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Google Is No Secretary Of State When It Comes To Diplomacy In China

International diplomacy is the fine art of negotiations that Hillary Clinton is learning as she goes. When Google announced last week it was purchasing a power plant to save on its utilities bill, I reported that their Energy Czar should be considered for the US cabinet post of Secretary of Energy. And while the Search Engine giant is ubiquitous and a jack of all trades, I don't think they have the finesse for resolving international debates.

One of my social media predictions for 2010 was that Southeast Asia would be the next social media geographic focus. Well...we're only into the new year a couple of weeks and that hotspot has turned into a 'hotbed' of controversy. Actually threatening to pull out of China, Google wants to stop censoring its search results in China and could end up closing operations as a result.

Google threatens to pull-out of the country following an attack on Google's servers in Mid-December that targeted the Gmail accounts of Chinese human rights activists.

"As part of our investigation we have discovered that at least twenty other large companies from a wide range of businesses -- including the Internet, finance, technology, media and chemical sectors -- have been similarly targeted," wrote David Drummond, chief legal officer for Google.

The Electronic Frontier Foundation and Human Rights Watch both issued statements calling for broader changes in policy from companies that operate in China. “Too many of them have been willing to comply with Chinese demands that they check their values at the border,” wrote EFF International Outreach Coordinator Danny O'Brien.

China's history of policing the Internet goes back to 2005. While initially appearing unassuming, an Internet security campaign featured animated beat cops that actually popped up on a user's browser. They then walk, bike or drive across the screen warning Chinese citizens to stay away from illegal Internet content.



But what about the two major social networks? Both Facebook and Twitter have both made overtures in China to capture adoption by the Chinese people. Both will need to take on Xiaonei which translates to "On Campus" in Mandarin as that is the most widely used social network in the country. Since Chinese social networking is less about who you know versus who is nearby, location-based services is where Twitter and Facebook might be able to move the needle in this country.

Smaller LBS firms like GyPSii have already scored major deals in China with companies like China Unicom, based on their geolocation features. Shane Lennon, GyPSii’s senior vice president marketing and product development notes,“With over 687 million mobile subscribers in that country, the future of connectivity in China is mobile NOT traditional computers,” Lennon notes.

So is Google taking on a huge risk by publicly trying to shame a world power the size of China into lightening up on its censorship policies? In essence what the company appears to be doing is acting like a sovereign state itself. Only Google could assume that type of posturing. However, if world powers like the US have been unsuccessful in addressing human rights issues with this country in the past, what makes Google think its clout has any more power?

"Google's dead in China," predicts Shaun Rein, managing director of China Market Research Group, a research and consulting firm in Shanghai. Even if the company were to stay on, no one in China "would have the confidence to do marketing campaigns" with them.

Duncan Clark, chairman at BDA China, a Beijing-based consulting firm, says there are few scenarios he could envision "where Google will win and China will back down."China is not going to make concessions in a public fashion like this," Duncan says.

On the other hand, the current financial stakes in this fight for Google are low. Google owns about 31 per cent of the Chinese search engine market (homegrown Baidu owns 64 per cent) but it derives only about 3 per cent of its $22 billion US revenues from China.

Still, Google was starting to reap small dividends in China, after opening a beachhead office in Beijing in 2006. With more than 1.3 billion so-called "netizens," China is the world's largest Internet market and Google would, if it left China, forgo considerable upside potential for the future.

So as far as a vote for Google as the next secretary of state, I would have to say 'pass.' As much as these censorship issues are abhorrent, I believe this issue might have been better resolved behind closed doors than trying to shame a world power on a national stage. Even if you are Google!

Jan 14- UPDATE 1: It is interesting to note, that the sensitivity of this issue is so volatile that not even the threeEric Schmidt, Sergey Brin & Larry PageEric Schmidt, Sergey Brin & Larry Page top executives at Google could agree on what was the best move to resolve this issue. While Larry Page has remained closed-mouthed on the topic, Sergey Brin acting as Google's unofficial corporate conscience objected to cooperating with a country that allows government censorship. However, according to a Wall Street Journal report, Chief Executive Eric Schmidt has long believed that it was Google's moral obligation to do business with China in an effort to try to open up the regime.

Jan 14- UPDATE 2:  According to the same report, when the Google 'troika' did finally reach consensus to pull out of China, they didn't initially consider the potential retribution against Google employees in China. To resolve any form of retaliation, the founders and their advisors agreed to add a statement to their announcement that indicated the move was "driven by our executives in the United States, without the knowledge or involvement of our employees in China."

