Google China Case
Google China Case
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CASE: P-76
DATE: 2010
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GOOGLE OUT OF CHINA
Perhaps we can return to serving mainland China in the future.
—Sergey Brin, Google CoFounder and President, Technology. 1
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INTRODUCTION
Google began serving the Chinese market from servers located in the United States, but service
was frequently interrupted by Chinese censors. After lengthy internal debate Google decided to
launch Google.cn in 2006 despite concerns about censorship and putting users in jeopardy.2
Google expressed its reservations: “We will carefully monitor conditions in China, including
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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.”3 Google’s
reservations met with criticism from the Chinese government and its state-controlled
newspapers. Google’s entry into China was criticized by human rights advocates and NGOs, and
in committee hearings members of Congress criticized the company for participating in
censorship. In 2006 Google’s President Sergey Brin expressed his ambivalence about the
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decision to operate in China: “We felt that perhaps we could compromise our principles but
provide ultimately more information for the Chinese and be a more effective service and perhaps
make more of a difference…. Perhaps now the principled approach make more sense.”4
Google’s motto was, “Don’t be evil.”5
In December 2009 Google detected an extensive and sophisticated cyber attack that targeted
several major companies and specific employees within those companies. After investigating the
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attack, Google announced on January 12 that it was changing its approach in China. Senior
1
The New York Times, March 24, 2010.
2
See GSB Case No. P54, Google in China.
3
David Drummond, The Official Google Blog, “A New Approach to China,” January 12, 2010,
http://googleblog.blogspot.com/2010/01/new-approach-to-china.html.
4
San Jose Mercury News, June 7, 2006.
5
Google Code of Conduct, http://investor.google.com/conduct.html
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Professor David P. Baron prepared this case as the basis for class discussion rather than to illustrate either effective
or ineffective handling of an administrative situation.
Copyright © 2010 by David P. Baron. All rights reserved. To request permission to reproduce materials, see
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Google Out of China P-76 p. 2
Vice-President David Drummond explained, “We detected a highly sophisticated and targeted
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attack on our corporate infrastructure originating from China that resulted in the theft of
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intellectual property from Google. …We have discovered that at least 20 other large companies
… have been similarly targeted. …We have evidence to suggest that a primary goal of the
attackers was accessing the Gmail accounts of Chinese human rights activists. …We have
discovered that the accounts of dozens of U.S.-, China- and Europe-based Gmail users who are
advocates of human rights in China have been routinely accessed by third parties.” 6 He
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announced, “We have decided we are no longer willing to continue censoring our results on
Google.cn.…We recognize that this may well mean having to shut down Google.cn, and
potentially our offices in China.”7 Drummond also acknowledged that “hundreds of millions of
Chinese people [have been lifted] out of poverty …” and praised the country. “Indeed, this great
nation is at the heart of much economic progress and development in the world today.”8
Microsoft Chairman Bill Gates commented that China’s “efforts to censor the Internet have been
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very limited” and that it was “easy to go around” the controls. He commented on the dilemma:
“And so you’ve got to obey the laws of the countries you’re in, or not?”9 CEO Steve Balmer
said, “I think you have to respect sovereign nations to make that decision…. It’s important we
comply with the laws and conventions in the countries [where] we do business.”10 Microsoft
continued to provide Internet services in China, as did Yahoo.11
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CENSORSHIP AND THE CYBER ATTACKS
Censorship of the Internet in China took two forms. First, the Chinese government blocked
Internet sites and used the Great Firewall to block access to foreign sites. Facebook, Twitter, and
YouTube were blocked in China, and Chinese equivalents were quickly established: Renren for
Facebook, QQ for instant messaging, and Baidu for Google, while Li Senhe launched
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YouTubecn.com days after Google announced it was considering pulling out of China. Second,
Internet service providers were expected to self-censor. The Chinese government did not specify
what content or links should be censored, and companies developed their own approaches.
