Pug, your ignorance is astounding. Studwell’s argument is exactly the opposite of what you say it is. It is about how most Western companies trying to get into the China market fail. Its whole point is that the China Dream is bullshit, that most Western companies that do well in the West are only fooling themselves when they think they can therefore do well in China. And yet you speak for Studwell as if you know something. Sorry, but you know nothing. If you want to shoot your mouth off, at least do a bit of research (like, read the Amazon blurb and some of the comments – or better yet, read the book like I did.) Comments like this betray how you work, with a predictable, reflexive response based on outlandishly, unbelievably false assumptions. This takes the cake, Pug.

January 14, 2010 @ 1:39 am | Comment

@pug
How to run business in China may not be the same as in the rest of the world.But at least you can PRETEND to be open and fair,right?As a Chinese myself,I’d very much like to see our own team thrive,in a healthy way,and beat foreign opponents in market share with innovation and good service,fair and square.Some protectionism is ok to me when it comes to saving our own sparks.But cripple most of the opponent’s key products by out right sabotage is another matter,it will only damage the brand image and the damage is hard to heal.For example many people still remember how baidu hijacked google’s domain to make it redirect to baidu back in 2002.
And by the way I hardly consider bribe all the way up like in China is the right way to do business.

January 14, 2010 @ 1:46 am | Comment

Richard, Cypher,

Maybe I didn’t stress this but do you honestly think China would be favorable to foreign companies? If Chinese companies want a loan, they get money from a Chinese banks. If foreign companies want a loan, they get loan from foreign banks. You think foreign companies doing business in China, they will get a loan from Chinese bank? No. That’s how ‘attracting foreign capital works.’ It is done here in the US, and that’s how it is done in China. That’s not discriminatory, that’s just a fact of life.

January 14, 2010 @ 3:26 am | Comment

I also want to say that dog eat dog world out there in China. It is not just about some Chinese company wants to drown out a foreign company, but Chinese companies do it to each other also. I have read the comments to Studwell’s book, and I agree with Studwell that China Dream is just a Dream. But I disagree on the reasons of why he believes so. Foreign companies have to bribe, they have to establish guanxi. Chinese companies are doing this already. Western companies want to remain ethical will ultimately lose out because they run their businesses like how they do in the West.

January 14, 2010 @ 3:54 am | Comment

Another thing, I don’t see what’s the difference between Chinese companies giving local politicians money in red envelopes and US companies paying off Lobbyists so that they can gain favorable treatment.

January 14, 2010 @ 4:01 am | Comment

Actually, I can´t find the “Update 2: The Wall Street Journal” quote when I follow the link. Did you provide the correct source for this one?

January 14, 2010 @ 4:39 am | Comment

@pug
Sigh…Not this sh!t again.
For too many times,I thought just why some people still hold such thinking patterns so dearly.So when you face the top dog in town the first thing you think is not how to surpass him but rather how to drag him down and beat him with your experience of being at lower level for too long?Heck,even if you win by this,you are still retarded anyway.
And as to your last point,I have to admit that corruption IS a widespread problem,but again this cannot justify corruption itself,same to your every-year influenza.Period.

January 14, 2010 @ 5:03 am | Comment

Pugster, you’re right in your assessment of the way things are run in western countries and eastern countries. Greasing the wheels of commerce involves sweeteners all the time – I believe this was BAe’s defence in the Saudi bribery scandal. Western countries do ethics like any other country – trust me.
Thing is, if you give money, grease the palms, get the promises, sign the contract, then you expect that things will be going your way… You expect dog eat dog, but when a deals done and dusted, you expect to be able to use the law to slap the other dog down. After all, that’s why sweeteners were distributed, no? When you have a deal, you don’t expect the person you signed the contract with to then favour your competitor and give them all your stuff. That’s not on and gives one a very bad name.
Western companies, especially the big ones, are not complete numpties. Small entrepeneurs, maybe, but the likes of Google and GM (OK, maybe not GM… ;-) )?
Backstabbing is the norm in that mean ol’ world, so I hear. That’s why there’s laws and stuff to protect IPs and the like. If you want to play, you got to at least play by the rules, otherwise no one picks you anymore….and then they do the same back at you. I hear China is already grumbling about protectionism ;-D

January 14, 2010 @ 5:04 am | Comment

Mike,

Thing is, if you give money, grease the palms, get the promises, sign the contract, then you expect that things will be going your way… You expect dog eat dog, but when a deals done and dusted, you expect to be able to use the law to slap the other dog down. After all, that’s why sweeteners were distributed, no? When you have a deal, you don’t expect the person you signed the contract with to then favour your competitor and give them all your stuff. That’s not on and gives one a very bad name.

