Google’s China Problem

Ten years ago, when I was working with Israeli internet  start ups, I brought a representative from an Israeli internet voice recognition company to Los Angeles.  In the course of his presentation to a group of investors, he described a meeting with Chinese officials in Beijing.   He said that for hours they peppered him with questions about security, questions he had never encountered  from  any government official before.    When he asked what was the source of fascination, it  was explained to him that his interlocutors were not as concerned with how to bring the new technology into the country, as with  how to keep it out.

Everyone has known for years that China is the fastest growing  market in the world for both the production and sale of goods.   But with its 1.3 billion person population, China also happens to be the world’s largest  potential market for information technology.

In recent years many of the landmark Internet operations of the United States, including Microsoft, Apple and Google have created beachheads in this market hoping to cash in on the likely explosive opening of this new frontier once Chinese state controls are loosened.

Last week Google became the first of the big three to finally accept that the Chinese fist is not going to be unclenched anytime soon.  Its threatened withdrawal from the Chinese market, after access to many of the major websites such as ebay, Youtube and Facebook had been blocked by the Chinese firewall known as Green Dam, was a last straw.  In recent weeks, at least 700 Web sites seem to have been shut down or blocked—on top of tens of thousands of foreign online services that were  already inaccessible. Individuals have been banned from registering new domain names in China, and authorities are turning the heat up on existing domains.

The lockdown has many companies worried because it is not simply access to information that is involved.   It is also access to proprietary technology that can apparently be scooped up by the Chinese firewall.  Cyberspying is a great threat to companies such as Google which rely on an interlinked network of proprietary technologies to engineer its formidable search engines.   Such piracy , is, of course, one of the known hazards of doing business in China.  But when you talk about theft of the very technology which makes a service such as Google unique, then there is cause for alarm.

For years, companies doing business in China recognized that they had to play by the Chinese rules if they wanted to succeed there.  Tough government regulations have always made it clear to companies from General Motors to  Motorola that they could reap the harvest of the Chinese market only if they were prepared to play by the rules.   For the past twenty years they have done just that.

But Google’s defiance at the latest outrage may be the first stone thrown in a battle with the Chinese which will involve not just companies but governments all over the world.   Already the White House has  come forcefully to the defense of Google demanding that China’s business practices conform with Western standards.  Other countries may soon follow suit.

What is clear is that the Chinese government is attempting to buy itself time.   It well knows that it was information that ultimately brought down Communism in Eastern Europe and the way to stem the ever present threat of a burgeoning counter-revolutionary force is to build barriers to that information.   But economic liberalization is meaningless without access to this information.  And prosperity, the one thing the Chinese leaders are certain is going to vouchsafe the longevity of their regime, will not continue to grow without it.

Unfortunately for the Chinese, growing prosperity also brings with it the demand for civil rights – as has been shown in almost every middle class -led revolution of the past 250 years.  The Chinese are fighting a battle they will not be able to win, and they know it.  One day the regime will topple, under the weight of a popular revolt from those who have access to information about the West and its many freedoms and will demand the same for themselves.

When it will happen , we do not know.   But as events in Berlin 20 years ago revealed to us,  a regime so seemingly certain of its longevity,  can be swept away in less time than it takes it punch a hole in a wall.

Or maybe in the time it takes to say ” Google.”


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