Google's deal with the devil: Declaring war in China while competitors wimp out

I was just old enough to remember, and appreciate the significance of, the Tiananmen Square Massacre in 1989. The iconic image of a dissident standing defiantly in front of a column of People's Liberation Army tanks is as powerful today as it was when we first saw it.

Back then, activists fighting for greater freedom used surreptitiously acquired fax machines to get the word out to the rest of the world. It was an early sign that technology held the potential to undercut control-freak-government efforts to stifle free speech. Now that the Internet has taken over as the platform of choice for Chinese freedom-lovers and freedom-crushers alike, the battleground has shifted irrevocably, and the autocratic Chinese government hardly has enough political officers to keep its spy game machinery in balance.

That doesn't mean it isn't trying, however.

It all begins to unravel

Four years after it launched its google.cn search service in China, Google now finds itself staring down the gun barrel of that proverbial tank. At the time (and ever since, if we're picking nits) the company was derided for censoring search results in accordance with limitations imposed by the Chinese government. Google justified its decision then by saying this is the price foreign firms must pay if they wish to do business in China.

That all changed earlier this month. On January 12, just after discovering an unprecedented cyber attack on its services and users, the company published the following on its blog:

We launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results.

Fair enough, and from where I sit, it was a Hobson's Choice that the "Do No Evil" company has balanced quite nicely these past four years. Google made a deal with the devil with its eyes focused intently on a bigger picture that envisioned delivering greater access to class-leading Internet Web services for Chinese citizens. It held its nose for the entire time, confident its move would eventually spark greater freedoms in a country where the government's definition of the word differs from that used elsewhere.

We won't directly accuse the government, but…

After revealing that its systems had been hacked and it would enter into discussions with the Chinese government (and possibly exit the Chinese market entirely if things weren't resolved to the company's satisfaction), Google didn't specifically accuse the Chinese government of backing the attacks. But it's fairly clear to anyone reading between the lines that Google believes the Chinese government was trying to take its censorship deal with Google to places never envisioned four years ago.

Simply put, no one outside the Chinese government has access to the scaled resources necessary to mount attacks of the magnitude uncovered by Google. Never mind the fact that the Chinese government stands virtually alone in having a motive to spy on human rights activists and their sympathizers in the first place.

The fact that Google is willing to walk away from the largest, fastest growing Internet market on earth -- it grew from 10 million users a decade ago to 340 million today -- just before it starts generating world-beating revenue, speaks volumes about how its corporate ethics have evolved since google.cn went live in 2006. Although Google plays second fiddle in Chinese search (31% market share to Baidu's 60%) it remains well ahead of Yahoo and Microsoft and stands positioned to cash in on its strong-second position as this market matures. It's all potential from where Google sits, so its threat to take its ball and go home should send a message to competing tech firms that deals with devils ultimately have limits.

Not everyone gets the message, however. Microsoft, which in December referred to China as "the most important strategic market," shows no signs of growing a spine. CEO Steve Ballmer told CNBC, "We've been quite clear that we are going to operate in China, (and) we're going to abide by the law." I guess "abide by the law" makes it sound palatable, even if "the law" is little more than an autocratic edict designed to suppress the actions of freedom-seeking Chinese citizens.

At least Microsoft has company in the "Do Some Evil" camp. Yahoo, an organization that apparently never met a Communist regime it didn't like, happily filtered its search results before hooking up with Alibaba in 2005. After buying 39% of the Alibaba partnership, Yahoo made headlines later that year when it delivered material from Shi Tao, a journalist, to the Chinese regime. Mr. Tao was subsequently convicted and is now serving 10 years in prison.

I'm sure leaders of both companies are sitting on pins and needles as they wait for the outcome of Google's negotiations with Chinese authorities. I'm certain they'd be beside themselves with glee if the company that's kicked their Web services tail in virtually every international market decides to abandon this one. I'm certain their PR minders will find ways to soft pedal their cozy relationship with the Chinese government in light of the Google hacking.

Principle over profits

While the end result remains a great unknown, the fact that a profit-seeking American company would put its most promising growth market on the line over a fundamental issue of freedom and security, and be willing to duke it out with the world's most powerful Communist government, should be an eye-opener for any Western firm thinking of doing business in a country where freedom remains something of a four-letter word. Compromises made in the interest of maintaining a guiding presence in the market mean little if the government ultimately chooses to bulldoze its way to confidential data after a few years have passed.

Even if you have no business in China, ask yourself which company you'd trust with your data: the one with a spine, or the one that gives Communist officials anything they're looking for? In the end, what happens in the Far East may very well dictate what happens here, and who deserves to prevail as Web- and cloud-based services continue to creep into the mainstream.

Carmi Levy is a Canadian-based independent technology analyst and journalist still trying to live down his past life leading help desks and managing projects for large financial services organizations. He comments extensively in a wide range of media, and works closely with clients to help them leverage technology and social media tools and processes to drive their business.