ICT on the Global Stage: Part 1 – China

One year ago this week, on January 12, 2010, two extraordinarily important things happened. Google announced its intention to close their office in China and shut down Google.cn, their Chinese-language search engine site. Half-way around the world, an earthquake shook Port au Prince, Haiti, to its core, killing over 220,000 people. Aside from happening on the same day, the two events share a deeper theme: they demonstrate the strengths and weaknesses of information and communications technology (ICT) in the world at the beginning of the 21st century.

The reason Google left China was more complicated than an altruistic support for human rights and free speech. Yes, Sergey Brin’s family had lived in the Soviet Union before immigrating to the United States when Brin was six years old, and Brin has spoken out for freedom of speech on other occasions; but as many pointed out, China’s population of over a million is an enormous potential audience. The right to search for terms such as “Dalai Lama,” “Falun Gong,” or “Tienanmen Square” alone is not enough to make a corporation pull out of the world’s most populous nation. That debate had gone on since 2006.

What really caused Google to shut down Google.cn was an intrusion on some of their main servers that was traced to hackers (or crackers, if you prefer that term) in China. Google engineers also found evidence that other companies’ servers had been similarly attacked. As Google’s announcement on its official blog explained:

These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China.

Operating a business in an environment where computer networks are under such attack while navigating the unwritten–but strictly enforced–censorship restrictions that apply in China is difficult and expensive. It’s particularly difficult for a company that is built on providing users with access to the Internet and is accustomed to working in the relatively free environment in the US. Censorship as a human right was not the biggest reason for shutting down Google.cn; censorship as a restriction on Google’s business model was a more significant reason.

As for giving up the million-plus audience in China, Google.cn had a fairly small market share at the time. Chinese sites like Baidu are better able to cater to both the rules of the censors and the tastes of young people who have grown up behind China’s “Great Firewall” and use the Internet differently than other audiences. So Google.cn was at a competative disadvantage in China. It earned a relatively small revenue against greater costs of doing business in an environment at odds with Google’s usual practice. Google may have turned its back on a large number of potential users, but not on a large potential profit.

The actual shut down was not complete until a few weeks later and service has since resumed, in a somewhat altered form, through Google.hk, Google’s Chinese-language service for Hong Kong, after further negotiations with the Chinese government. In the announcement that Google’s Internet Content Provider license in China would be renewed, the company explained:

As a company we aspire to make information available to users everywhere, including China. It’s why we have worked so hard to keep Google.cn alive, as well as to continue our research and development work in China. This new approach is consistent with our commitment not to self censor and, we believe, with local law.

The lesson of January 12,  2010, in China is that onerous restrictions on freedom of speech creates a bad environment for business.

(Thursday’s post will look at the other event of January 12, 2010, the earthquake in Haiti, and how it was influenced by ICT.)

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