Google pinged the Great Firewall to see what was blocked, monitored actions taken by the
government, and attended weekly “wind blowing” meetings held by the State Council
Information Office. Search requests on Google for Tiananmen Square, the Falun Gong, and riots
in Tibet and Xinjiang returned only links understood to be satisfactory to the government. A
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2008 study by the Citizen Lab at the University of Toronto found that Google.cn was less
censored than other search engines.12
Brin commented that leading up to the 2008 Beijing Olympics, “I actually feel like things really
improved. We were actually able to censor less and less, and our local competitors there also
6
One of those whose Gmail account was accessed was Tenzin Seldon, a sophomore at Stanford University, who
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Google Out of China P-76 p. 3
censored less and less.” 13 After the Games, he said that “there has been a lot more blocking
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going on.”14 The tighter controls were justified by the government as responses to internal threats
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that had escalated. Government officials cited the riots in Lhasa, Tibet; protests intended to
disrupt the Olympic Games; a human rights petition signed by 10,000 people; and the July 2009
ethnic riots in Xinjiang that resulted in nearly 200 deaths and 1,700 injuries. The government
claimed that the Internet was used to recruit Uighur youths to go to Xinjiang and attack ethnic
Han citizens.15 The Communist party’s official newspaper, the People’s Daily, editorialized,
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“How did the unrest after the Iranian elections come about? It was because online warfare
launched by America, via YouTube video and Twitter micro-blogging, spread rumors, created
splits, stirred up and sowed discord.”16
Although Google traced the attacks to China, it did not allege that they were conducted by the
government.17 The attack reportedly targeted Google’s Gaia password system that controls
access to its Web services, e-mail, and applications.18 Adobe Systems and Juniper Networks
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also said they were victims of the attacks. A spokesperson for the Ministry of Industry and
Information Technology (MIIT) stated: “Any accusation that the Chinese government
participated in cyber attacks, either in an explicit or indirect way, is groundless and aims to
discredit China.”19
The New York Times reported that investigators had concluded that the cyber attacks were
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conducted using computers at Shanghai Jiaotong University and the Lanxiang Vocational School
and may have been connected with the Chinese military or government. Ma Shaoxu, a
spokesperson for China’s Foreign Ministry, responded angrily to the allegations: “Reports that
these attacks came from Chinese schools are groundless, and accusations of Chinese government
involvement are irresponsible and out of ulterior motives.”20
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In June 2009 the government blocked Google’s Web site for linking too often to pornography
and vulgar content. Google pledged renewed efforts to avoid pornography. In January 2010
China announced that it would scan text messages for “illegal or unhealthy content” as part of its
campaign against pornography. Sun Li, a businesswoman in Beijing, said, “This is against the
law. You can block Web sites for pornography or violence, but texts are from person to person.
It has nothing to do with the public. If this is really so, I can’t text anyone anymore, or call
anyone.”21 In January 2010 the Foreign Correspondents Club of China reported that the Gmail
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accounts of some of its members were hacked, and in April 2010 the Club’s Web site
experienced a denial of service attack.
13
The Wall Street Journal, March 13-14, 2010.
14
Ibid.
15
The New York Times, February 12, 2010.
16
Ibid.
17
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Google reportedly asked the U.S. National Security Administration for technical assistance in investigating the
cyber attacks.
18
The New York Times, April 20, 2010. The attackers knew the names of the developers of Gaia and attempted to
enter through their computers but failed. They then used other means to access the code, which they then transferred
to a computer at Rackspace in Texas, which was unaware of the activity.
19
San Jose Mercury News, January 25, 2010.
20
San Jose Mercury News, February 24, 2010.
21
The New York Times, January 20, 2010.
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Google Out of China P-76 p. 4
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Censorship was practiced by many countries. Iran had shut down Gmail in February, and
Secretary of State Hillary Clinton spoke of a “spike in threats to the free flow of information” in
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the Middle East, pointing to Egypt, Iran, Saudi Arabia, Tunisia, Uzbekistan, and Vietnam. 22 The
United States released its annual report on human rights abuses, which criticized China; and
China issued its report on human rights abuses, listing what it said were abuses in the United
States.
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THE DECISION
Google hoped to negotiate with the Chinese government to allow it to remain in China without
self-censoring. At the World Economic Forum in Davos, CEO Eric Schmidt commented, “We
love what the Chinese are doing as a country, in terms of growth, improving the states of lives of
people, and using information. We just don’t like the censorship, and we said that very publicly.
What we hope is that that will change. And we hope that we can apply some form of negotiation
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or pressure to make things better for the Chinese people.”23
Although Schmidt said, “We’re in active negotiations with the Chinese government,” Miao Wei,
China’s vice-minister of MIIT, stated that there had been no negotiations.24 MIIT’s Minister Li
Yizhong warned, “If you insist on taking this action that violates Chinese laws, I repeat: You are
unfriendly and irresponsible, and you yourself will have to bear the consequences.”25
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On March 22, 2010, citing the cyber attacks, Drummond announced that Google had stopped
censoring its search services—Google Search, Google News, and Google Images—on
Google.cn. Google users were now redirected to a new “entirely legal” service on
Google.com.hk for uncensored search in simplified Chinese using servers located in Hong
Kong.26 Google explained that “the Chinese government has been crystal clear throughout our
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discussions that self-censorship is a non-negotiable legal requirement,” adding, “We are well
aware that it could at any time block access to our services.” Hong Kong had a separate Internet
and communications infrastructure, and political dissidents operated blogs from there and human
rights NGOs located there.27 The Hong Kong site, however, was outside the Great Firewall, and
censoring by the Chinese government replaced Google’s self-censoring. On March 30 Google’s
search site stopped working for several hours, and Google explained: “So what happened to
block Google.com.hk must have been as a result of a change in the Great Firewall.”28
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The reaction by the Chinese government was swift and harsh. An official of the Internet Bureau
of the State Council Information Office told the Xinhua News Agency that Google had “violated
22
San Jose Mercury News, January 25, 2010. The Arabic Network for Human Rights Information provided a report
on Internet censorship in 20 Arab countries: “One Social Network with a Rebellious Message,” December 2009.
www.anhri.net/en
23
San Jose Mercury News, January 30, 2010.
