America on the brink

I haven’t written about the US in quite a while, but tonight it’s the US I’m thinking about. It seems that tomorrow’s election in Massachusetts to fill Kennedy’s seat will almost certainly go to a Republican, which will end the Dem’s 60-seat majority and potentially result in the early death of “Obamacare,” an imperfect but huge first step toward true healthcare reform.

This letter a reader wrote to another blogger really resonated with me:

The past year has been a very difficult one for me, personally and professionally. I’ve been up a lot more than I’ve been down, and I’ve been angry and frustrated with life, as we all are at times. But I can’t remember the last time I felt such overwhelming rage toward a group of people as I have felt toward the Republican Party and the conservative movement since President Obama’s election.

I simply cannot grasp what motivates these people, what compels them to thwart even the smallest attempts to clean up the enormous destruction they wrought under Bush and Cheney. Irresponsible, hateful, mendacious, sleazy, destructive – these words do not even begin to describe them.

I am unemployed and have not found a new job after almost a year of searching. I have a mortgage. I also have a preexisting medical condition, thanks to emergency surgery I had to undergo nearly 18 months ago. My unemployment benefits expire in five months, my COBRA not long after. Like untold millions of Americans, I am preparing for the worst as the economy slogs through its agonizing turnaround.

I voted for Obama with proud but open eyes, knowing full well not just the magnitude of the tasks he faced, but the pure, unrestrained malevolence of his opposition. Health care reform will unquestionably help people like me. And now some low-rent hairdo, whose sole claim to fame is posing naked for some ladies’ magazine way back when, may happily destroy whatever chance this country has at moving in a more just, humane, and morally and fiscally responsible direction.

With unemployment the highest it’s ever been in my lifetime, by far, the number of Americans on COBRA, including good friends of mine, is unprecedented, and all of them are at risk if this fails. And I look with horror at what some liberal bloggers who can’t adjust to the fact that our elected officials are not ready to approve a public option are doing to sabotage what we’ve got and cause serious harm to millions of Americans who see the healthcare bill as their last chance for survival. More pragmatic liberals (like me and this one) are appalled.

I was reading today about how battered my state has been by the recession. We are about to close most of our state parks. We are slashing services. Our next-door neighbor California is bleeding to death. Most US states are teetering near bankruptcy. Make no mistake – straits don’t get much more dire than this.

You are witnessing a debt crisis play out in slow motion across the entire United States. California is going down first, then the dominos will start to fall. You don’t think there is a crisis brewing in states like Michigan when Detroit has an effective unemployment rate of 50%? The implosion is coming- it’s only a matter of time.

And where will our attention be focused? On the idiocies of Sarah Palin and Glenn Beck, on the preposterous wedge issues that place us in in permanent armed camps, ever at one another’s throats over issues that hold little or no actual relevance to any of us.

It is at moments like this that I wish we had an authoritarian ruler who could take over for a few years, a clear-headed liberal in the classical sense who could ram things through and get them done without giving a thought to the shrieks and cackles of the deranged fringes of either side. It’s at moments like this when I think, “The USA could use a little China, or at least a little Singapore.” A benevolent despot who can engineer solutions and force them to happen.

Of course, this is impossible, because once we agree to give up pluralism we lose control and anything can happen, as history has shown us. Franz Papen tried a similar experiment in 1933. Nothing can be more dangerous, considering the human frailties and temptations of anyone invested with vast power. But it’s nice to dream now and then.

Meanwhile, there will be no sweet dreams tonight for the millions of Americans who view tomorrow’s election as a matter of life and death. The notion that we can afford to put healthcare off for another six or eight years until we get the just-right bill passed while leaving those at risk with no hope is too impossibly frustrating.

I may not love Obama and I may have deep issues with his not pursuing the things I’d like him to. But he is what we’ve got, and healthcare is a noble goal and we are (were?) on the verge of making a major first step, a step that would change the lives of millions of Americans for the better. I know, he should have fought harder for a public option, but that would not have made the difference; even getting the diluted bill passed in the Senate was a herculean feat.

