The China Crisis, Part II: Google’s Gauntlet

Posted: January 13, 2010 in Business & Economics, Dispatches from the Edge: Editorials, Main Articles & Blog News, World Affairs
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Part 2 of Several Parts: Sovereignty Issues of a Mega-Company vs. a Host Country

Hot on the heels of yesterday’s post about China, I recently learned that Google had declared it would no longer be willing to self-censor content on its PRC-based servers. This is excellent news for human-rights activists, watchdogs, and armchair critics (such as myself), implying that the Ca- lifornia-based search-engine giant is taking a stand (finally) on human rights.  The last straw was when a “highly-sophisticated and targeted attack” on their Chinese base occurred last month, resulting in the theft of intellec- tual property as well as the hacking of Gmail accounts of Chinese, European and American human rights activists. There is already talk that they will be shutting down operations in the Red Star of the East as a sign of protest, dealing them a black eye in business operations.

Hold your horses. Google is neither completely altruistic, nor will it neces-sarily shut down all operations anytime soon. It’s a business, just like any other. First off all, if Sergey Brin and Eric Schmidt really gave a flying crap about human rights, they would not have ignored the crackdowns, the pur- ges and the routine abuses of individual liberties. They would have thought twice about rolling out, and all the Faustian deals that were made in that 2006 bargain. Talk of “make meaningful and positive contributions” to development in China sounds great, until you consider the various in- dignities Google has put up with, all for the sake of economic growth.

The decision to say “no” has little to do with human-rights and plenty to do with corporate sovereignty.  As an avid spectator of business events, I have observed these [sometimes] drawn-out “tennis matches” between nations and industries. Governments love business, because it means more to tax (operations, land, leasing, profits, etc.) and push around. As with all things that entropize over time, taxes can and do increase. But instead of being a good citizen and taking the extra burden on the chin, any clever business owner will do the next best, and legal thing, which is to transfer operations to a more business-friendly state or country.  Think of businesses as being just like people (by definition, a “corporation”): If they don’t like the way they’re being treated, they can always up and leave.

Businesses like Google, Yahoo! and Microsoft are different from individuals in the sense that they do not necessarily see shades of black and white, but only gray. They do things if it profits their operations. They don’t do things if it doesn’t.  They will respect the laws of their host countries, as Google had willingly shown back in 2006. What they won’t put up with is a gross vio- lation of their own turf – especially if the methods are illicit and there is no reasonable justification. To order a company to surrender information on the basis of national security is one thing; to blatantly hack into its databases is one step short of declaring veiled corporate warfare.

Some activists in China have reacted to Google’s challenge to pull out, saying that they have no right to act as if they are above Chinese law. Google has made no such claim, and the activists do not get it. The search engine giant has proven its willingness to work with authorities. But if the authorities cross that ethereal line of sovereignty of corporations (that American and European governments know better to tread) – then all bets are off. Google has a perfectly-legitimate right to protect its own interests and constituents. I sure as hell wouldn’t want a commie or any other totalitarian invading my account and exploiting my information.  If Google takes steps to protect the rest of its customer base against such a belligerent entity, then my faith in corporate sagacity will have been vindicated.
I doubt if a complete Google pullout is forthcoming, or that it will have any significant impact. Indeed, Google has more to lose from the move than China, so that such a move would be premature. Just a warning to leave may be all that is needed, to get everyone to talk rationally. As long as there are no more Chinese-sponsored breaches of security, then all will settle down.  If not, then this experiment is as good as done – and good riddance.

While Google scored a coup for being the first to capture this market, there will be no love lost for them when they leave. Its operations there make up only 2% of its overall market. Rival and other home-grown search engines have all but nudged it out of competition among Chinese-language web-browsing content. In the long run, the biggest news here is more symbolic than anything else. This event exposes yet more of the prob- lems and perils that foreign investors and businessmen face as they venture into the Last Great Totalitarian State that is China. As for Google, it may lose its business now, but it somehow redeem itself and saves face, becoming a new and unwitting supporter of human rights.

Copyright Anabasius 2010


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