I think that bribing officials and trying to screw your competitor are 2 different things.

Backstabbing is the norm in that mean ol’ world, so I hear. That’s why there’s laws and stuff to protect IPs and the like. If you want to play, you got to at least play by the rules, otherwise no one picks you anymore….

Again, I stress that there Google did not elaborate what kind of IP was stolen as the result of the cyberattack and this has nothing to do about backstabbing the other company. I also don’t see how if one company play by the rules, the competitor will do the same.

January 14, 2010 @ 5:44 am | Comment

“I think that bribing officials and trying to screw your competitor are 2 different things”
They are…until they coincide. Screwing the competitor is what a lot of business is all about (the clue’s in the word “competition”) and sometimes the only way to get ahead, the only way to even think of starting, is to pay someone to ease things for you. I’m not even in the business game (I’m a research technician doing cancer research) and I know about this so I figure you’re just being disingenuous here…

As for playing by the rules – see it as a soccer game. You have a framework of rules, there’s a referee but have you ever seen a game where that whistle is not blown for some infringement? And as you watch, you know you’ve seen plenty of fouls that the ref missed…but the game is still recognisable and it flows (or should do). Now, get one team playing soccer and the other playing rugby and even you have to concede that a mismatch will occur…

January 14, 2010 @ 6:54 am | Comment

Here, Pug, read this http://www.nytimes.com/2010/01/14/business/global/14western.html?ref=global-home

OK, OK, I know, it’s the NYT, hardly a beacon of “I love China” articles….

January 14, 2010 @ 7:03 am | Comment

Mike,

I rather not discuss about #80 because it is getting off topic and doesn’t talk about google at all. In terms of #81, surprising, once in a while you see some article from NYT that is defending China what what Thomas Friedman wrote recently. In terms of the article relating to google was simply a tirade of complaints from Companies who didn’t do what they expect in China. This includes google as they are losing market share to baidu because they didn’t adopt to the local market.

January 14, 2010 @ 10:10 am | Comment

tRUE ENOUGH, pUG_STER (OK, caps lock off now! Carrying on…)
Was it a case of Google not adapting to the local market or being hamstrung by ….. powers that be that invested in local products? I mean, really, a search engine is a search engine. Like a bicycle – hardly needs to be adapted to fit a market…

January 14, 2010 @ 3:51 pm | Comment

This is what many companies, large and small, may now be thinking about their business with CCP-China.

“If a company like Google, even after accommodating to their demands, gets that kind of treatment, what can of treatment will I get for my business in CCP-China or with CCP-China companies?”

January 14, 2010 @ 3:59 pm | Comment

The pug_ster Mike Goldthorpe feed back loop….

Do you have a paypal account to send you my 50 Cents of a RMB?

It is one or two accounts?

January 14, 2010 @ 4:02 pm | Comment

In early January, Tenzin Seldon, a 20-year-old Stanford student and Tibetan activist, was told by university officials to contact Google because her Gmail account had been hacked.

http://www.nytimes.com/2010/01/14/technology/14google.html

January 14, 2010 @ 5:00 pm | Comment

[...] censorship. Put another way, as an expat friend of mine succinctly notes amid a typically lively discussion on his PekingDuck blog, “Whoever it is, they’ll have to sell out. Business as [...]

January 14, 2010 @ 6:09 pm | Pingback

Eco – just send over some braised pork. Give it to pug_ster to bring over ;-)

January 15, 2010 @ 4:42 am | Comment

payppork does not exist yet.

:-P

January 15, 2010 @ 4:49 am | Comment

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.