One of my favorite bloggers goes on an explosive rant today on this very topic – fingering those on the left and the right who are seeking to sabotage Obama, and who are using nearly the exact same talking points to damn him. He echoes my thoughts to the letter:

Now do you understand why I am wondering what the hell people are thinking? I don’t understand the logic of adopting the same frames as the right. I don’t understand the idea of killing HCR because there will be something better down the road. I don’t understand why everything has to be done immediately, the way the loudest want it done, or Obama is a sell out.

Maybe I am just an authoritarian at heart, and I know I am much more comfortable supporting a movement than I am attempting to lead one, but it just seems like the Democrats worst enemy right now is other Democrats.

Exactly. This all or nothing attitude is going to kill us. It’s going to derail all the progress we made. And don’t get me wrong; at heart I am an iconoclast and and even something of an anarchist. At the same time, I am a pragmatist, and I know when we’re fucking ourselves. Like that blogger John Cole, tonight I feel like “maybe I’m an authoritarian at heart,” too.

As for Massachusetts, it’s our fault. The Republicans will win because for reason I simply cannot fathom the Democratic candidate thought she could waltz into office, Massachusetts being a liberal Democratic state, after all, right? She did everything wrong, absolutely everything. I have to give the GOP credit for spotting an opportunity and exploiting Democratic complacency and stupidity. And now we’ll all have to pay the price, with the victims being, as always, the poor, the disenfranchised and the hard-up. (Please God, prove me wrong tomorrow.)

Yes, there are definitely moments when I admire what a country like China can do, free of the curse of having to campaign for re-election every waking moment. Moments, at least.

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Shaun Rein writes the single most irritating article on the Google-China calamity

[UPDATE: Rein has once again outdone himself. Check the comments and the links to the original blog post by Modern Lei Feng. Yikes.]

I’ve been wondering for a couple months now how Shaun Rein got one of the sweetest deals in China – a column in Forbes that lets him link to and plug his own marketing company in nearly every column as he tells readers how great business is in China and how rosy things look there. In one recent column, modestly titled, Yes, China Has Fully Arrived As A Superpower, he takes James Fallows to task for pointing out that while China is rising fast it is still far too poor and wracked with internal challenges to be considered a true superpower along the lines of the US, a not-so-outlandish assertion. These are the lines from the article that jumped out at me:

“China is certainly not altogether as wealthy as the US or Japan, as Fallows correctly observes. But it is emerging confident and relatively unscathed from the financial crisis.

Not altogether as wealthy as the US?? As if it’s almost as wealthy as the US? China’s great. I love China. But hundreds of millions of Chinese are still dirt-poor, and while China is improving and getting wealthier, to compare its society’s wealth with that of the US and Japan, even with all of their problems, is irresponsible. “Not altogether as wealthy as the US”?? But let’s get back to Google.

If Rein’s column on China emerging as a great superpower was awful, his new column on Google with the provocative title Google’s Act Of War Against China is way worse. Like all of Rein’s columns, it echoes the party line and is resoundingly “pro-China,” always playing up the great market potential of China, (where, coincidentally, Rein heads a marketing company). It’s fine to be pro-China. I consider myself to be pro-China. But we expect to read stuff like this on Chinese BBS’s, not in Forbes:

Has Google really thought through the implications of its actions, beyond just giving up the world’s fastest growing digital advertising market and the welfare of its employees and legal representatives in China? Or is this the impulsive move of an arrogant and immature leadership team used to getting its way?

Looking beyond the implications of what is, in effect, a new mode of statecraft, we should ask whether Google isn’t using censorship and cyber terrorism as an excuse to get out of China because of business failings there. If Google were making more money in China, would it necessarily have taken this stand?

