Well, none of you guys' back and forth bickering addresses my question: how would pulling out of Chinese market help in preventing hacks allegedly from Chinese Gov? Aside from denying Chinese user of gmail account, the answer is no a bit.
So assuming, for the sake of argument, Google (and US intelligence, one would also assume) knows, without a doubt, that the Chinese government is hacking Google, getting information about "people they want to know about" and/or stealing Google's intellectual property, the foundation of their business. You would expect them to simply stay in China, go on about their business after this has happened, or while this is happening, and shrug?
The issue is whether Google would've stayed in China if they were competitive in China. Adobe, Yahoo among those hacked with Google? (details about the hack itself in link) ... Cybersecurity and human rights observers praised Google for coming clean about the attack and taking a stand on censorship. But Chris Wysopal, chief technology officer at security risk management firm Veracode, said Google's threat didn't make much sense in the context of security. Hackers "could launch an attack from any point in the world," he said. "I don't know how (moving out of China) would make Google's infrastructure more secure. To me it seems more of a business and political move than anything related to securing its infrastructure." Forbes Op/Ed: Google's Act Of War Against China Shaun Rein, 01.14.10, 12:50 PM ET Google is so big and influential that its threat to shut its China offices if the Chinese government doesn't allow uncensored search is essentially an act of statecraft. Cutting off search and e-mail would be as serious as blockading oil to a nation. In today's global system it is easy to ignore a secretary of state, let alone an ambassador. Chief executives of big multinational corporations wield far more influence. 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. China's leaders fear instability more than anything else. Contrary to what most Americans think, most of China's leadership and their parents suffered terribly in the chaotic time of the Cultural Revolution. Leaders like Deng Xiaoping and Ye Jianying emerged to calm China after enduring great personal hardship at the hands of the Gang of Four. Deng's son had been thrown out a window by the Red Guards and paralyzed. Today he is a leader at pushing for rights for disabled people in China. Today's leaders were not the ones who led the chaos, and for them stability trumps everything. That is why they keep talking about internal affairs when mentioning Taiwan or Tibet. They experienced first hand the horrors instability can bring, and they will do anything to prevent a return of those horrible days. They 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. In this context, Google's actions are as irresponsible as they are brazen. Does anyone really think the Chinese government is going to bow down to the demands of a foreign media company? Google's move is similar to failed U.S. economic sanctions against Iran, Myanmar, Cuba and North Korea. Active engagement such as the U.S. has pursued with China ever since the Nixon years, not economic sanctions, is what helps bring people out of poverty and into a better life. Conversely, sanctions bolster regimes like Kim's and Khamenei's, while impoverishing ordinary Iranians and North Koreans. I fear that hardliners in the Chinese government may use Google as a pretext to crack down on more sites, just as Iran blocked Twitter and Facebook after they spread news of protests. Google's actions could do the opposite of opening up information flow. 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? When China blocked Google's YouTube service a year ago, the company didn't utter a peep of complaint. Google didn't like the cost of all the bandwidth it needed to show video clips to Chinese who American advertisers weren't interested in. Then when Google's China president, Kai-Fu Lee, resigned last summer, no replacement was named. Google said it would consider servicing China from the U.S. Which all makes it look as if Google is just using censorship and cyber terrorism as a face-saving mechanism to extract itself from its enormous failings in China. 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. People always seem to forget that around 2003 Google had the dominant market position in search in China , followed by Yahoo!. Baidu was a distant third. Baidu became China's leading search engine only after it went public in the U.S. and raised the cash necessary to innovate with a wide range of services--while Google moved at the speed of a hippo on land. Kai-Fu Lee, Google's hubristic former China president, failed to make Google more competitive. In our interviews with young Chinese graduates, they said they would rather work for Baidu than for Google, as I wrote in "Three Myths About Business in China." They want to be where there is no glass ceiling, and where services are tailored for the Chinese. Baidu and companies such as Sina and Tencent have been taking advantage of Google's slowness to create new China-friendly services. Taking a business model from the U.S. and bringing it unchanged to China doesn't usually work. Google's way probably can prevail in, say, Zimbabwe, but not in China. There's too much competition there from aggressive, confident and cash-rich local operations. EBay similarly got it wrong in China. It acquired Eachnet, the country's leading auction site. Customers left for Eachnet's competitor Taobao. That happened not because, as many think, Eachnet charged fees and Taobao didn't, but because eBay came in and forced its new China subsidiary to integrate with its global technology system hosted in the U.S., despite protests from the local team. That led to bandwidth problems that hurt access speeds (some people wrongly blamed the great firewall for the slowness). Shao Yibo, the founder of Eachnet, estimates that traffic to eBay's China site dropped 50% on the day eBay forced its China team to move to its global servers. Google's actions in China not only imperil its own bottom line; they also threaten to start a slowing of Internet and media reform. Much as economic sanctions fail in statecraft, Google's actions will end up doing little good for either its investors, its partners or, perhaps most important, China's citizens.