Jan 14- UPDATE 3: In a Reuters' release, Microsoft, the world's largest software maker is not likely toSteve Ballmer, CEOSteve Ballmer, CEO support its fierce rival Google in its battle with China and rebuffs broad U.S. political backing for Google. "There are attacks every day. I don't think there was anything unusual, so I don't understand," Microsoft CEO Steve Ballmer told Reuters after a meeting on modernizing government services at the White House.

"We're attacked every day from all parts of the world and I think everybody else is too. We didn't see anything out of the ordinary. I don't understand how that helps anything. I don't understand how that helps us and I don't understand how that helps China," Ballmer said.

Jan 15- UPDATE 1: Secretary of State Hillary Clinton said Google's allegations "raise very serious concerns and questions," and that "we look to the Chinese government for an explanation." But later, a State Department spokesman said the dispute was within "the range of issues" that normally define U.S.-China relations, adding that it "is a broad, it is a deep, it is an expanding and durable relationship." This back-peddling from the state department is indicative of how lightly we need to tread in China. It's easy to say, we need to stand up to bullies and make bold accusatory statements to curry world favor by denouncing censorship, but it's another thing entirely to know that at the end of the day we still need to maintain a civil working-relationship, particularly with a country that we owe billions of dollars to in debt.

Jan 15- UPDATE 2:  According to Rebecca Fannin at Forbes.com, Google may be leaving China, but this is not due to a censorship issue. Google while appearing altruistic to the world in fighting the good fight (rah,rah) is leaving China first and foremost based on a business decision. The search giant just could not compete with Baidu. While Google's market share in China moved the needle to 31%, Baidu's grew from 47% in mid-2006 to 64% today. That's a big lead. According to industry experts, Baidu's product and service is far superior to Google's. So much so, that according to Fannin, Baidu may someday be bigger than Google globally.

So who is trying to save face now? If Google is packing up its marbles to play in someone else's sand box, it may not be because it was up against a bully in the school yard - it may have been because it just refused to play the game anymore with someone who would continuously out-beat them while the whole world was watching..

Jan 16- UPDATE 1:  According to Martin Jacques, author of "When China Rules the World..." Google will be obliged to either accept Chinese's censorship policies or exit the world's largest Internet market, with serious consequences for its long-term global ambitions. This, according to Jacques, "is a metaphor for our times: America's most dynamic company cannot take on the Chinese government - even on a issue like free and open information - and win."  He adds, "Google's fate is a sign of the world to come, and the sooner we come to appreciate the nature of a world run by China, the better we will be able to deal with it."

While this is a ominous forecast when one considers that China may become the world's next number one superpower, it does give one pause as to how to deal with the Chinese government going forward. My thesis in this blog hinges on internal talks with the Chinese through negotiations,conciliation, mediation and compromise. In essence, I believe more can be accomplished by keeping one's enemy close versus putting one's tail between its collective legs and running.

Jan 17 - UPDATE 1: In a Reuters report, Google enters a second week of high stakes brinkmanship with China's government, amid speculation the firm has decided to pull out of the world's biggest Internet market over cyber-spying concerns. Google deniese these rumors saying the company is still in the process of scanning its internal networks since the cyber-attack in mid-December and would continue to hold talks with the Chinese government over the next few weeks.

Sounds like back-peddling to you? Apparently Google's defiant public display to exit China did not garner their anticipated result.

 

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Ron Callari
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Comments
Jan 14, 2010
by Rick Martin
Rick Martin's picture

Some points

Quote: "As much as these censorship issues are abhorrent, I believe this issue might have been better resolved behind closed doors than trying to shame a world power on a national stage. 

I strongly disagree here. Google would have been taking a considerable risk by not disclosing the fact that accounts of human rights activists had been hacked.  

Also, I don't really see the relevance of bringing up Facebook and Twitter here. While they are indeed the two major platforms outside of China, they aren't popular among Chinese language speakers.  You're right to mention Xiaonei, although please note that they changed their name to RenRen last summer.