Here’s what James Fallows, a real journalist who writes consistently great posts on China, has to say about the argument Rein is embracing (that Google was creating an excuse to leave China because it was trailing in market share).

Sky Canaves of the WSJ in Beijing has saved me a lot of time (and done readers a favor) by producing a catalogue of the biggest “misstatements and misunderstandings” people have promulgated about this situation.She starts with the most preposterous: that Google deliberately picked an extremely public fight with a notoriously thin-skinned government, merely to distract attention from its commercial struggles in a market where it enjoys “only” a 35% share. That Chinese officials and “netizens” would claim this is understandable. The Westerners who took it up reveal their preference for the counter-intuitive and “clever” rather than the believable.

Rein goes on to wag his finger at Google, as if he has a better grasp of their situation – as though Google is stumbling and bumbling and screwing up, with no idea how they’re damaging themselves. He almost makes it sound as if they need a good China marketing company.

Its mistakes may have long-term effects on its bottom line. Beyond giving up search for China’s 380 million netizens, the company may now find handset makers being pushed not to carry its Android operating system. That could mean a serious long-term loss of revenue in a country with 720 million mobile phone users.

Google’s China experience also illustrates that anyone operating in China needs to empower local employees to make decisions early and fast. You also need a head of your business in China who has the credibility and headquarters support to champion such decisions.

I assure you, Shaun, Google has taken the possible loss of potential revenue from its Android phone into account, but I’m sure they appreciate the free advice.

Earlier on in the article, Rein tells us, ominously,

If other foreign firms and activist investors in companies conducting business in China banded with Google, they could launch a serious threat to the stability of China, or of any country.

You see, this is Google “declaring war on China.” There is one bad guy here, the one declaring war, and other companies might follow suit leading to a potential crisis for China (which would be bad for marketing companies in China, no?). But has China no say in this matter? Why is there not a single word about what foreign companies need to go through to enter the China market? Not a word about the actual reasons Google spelled out for its decision? Instead, we are fed pablum like this:

They [China's leaders] have also seen how 30 years of economic growth brought happiness to the Chinese population. Let’s not forget that the Pew Center has found that 86% of Chinese are happy with the direction the government is taking the country.

Normally I wouldn’t bother writing a post like this about an article that’s so blatantly one-sided and suck-uppish. But this is Forbes, and they have such a great Beijing bureau chief and the quality of most of their articles is so outstanding – I am at a loss as to how self-advertising puff pieces like this are allowed to run. I read it with disbelief.

Updated with cosmetic edits, January 17 1PM Mountain time.

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Dispelling the myths about Google in China

Google’s jaw-dropping announcement is not about finding an excuse to leave China because it’s failing there. That and other rather ridiculous myths are exploded over here. I’ll just quote what the article say about that myth; read the whole thing for all he other myths. A fine piece.

Google’s China operations contribute a small fraction of the company’s overall revenue – the company doesn’t disclose the amount, but analysts estimate it was a few percent of its total $21.8 billion in 2008 revenue, or several hundred million dollars. But Google has made significant progress in China in recent years, raising its share of the Internet search market to roughly 36% in the fourth quarter of 2009 from 13% when it started its Chinese-language google.cn site in early 2006, according to data from research firm Analysys International.

Many other foreign companies doing business in China would gladly forgo big profits in the short term for comparable market-share growth in China—especially in an industry where China has more users than any other country (384 million according to the latest statistics). Google has also been particularly popular among the highly sought-after demographic of young, educated, white-collar urban professionals. The company’s powerful brand of business and ethics (“don’t be evil) has also earned it a fair amount of good will among Chinese Internet users, many of whom are now mourning its (still uncertain) fate. While rival Baidu still has a much larger 58% share of the search market, its brand has suffered as a result of scandals involving paid results and allegations of censorship of sensitive news stories.

