Google's Uncertain Future in China

BEIJING, Jan. 13, 2010 — -- Google has announced that it may end its four-year presence here after discovering an attack on its corporate infrastructure originating from China.

Chinese authorities were seeking more information on Google's comments, an official with the country's State Council Information said in an interview today with the Xinhua news agency.

"It is still hard to say whether Google will quit China or not," the official said. "Nobody knows."

Reaction to the news on Chinese Internet sites has been mixed. One "netizen" wrote, "If Google leaves, all we have left is Baidu, which is trash. Please don't go!" While another simply wrote, "Just get out."

Baidu is a Chinese search engine.

At Google's Beijing headquarters, a dozen locals reportedly laid flowers on the Google sign at the entrance as a sign of support for the firm.

Chinese hackers apparently targeted the Gmail accounts of Chinese human rights activists within China and abroad in the United States and Europe. Google said the hacking resulted in the theft of intellectual property from Google and targeted at least 20 other large companies from the Internet, finance, technology, media and chemical sectors.

"We have taken the unusual step of sharing information about these attacks with a broad audience not just because of the security and human rights implications of what we have unearthed, but also because this information goes to the heart of a much bigger global debate about freedom of speech," said David Drummond, a senior vice president at Google.

When Google launched in China in 2004, it agreed to censor some search results, a requirement of the Communist government here, leading to widespread criticism that Google was betraying its own company motto, "don't be evil."

Here in China, many Web sites such as Facebook, Twitter and YouTube are impossible to access. Searches for sensitive topics such as "Dalai Lama," "Tibet Independence" or "Falun Gong" usually come up blank. China's largest search engine, Baidu, is privately run but heavily censored. The country's censoring prowess is often dubbed "The Great Firewall of China."

Google Attack 'Wake-up Call' to Other Companies

Human Rights in China, a group that monitors civil liberties, said the recent attack should be a warning to other companies.

"This is a wake-up call to the international community about the real risks of doing business in China, especially in the information communications technology industry, an industry that is essential to the protection of freedom of expression and privacy rights, " said Sharon Hom, executive director of Human Rights in China.

Secretary of State Hillary Clinton said the United States is aware of the hacking incident and will "look to the Chinese government for an explanation. The ability to operate with confidence in cyberspace is critical in a modern society and economy."

As for Google's future in China, it faces a dilemma on whether to stick with its motto or choose to focus instead on its business plan. Google faces stiff competition from Microsoft globally. And in China, the world's most populous country, the Internet audience has soared from 10 million to 340 million in the past decade.

Google made $200 million in China last year, a small but strategic piece of its global plan for the future. But Google has only 30 percent of the market in China, compared to 70 percent for Baidu. Some critics argue that Google is using the hacking as an excuse to pull the plug on a losing business.

"We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all," Google's Drummond said.

It's possible that the Chinese government will make some concessions to convince Google to stay. But the argument most commonly expressed by Chinese officials is: foreign companies must abide by Chinese laws if they want to do business here.