Also, with that blurb about "spear-phishing" [in which criminals identify members in an organization and trick them into downloading content that allows access to their computers] and the end-result of the hacks, it would take some jingoistic hard core "basso-level" followers for it not to involve the Chinese government. Not that it's been officially proven the Chinese government is involved or anything...
Nice article. I never knew Baidu used to be distant 3rd. By the time I got to China, it was already dominating market shares on par with google in the US. Always thought that google got into the Chinese market late as the reason for its irrelevancy here. Never thought it was actually the other way around. That they started off #1 and then got worked.
I don't know, it certainly wouldn't help by pulling out. Google is more concerned that their business model isn't competitive in China than someone's email account gets hacked. For google, getting some publicity while potential giving up a small business isn't a bad bargain. The U.S. government has the authority to monitor any email for national threat or whatever, I don't see google is pulling out of the American market.
You did say you "don't know," which is fair in and of itself, but then you go on to say "Google is more concerned that their business model isn't competitive in China than someone's email account gets hacked" and "The U.S. government has the authority to monitor any email for national threat or whatever, I don't see google is pulling out of the American market." With all due respect, that's completely nonsensical. And "For google, getting some publicity while potential(ly) giving up a small business isn't a bad bargain" also makes no sense. Giving up a "small business" in a country with 1.3 billion potential customers, now and in the future? Google doesn't "give that up" without a darn good reason. Thinking it's because they can't compete ignores the fact that Google is hugely successful the world over and would never walk away from that market, regardless of its current competitive position, unless it felt its intellectual property threatened (its most valuable asset) and/or the security of its customers was compromised, without which it cannot do business, something that it does not see as a concern worthy of such drastic action in the United States or anywhere else that I know of. I'm a bit at a loss that someone of your obvious intelligence really believes what you posted, unless you are having a bit of fun "having me on."
I think Micheon's arguments deserve more credits than what you think. Just like US, China could compel any business operated in China to disclose customer's activities that compromise national security. The scope of such activities are up to the Chinese legislature to define. China did it to Yahoo, which abode by the Chinese law, and likewise there is no reason China couldn't do the same to Google. For me there is just not enough evidence disclosed by Google to say the Chinese govt is behind it. Even if that's true, this is sort of thing Google signed on to when it opened Google.cn 4 years ago. I think Google mishandled this situation. What Google should have done, IMO, is 1) fix the security breach and 2) start the legal process with formal investigation in the Chinese context, i.e. follow the Chinese law. Google would have a much stronger case that way should there be obstruction on the Chinese govt part to prevent evidence discovery during that process. My two cents.
Really like this article. I think Google is making a mistake and it will hurt them in the long run. I think there are some issues with doing business in China (especially when it comes to things like corruption) but I can easily see how that some stuff are definitely better done with Chinese companies than foreign ones because the lack of knowledge of local culture is so much worse.
Hah... I like the glossing over of "national threat". That's the problem when your government is run by Communists. Political speech is a national threat in China whereas in most of the rest of the world it's an encouraged part of daily life. Replace China with USSR or North Korea or Cuba in this instance, no difference. Cue Dennis Green. <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/m_N1OjGhIFc&hl=en_US&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/m_N1OjGhIFc&hl=en_US&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>
So explain the part in the article where google didn't even let out so much as a squeak when China banned youtube in the country. Why weren't they making such a fuss back then? Oh, that's right. It's because the Chinese govt were saving google tons of money. It's funny how companies will always roll over when there's money to be made.
This is a fallacy. Once Google decided to operate in China, it needs to follow the Chinese law like everybody else in China. That's the choice Google made 4 years ago. Whether the law is good or now is another question.
The issue is China acting as if their government and their idiotic laws have to be respected on par with governments that are Democratic in nature. A national threat in most countries involves violence against people or infrastructure and a national threat in China is idea based. It's the same ridiculous equivocation that the Chinese have made with respect to America's issues with terrorism in order to dismiss criticism of their record on human rights.
Why aren't the Chinese making a fuss when their government banned you tube? It's not funny how companies try to make money at every turn, that's why they exist. There's nothing funny or amusing about it. Do something for yourselves already, it's not Google's responsibility to make political points for the Chinese or to save the Chinese people from themselves.
I don't think Google is on an mission to change China. Idiotic laws or not they are still laws of a sovereign nation and not to be pooped by business with different view points. If the mindset you described is that of Google's management, Google is making a huge mistake.