Google doesn’t say if it’s profitable in China, but there’s certainly no reason to assume it’s not. Baidu, its chief rival, reported net profit of about $153 million on revenue of $468 million for 2008, when it said it had 6,387 employees. Google’s revenue would have perhaps half or two thirds that amount, but it likely has a much lower cost base in China than Baidu, since Google is believed to employ well under 1,000 employees in the country, and can use technology developed by its U.S. headquarters.

To make this kind of decision because business is poor at the moment makes no sense (though I am not convinced of the 36 percent market share figure, which seems awfully steep). Google knew this would be a long-term commitment with a lot of risk. They knew it might take many years, and it maintaining its operation in China meant very little skin off Google’s back.

James Fallows, as usual, is offering the sanest, most clear-headed and balanced opinions on the subject. Sample:

Two of the developments to date should not be surprising: the silence of the Chinese government, which is at its weakest in decision-making under time pressure; and the jubilation among some in the West, which I think reveals a pent-up reaction to endless stories about China’s rise and perhaps to recent Chinese government overreach. To me the more surprising — and significant — reaction is the clearly divided reactions within China, with some people reacting with nationalistic anger at Google’s insult but others taking the daring step of bringing flowers to the Google office etc.

Go to his blog and keep scrolling. Balanced, clear-headed and free from neurosis. How refreshing.

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Police in Beijing shut down China’s first “Mr. Gay Pageant”

I was surprised when I first learned via this video about the gay pageant event taking place. I was not surprised to learn a little while ago it was closed down right before it was set to start.

Police shut down what would have been China’s first gay pageant on Friday an hour before it was set to begin, highlighting the enduring sensitivity surrounding homosexuality and the struggle by gays to find mainstream acceptance.

Organizers said they were not surprised when eight police officers turned up at the upscale club in central Beijing where the pageant, featuring a fashion show and a host in drag, was set to take place.

”They said the content, meaning homosexuality, there’s nothing wrong with that, but you did not do things according to procedures,” Ben Zhang said. Police told him he needed official approval for events that included performances, in this case a stage show.

”I kind of saw that coming,” Zhang said.

Chinese police frequently cite procedural reasons for closing down gatherings that are deemed to be politically sensitive. Though the pageant did not have any overt political agenda, similar events in the past — such as a parade during the Shanghai Pride Festival last year — have been blocked by authorities.

”It totally has to do with moral standards and culture,” said contestant Emilio Liu, 26. ”If most people can’t accept it, then the government won’t let it happen.”

This is really too bad. China has made incredible strides in becoming more tolerant, and most Westerners would be shocked to learn just how open-minded many Chinese people in the big cities can be about this issue – as long as it’s not their son or daughter. The gay weddings a year ago in Tananmen Square were allowed to take place and China Daily did a wonderful job covering them (I wrote about it briefly here). So this is certainly a disappointment. Looking at the video I referenced, I can guess that it crossed a perceived moral line (maybe too much skin?). A shame.

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Guest post: China can still out-Google Google

This is a contributed article from my friend in Taiwan Bill Stimson. It does not necessarily reflect the opinions of The Peking Duck.

China Can Outgoogle Google

by William R. Stimson

What if they gave a dictatorship and nobody came? This is what we’re seeing happen in Iran now, and with Google it’s apparently also beginning in China.

The Chinese authorities dangle profit in front of the greedy eyes of Western firms but then as those firms rush in and struggle to establish themselves in the very different (so-called) “business” climate of China, these same authorities keep changing the rules, demanding a little bit more every few years, altering the structure of the business environment and changing the rules some more, until they themselves are firmly in control of the firms and own the technologies. To China’s leaders it must seem like such a winning game that already they can’t help strutting and posturing about their own superiority as a race, a nation, and a system of “government” that, unlike the liberal democracies of the West, works against the recession.

