OT-Google-- Two articles from the journal:
A Heated Debate at the Top
Co-Founder Brin Pushed for Strong Condemnation of China, While CEO Schmidt Argued to Stay
By JESSICA E. VASCELLARO, WSJ
Google Inc.'s startling threat to withdraw from China was an intensely personal decision, drawing its celebrated founders and other top executives into a debate over the right way to confront the issues of censorship and cyber security.
Google's very public response to what it called a "highly sophisticated and targeted attack on our corporate infrastructure originating from China" was crafted over a period of weeks, with heavy involvement from Google's co-founders, Larry Page and Sergey Brin.
Google CEO Eric Schmidt, and Co-Founders Larry Page and Sergey Brin, shown in July, have long struggled with China's censorship.
For the two men, China has always been a sensitive topic. Mr. Brin has long confided in friends and Google colleagues of his ambivalence in doing business in China, noting that his early childhood in Russia exacerbated the moral dilemma of cooperating with government censorship, people who have spoken to him said. Over the years, Mr. Brin has served as Google's unofficial corporate conscience, the protector of its motto "Don't be Evil."
China told companies to cooperate with state controls and that it's Internet policy is "open." Google is threatening to shut down Google.cn after it found cyber attacks originating from China. Video courtesy of Reuters.
Google threatens to exit China after a series of cyber-attacks. Will other big U.S. companies follow suit? WSJ's Jessica Vascellaro joins Simon Constable on the News Hub to discuss.
The investigation into the attack began weeks ago, although how Google detected it remains unclear. As Google employees gathered more evidence they believed linked the attack to China and Chinese authorities, Chief Executive Eric Schmidt, along with Messrs. Page and Brin, began discussing how they should respond, entering into an intense debate over whether it was better to stay in China and do what they could to change the regime from within, or whether to leave, according to people familiar with the discussions. A Google spokesman said Messrs. Page, Brin and Schmidt wouldn't comment.
Mr. Schmidt made the argument he long has, according to these people, namely that it is moral to do business in China in an effort to try to open up the regime. Mr. Brin strenuously argued the other side, namely that the company had done enough trying and that it could no longer justify censoring its search results.
The three ultimately agreed they should disclose the attack publicly, trying to break with what they saw as a conspiratorial culture of companies keeping silent about attacks of this nature, according to one person familiar with the matter.
Soon, Google's vice president of public policy and communications, Rachel Whetstone, began crafting and revising a number of versions of a possible statement the company planned to release publicly, these people said, sharing it with the three.
The top three agreed that in addition to discussing the attack, the blog post should contain some language about human rights, the strongest statement of which is a clause in the penultimate paragraph of the post.
The section said they had reached the decision to re-evaluate their business in China after considering the attacks "combined with the attempts over the past year to further limit free speech on the web."
Concerned about potential retribution against Google employees in China, the founders and their advisers agreed to include a line saying that the move was "driven by our executives in the United States, without the knowledge or involvement of our employees in China."
A group of Google executives were told Monday of the plan to release the post on Tuesday, according to two people familiar with the discussions.
To further protect Chinese employees on the ground, executives didn't notify the vast majority of Google's China team until a few minutes before the post went up.
Disagreements among Google's top troika aren't unusual. Last year, for example, Mr. Schmidt told reporters that he had long opposed Mr. Page's desire to build a Web browser but ultimately came around.
Google's conduct in China has long incited broader geopolitical debate over whether Western companies should do business in the country. In 2006, after Google said it would censor its China search engine, Google was called to defend the move before the U.S. House of Representatives, which began contemplating legislation that would prohibit U.S. companies from cooperating with Chinese officials, except in certain circumstances.
On Tuesday, Google said it could no longer abide by Chinese government requirements that it filter the search results on its site in the country, Google.cn. The company said it would be discussing the matter with the Chinese government, stating that it realized that its move may mean that it will have to shut down the Web site and potentially its offices in China.
The question is whether other U.S. companies will agree with Google's definition of evil. Google's decision conflicts with the strategies of many U.S. companies to deepen their involvement in China, which is both a key market for their potential exports as well as a source for many manufactured goods on which U.S. companies and consumers depend.
Veteran observers of trade between the countries suggest that Google, and the U.S. generally, has little leverage to press China to back down on Internet censorship or other issues.
Besides the Google.cn Web site, Google has a range of other business initiatives and partnerships in China that could be affected by its decision. By snubbing Chinese authorities so publicly, the company risks government retaliation against itself or its partners.
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Google's Watershed Moment in China, WSJ
By ANDREW PEAPLE
There's little doubt this is a watershed moment for Google. By publicly contemplating a withdrawal from China, the company is showing it values its reputation for providing a secure service to users more than a leading position in a huge and growing market.
But is pulling out the right decision?
Near term, Google's internal agonizing will be soothed by the knowledge that China remains a small part of its global business. Google's China operations will contribute just 1% of its 2010 profit, Citi Investment Research says.
That has given ammunition to a flawed argument--that a Google exit would be a cynical retreat from a losing market position under the cover of ethical business. In truth, Google has been making substantial headway into China, taking its share of Internet search profits to roughly 36% in the fourth quarter of 2009 from 13% in 2006, data from research firm Analysys International show.
It's still a distant second to China's own Baidu.com, with its about 58% share, but Google's large slice of a virtual duopoly is a position most foreign companies in China would kill for.
When it comes to profits, as with many other companies, Google's presence in China—which boasts the world's most Internet users--is all about the long-term potential.
The company would be sacrificing an already strong position in a growing market. For investors, the decision would be a reminder of the idealistic streak running through Google's management. Given Google's success in paid-search, it is easy for investors to overlook spending on initiatives, such as book digitization, whose payoffs are in the distant future. Google sometimes has the air of a philanthropic foundation. As its founders said when the company went public, "we may do things that we believe have a positive impact on the world, even if the near-term financial returns are not obvious."
But it makes sense to live up to at least some of its IPO promises—and not just from an ethical perspective. Google, which relies on consumer trust given the huge amount of personal information it stores, needs to show it guards the data jealously and uses it judiciously. Also, pushing for the free dissemination of information everywhere is hard to square with the prospects of ever greater curbs in China.
Overall, the move is a depressing sign for foreign businesses in China.
In accepting self-censoring of search results to do business in China, Google surely hoped any subsequent expansion would help encourage greater openness toward the Internet from Beijing.
The opposite has happened. The cyberattacks on its operations have become the last straw for Google, which says it has noted "attempts over the past year to further limit free speech on the Web."
Its troubles, too, tally with other recent trends that suggest the climate for foreign businesses is worsening. China's economic self-confidence after the global financial crisis seems to have encouraged a more aggressive stance to outside interests, be it the rejection of Coca-Cola's bid for juice maker Huiyuan or the arrest of four Rio Tinto employees last summer.
Perhaps China's leaders care little about Google. Its possible withdrawal, after all, leaves the field clear for Baidu.com and other homegrown Internet companies more willing to accept government curbs. In turn, the Internet in China will increasingly become an ever more pliable intranet.
No doubt such worries motivated those who left flowers outside Google's China offices on Wednesday. For those outside China, Google's move may look like a stand for Internet freedom. For those within, its exit would be more than a step backwards for one foreign company.
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The chinese are not going to forgive and forget. This is the end of google in China for a long time the way it is playing out. Maybe premature, but I personally believe this moment will be remembered in history if China ends up running the world show. We are used to the U.S. being the big brother of the world and may think we understand all the problems with that. I don't think people appreciate the drive there is within the power of China to be the big brother and what it means if China gets there. |