Because, and this has been stated a million times by many Chinese on this site already, THEY DON'T F--KING CARE. If you want to know what it's like for a Chinese person to watch a youtube video, go to this website and try it yourself. http://www.youku.com/ Indeed. It's not google's responsibility to make political points. Hence why some would say their actions recently are not politically motivated, but money motivated like every other business in every other country. No one feels that they should. And no one really believes them when they do it.
What about it? I don't see a nexus. If the law in a country amounts to adverse business environment, an exodus of foreign investment will sure follow. Google is certainly entitled to not complying with Chinese law or regulation and quit China, but it's another matter if Google has violated Chinese national security law after it starts operating in China, and that's the hypothetical context this little side discussion is in.
Makes sense considering the hack requires IE6 and XP for it to work. On a sidenote, Microsoft's damn stupid in its insistence not to abandon their older platforms. Google cyber-attack from China 'an inside job' Google employees may have assisted hackers who launched a cyber-attack from China, prompting the company’s threat to leave the country, it has emerged. The world’s most popular search engine is believed to be investigating whether one or more of its own workers bases in the Chinese offices helped those attempting to break into the e-mail accounts of human rights activists last month. Last week, Google said that it may pull out of the country after it was was targeted, along more than 30 other companies, in a “highly sophisticated and targeted attack on our corporate infrastructure originating from China”. It has now emerged that a number of Chinese journalists may have also seen their e-mail accounts hijacked. The company is continuing to investigate the incident which took place in mid-December. But unnamed sources told news agencies today that the attack could have been an inside job. Google employees may have assisted hackers who launched a cyber-attack from China, prompting the company’s threat to leave the country, it has emerged. The world’s most popular search engine is believed to be investigating whether one or more of its own workers bases in the Chinese offices helped those attempting to break into the e-mail accounts of human rights activists last month. Last week, Google said that it may pull out of the country after it was was targeted, along more than 30 other companies, in a “highly sophisticated and targeted attack on our corporate infrastructure originating from China”. It has now emerged that a number of Chinese journalists may have also seen their e-mail accounts hijacked. The company is continuing to investigate the incident which took place in mid-December. But unnamed sources told news agencies today that the attack could have been an inside job. It is claimed that hackers targeted people who have access to specific parts of Google’s networks, with employees based in its Chinese offices helping to facilitate the hackers. A Google spokeswoman said: “We’re not commenting on rumour and speculation. This is an ongoing investigation, and we simply cannot comment on the details". Local media have also reported that some Google China employees were denied access to internal networks last week, while some staff were put on leave and others sent to its offices around Asia. Google said it would not comment on its business operations. It is believed that investigators at the company are continuing with the assumption that hackers outside Google were the main culprits, but that the sophistication of the attacks had led them to explore other avenues. Security experts said the breadth and scope of the attacks, which also targeted the computers of Chinese dissidents, indicated that they were almost certainly carried out by the Chinese state. Google remains in talks with Beijing over its continued presence in the country. It has said it would pull out if had to continue to submit to the China’s sensors. Privately, Google is resigned to leaving the web’s largest growing market. China has tried to downplay Google's threat to leave, saying there are many ways to resolve the issue, but insisting all foreign companies, Google included, must abide by Chinese laws. Among the major firms targeted by the cyber-attackers were defence contractors, finance and technology companies, as well as human rights activists and journalists. The victims are believed to include the web company Yahoo, the defence firm Northrop Grumman, and the chemicals giant Dow Chemical, all of which have refused to confirm whether they have been targeted. The internet and technology companies Adobe and Juniper Networks were also hacked. The Foreign Correspondents' Club of China said in a statement today that Google Mail accounts used by journalists in at least two bureaux in Beijing had been hijacked and their emails forwarded to unknown email addresses. Many Chinese human rights activists have complained of the same problem. The row between Google and China over the attacks, has led to a number of other spats and diplomatic incidents. Today, France echoed the German government’s warning not to use Microsoft’s Internet Explorer web browser, after it emerged that hackers used an unknown weakness in the software to launch the attack against Google and others. Government agencies in both countries warned its citizens that it should not use any version of Internet Explorer until the security hole in the software was fixed. Thomas Baumgaertner, a Microsoft spokesman, rejected the moves, pointing out that the attacks on Google were by highly motivated people with a very specific agenda. “These were not attacks against general users or consumers,” Baumgaertner said. “There is no threat to the general user, consequently we do not support this warning.” Meanwhile, the Google issue risks becoming another irritant in China's relationship with the United States. Ties are already strained by arguments over the yuan currency's exchange rate, which U.S. critics say is unfairly low, trade protectionism and U.S. arms sales to Taiwan. Washington said it was issuing a diplomatic note to China formally requesting an explanation for the attacks.
I guess we know now why the location matters. Get the Chinese market and have your intellectual property stolen by the government or tell the Chinese government to suck it and leave the country.