Only, like the populace of Iran, Google looked the big boys in the face, decided it wasn’t worth playing their cheating game, turned around, and walked out on their party. This is the opposite of the Americans going into Iraq for its oil. This is America coming of age. The greatness of America, whatever superiority it may have, as it turns out, isn’t what so many in the West, or even in China, might suspect. Rather it’s the simple freedom to innovate and to try to be real – it’s the “tangle and bother” freedom that the Chinese leaders now deride for its slow and stumbling economic recovery.

America has what China can’t steal. It can finally produce a company that is true, that places human values above dollars – a company that can win our hearts and so, of course, earn our dollars in a big way.

Google does right to step out of China because by doing so it is preserving its one priceless asset. This is not the secret computer codes the Chinese want to steal. It’s something the Chinese cannot steal from Google or any other company. Legitimate authenticity, genuineness, call it what you will – this is the commodity that will be selling in the marketplace of the future, and that not just America but Taiwan and so many free countries around the world are now perfecting. This is the commodity that will end the destruction of ecosystems, the exploitation of labor forces, the extinction of species, the stealing from future generations, and, yes, that will end poverty too; and overpopulation. A genuine company is one that gives away for free far more than it ever even attempts to sell, it is a company that spins a fortune out of thin air, and it is a company that the China we know today will never understand because it is a company that “does no evil.”

China can have all Google’s secrets, yes. But to get them it’ll have to set free its captive 1.3 billion, let them read and think and write what they want – and let them self-organize as they wish. Only then will the greatness of the Chinese culture and the superiority of its many peoples and inner nations rise up and show the world what can outgoogle Google.

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“Doubting the sincerity of Google’s threat”

This is certainly outspoken, not to mention cynical.

Here is my very crude and cynical (Eastern European) reading of the situation: Google was in need of some positive PR to correct its worsening image (especially in Europe, where concerns about privacy are mounting on a daily basis). Google.cn is the goat that would be sacrificed, for it will generate most positive headlines and may not result in devastating losses to Google’s business (Google.cn holds roughly 30 percent of the Chinese market).

All the talk about cybersecurity breaches seems epiphenomenal to this plan; it may simply be the easiest way to frame Google’s decision without triggering too many “why, oh why?” questions. Besides, there is no better candy for U.S. media and politicians than the threat of an all-out cyber-Armageddon initiated by Chinese hackers. I can assure everyone that at least a half of all discussions that Google’s move would spur would be about the need to make America more secure from cyberattacks. No better timing to throw more terrorism-related meat to the U.S. public (“what if they read Obama’s email?”).

Now, if you believe that Google was wrong to censor the Web in China in the first place, I doubt you’ll suddenly become a fan of their work — they still don’t seem to recognize that censoring the Web in China may have been wrong for ethical reasons and frame it simply as a business decision (based on new security threats). You’ll probably think that they are now doing the right thing for the wrong reasons.

If, on the other hand, you believe that they did the right thing in China by offering their limited service (rather than no service at all), I don’t see how this move could make you feel good either: all it took to get Google to shut down their “public service” was to launch a bunch of cyberattacks (so, should we expect that, instead of direct censorship, authoritarian governments would now simply launch cyberattacks on their targets and force them to leave under psychological pressure?). Thus, you’ll probably think that they are now doing the wrong thing for the wrong reasons.

Could Google be this cynical, in direct definace of their Don’t Be Evil mantra? If so, if this guy is right, it just may be working. After all, the Web was saturated today with columns and posts congratulating Google for its moral fortitude and asking, “What took them so long to do the right thing?”

But I remain cautiously skeptical. They weren’t “winning” in China but they still had more than 20 percent market share; most US companies would be thrilled if they could fail that miserably in China. I can easily imagine that they had a big blow-up with the government and found they had irreconcilable differences, and the cyber-attacks were the last straw. I actually find that more than believable. I don’t believe they’d just pick up and leave China because Baidu was ahead and leaving makes them look good in Europe. I guess the truth will come out at some point. It usually does.

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Thomas Friedman: “Is China the next Enron?”