 

Rick Martin
twitter.com/1rick

Jan 14, 2010
by Ron Callari
Ron Callari's picture

Some points

Exposing the hacked sites is one thing, and you're right - the pubic needed to be aware. Threatening to pull out of a country publicly did not take in account how to negotiate with the Chinese government. The Chinese are intrinsically sensitive to 'saving face.'  If Google considered this factor, they could have avoided airing their dirty laundry until there was no other recourse or avenue to explore. By not doing so, they came off no better than the Chinese and reduced this issue to a school yard brawl. This solved nothing, and doesn't position Google in a favorable light for future negotiations.

Ron Callari is a freelance journalist and editorial cartoonist. His slighlty off-center published work includes trends, social media, politics, travel, humor and political articles.

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Jan 14, 2010
by Ron Callari
Ron Callari's picture

Agree to disagree

Unfortunately, I can't agree  that Google exhausted all avenues before resorting to a public display and I certainly don't agree with you that 'saving face' is a superficial view of this issue. Chinese government officials are fundamentalists and their worldview is black and white. While they might have nuanced personal opinions on certain issues, their public response to criticisms of this nature emerges as a collective front. This cultural aspect is basic to their nature and has stymied the US and other countries in the past when hammering through other human rights issues.

Jan 14, 2010
by Ron Callari
Ron Callari's picture

Some Reading

Rick, read the updates in my blog regarding CEO Eric Schmidt's reluctance to agree with Brin to pull out of China cited in the WSJ. If one of their own didn't think it was a wise idea, it gives one cause to question how and why the decision was made. Also Google initially didn't think about the repercussions that might be incurred by their Chinese employees when they made their decision to pull out (again cited in the WSJ) . If this was a well-thought out concerted plan as you are adamantly trying to prove here, I would think that Google would have had every one singing out of the same hymn book. And leaks like these would not have surfaced so quickly.

Jan 14, 2010
by Ron Callari
Ron Callari's picture

Google understands?

I never mentioned 'money' as the reason for Google not pulling out, or as the end that justifies the means.I do believe however that this type of issue is endemic to doing business with the Chinese, and Americans in the goverment as well as the private sector were fully aware of the Chinese position on issues of censorship before we went in.

Moreso than monetary gain or loss, the point of my blog was to illustrate how you don't achieve anything by threatening a superpower to make changes publicly without a lot of closed door meetings beforehand. And no one has proven to me that those types of actions took place. I think a better result could have been accomplished and perhaps altered the Chinese government's behavior if all diplomacy channels were exhausted vs.opening this issue up globally so the world could chime in and take sides (as you and I and others are doing here).

Jan 15, 2010
by Anonymous

welcome to the new world of openness

"if all diplomacy channels were exhausted vs.opening this issue up globally so the world could chime in and take sides (as you and I and others are doing here)."

or perhaps, it is time to change how things are done, and be open... :-)

Jan 19, 2010
by Anonymous

So far off base...

I feel that your take on this situation is way, way off base.

Quite some time back, like several years ago, Google engaged in heavy discussion prior to entering the Chinese market. Google was outwardly opposed to doing business in China due to the censorship situation in that country. Yet they came to an agreement and business was conducted as usual.

China has a very sordid history of cyber attacks throughout the world. The fact that China has targeted Google infrastructure, and also based on Google's initial concerns about censorship it seems to me that this is simply the last straw.

The line was drawn in the sand very clearly. China step over that line. Game Over!

It is no more complex than that. It is not a political stance or an attempt to achieve in China what several world powers have failed to achieve. It's simply a private enterprise who has said, we'll play you game but these are the rules we'll play by. Break, bend or change those rules and we won't play anymore.

"the point of my blog was to illustrate how you don't achieve anything by threatening a superpower to make changes publicly without a lot of closed door meetings beforehand."

This may be the case in a political setting but we're not talking politics. Even still I would argue that that's exactly what JFK's cabinet did during the Cuban crisis.

But...we're talking about private enterprise who has no obligation to exhaust all diplomatic avenues. Particularly when the other party involved is attempting to infiltrate and steal personal and possibly confidential information.

Not sure how things work where you live but if you break into my house and try to steal my personal files - the games over - you're no longer welcome in my home, and if possible I'll be pressing charges against you. I don't care about your political opinion or persuasion.

And if we take a good close look at what exactly Google is getting out of the China market, with less than 10% of the population actually having access to the internet, that's now the equivalent of losing 1/8th of the US market. So What? Consider the cost of maintaining, monitoring and protecting that asset and the cost far outweighs the return particularly when these kinds of attacks are taking place.