24
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Google Out of China P-76 p. 5
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the written promise it made when entering the Chinese market by stopping filtering its searching
service and blaming China,” adding, “We’re uncompromisingly opposed to the politicization of
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commercial issues, and express our discontent and indignation to Google for its unreasonable
accusations and conducts.”29 A Chinese embassy official in Washington stated, “China’s
policies of encouraging Internet development will remain unchanged. So will its policies of
managing the Internet according to Chinese laws and regulations.”30
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Sergey Brin said that the cyber-attack “was the straw that broke the camel’s back.”31 He
explained, “I think at some point it is appropriate to stand up for your principles, and if more
companies, governments, organizations, individuals did that, I do think the world would be a
better place.”32 Silicon Valley venture capitalist Mitch Kapor echoed Brin’s sentiments: “More
businesses ought to follow ‘gut principles’ and shareholders and customers ought to support and
encourage them to do so.”33 Two days after Google’s announcement, Go Daddy Group told a
congressional committee that it would cut back operations in China because the government had
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required information about registrants in China.
Commenting on the move to Hong Kong, Brin said, “We got reasonable indications that this was
okay. We can’t be completely confident.”34 In its announcement, Google also stated that it
would continue its R&D work in China, would maintain a sales force on the continent, and
would continue in its partnerships. Drummond explained, “We certainly expected that, if we
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take a stand around censorship that the government doesn’t like, ... it would have an impact on or
business. We understood that as a possibility.”35 The decision to move its search and news
services to Hong Kong risked not only losing mainland users but also jeopardizing its partnering.
Tom.com, an Internet portal located in Hong Kong and controlled by tycoon Li Ka-Shing,
quickly switched its default search link from Google.cn to Baidu.com explaining, “As a Chinese
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company, we adhere to rules and regulations in China where we operate our business.”36
Tianya.cn announced that it was discontinuing cooperation with Google on some projects,37 and
Sina Corporation said that it was considering whether to switch to another search provider.
Mobile phone operator China Unicom Ltd. announced that it would not install Google search in
its new handsets. China Mobile Ltd. commented that it was working with Microsoft’s Bing and
other search engines in addition to Google. Motorola said it would provide links to other search
engines on its Android system phones in China.
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When it made its January 12, 2010 announcement, Google postponed the introduction of its
smart phone in China, and MIIT stated that Android-based applications would not be affected. A
29
The Wall Street Journal, March 23, 2010.
30
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Ibid.
31
The Wall Street Journal, March 25, 2010.
32
Ibid.
33
Ibid.
34
The New York Times, March 23, 2010.
35
The New York Times, March 24, 2010.
36
The Wall Street Journal, March 24, 2010.
37
The Wall Street Journal, March 26, 2010.
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Google Out of China P-76 p. 6
spokesperson explained, “As long as it fulfills Chinese laws and regulations and has good
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communication with telecom operators, I think its application should have no restrictions.”38
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China had over 300 million Internet users in 2009 and was projected to have 800 million users
by 2013. Beijing-based Analysys International estimated that for the first quarter 2010 Google’s
share of Internet advertising revenue fell from 35.6 percent to 30.9 percent and Baidu’s share
rose from 58.4 percent to 64 percent.39 Although Google’s market share was only half that of
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Baidu, Google users were better educated and had a higher average income than Baidu users.
Google’s searches were said to be less biased than those on Baidu, where advertisers paid for
placements of their links. China was the second-largest traffic generator for Google, according to
Jeffries & Co. Analysts estimated that Google’s revenue in China was between $250 and $500
million, representing 1- 2 percent of its $23.6 billion revenue.
Commentators speculated that Google employees in China might defect to Microsoft. Hao Wu
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of the Chinese subsidiary of TripAdvisor said, “Once Google made the announcement to
possibly exit China, many tech companies were interested in poaching their employees.”40
At the beginning of April 2010, Google started posting the number of requests it received from
governments for information about its Web users and the requests to remove content from its
services. Drummond stated, “We hope this tool will shine some light on the scale and scope of
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government requests for censorship and data around the globe.”41 China was not included
because it was illegal to identify government requests. During the last half of 2009 Brazil had
the most, with 3,663 requests for user data and 291 requests that material be removed. The
United States was second with 3,580 requests for user data and fourth in removal requests.
“The Internet is really big,” said Wang Quiya, a 27-year-old worker in Beijing’s financial
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PREPARATION QUESTIONS
1. How much is Google sacrificing in moving its Web services to Hong Kong?
2. Is Google’s move to Hong Kong an appropriate decision or an uncomfortable
compromise of principles?
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3. Does it matter if Google self-censors or China does the censoring, if the result is the
same?
4. Why is China so adamant about censoring?
5. Should Google have stayed in China? Use principles of utilitarianism, rights, and justice.
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38
San Jose Mercury News, January 28, 2010.
39
The Wall Street Journal, April 27, 2010. Baidu’s profit for the first quarter 2010 increased by 65 percent to $70.4
million, and sales increased by 60 percent to $189.6 million, compared to a year earlier.
40
The Wall Street Journal, February 25, 2010.
41
The Wall Street Journal, April 2, 2010.
42
The New York Times, January 17, 2010.
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