Oh no, here we go again! Is China about to soar or plummet? We are literally up to our eyeballs in punditry about the fate and future of China. Friedman, the only columnist I know to have a metric named after him, has to get into the act, of course. In this instance, I admit, I tend to agree with him.

Reading The Herald Tribune over breakfast in Hong Kong harbor last week, my eye went to the front-page story about how James Chanos — reportedly one of America’s most successful short-sellers, the man who bet that Enron was a fraud and made a fortune when that proved true and its stock collapsed — is now warning that China is “Dubai times 1,000 — or worse” and looking for ways to short that country’s economy before its bubbles burst.

China’s markets may be full of bubbles ripe for a short-seller, and if Mr. Chanos can find a way to make money shorting them, God bless him. But after visiting Hong Kong and Taiwan this past week and talking to many people who work and invest their own money in China, I’d offer Mr. Chanos two notes of caution.

First, a simple rule of investing that has always served me well: Never short a country with $2 trillion in foreign currency reserves.

Second, it is easy to look at China today and see its enormous problems and things that it is not getting right. For instance, low interest rates, easy credit, an undervalued currency and hot money flowing in from abroad have led to what the Chinese government Sunday called “excessively rising house prices” in major cities, or what some might call a speculative bubble ripe for the shorting. In the last few days, though, China’s central bank has started edging up interest rates and raising the proportion of deposits that banks must set aside as reserves — precisely to head off inflation and take some air out of any asset bubbles.

And that’s the point. I am reluctant to sell China short, not because I think it has no problems or corruption or bubbles, but because I think it has all those problems in spades — and some will blow up along the way (the most dangerous being pollution). But it also has a political class focused on addressing its real problems, as well as a mountain of savings with which to do so (unlike us).

He goes on to mildly ridicule Chanos (who can’t be all bad, since a recent article about him in Politico actually linked to one of my posts!). And I have to say I think Friedman is right. We’ll see some deflating of the asset bubble and some serious pain. But nothing is about to collapse. Not China. Not the US.

We are being deluged with bad news about China, and yesterday’s Google story only made China look worse. “Bubbles” and “house of cards” and “built on sand” are among the metaphors that seem to be co-joined to so many discussions of China. Yesterday, I found myself so convinced that I actually went and bought a few hundred shares of a stock, FXP, that shorts the Xinhua index. So many bad vibes being sent out by so many pundits! Surely China has got to come careening downward.

I was lucky and made a profit (about enough to buy me a meal at Bellagio). But this morning I sold my shares and am long China again. I stepped back and realized I was getting sucked into the hype that’s building. And whenever there’s a common perception of inevitability, usually exactly the opposite happens. And it’s just as easy to get sucked into the counter-hype – the euphoric predictions of an economically invincible China assuming the mantle of world leadership. So hard to see what the real situation is amid all the clutter and noise.

I know, we’ve talked this to death. We don’t need to have another long food fight about it. So then why do I keep posting these kinds of articles from both sides after so many interminable threads? Because I like to know what the influencers are saying (even questionable ones like Friedman), I like to know both sides, I like to compare opinions and expose dumb arguments and applaud smart ones. This one is probably on the smart side. Take it or leave it. Time will tell.

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Laowai, don’t assume you are one of us!

This is a great post.

Is she being self-deprecating and funny? I sure hope so.

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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?

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China’s Internet “the most open in the world”

This is good to know!

“Our country’s Internet situation is unique. Compared to all kinds of restrictions in foreign countries, China has the most open Internet in the world.”

«我国互联网形态有特殊性。相对于国外的各种限制,中国的互联网是全世界最开放的。»
- Zhou Xisheng (周锡生) Deputy Chief of Xinhua News Agency, Director-General of Xinhua News Net.

From notes taken at the ninth session of the 2009 SCIO Internet News Work Training Session.

Now that that’s settled, please use this as an open thread. That includes those of you who need a proxy to access this site over in the world’s most open Internet.

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