Google Waves Goodbye to China

Will other U.S. corporations now follow search engine's lead?

By Tamer El-Ghobashy and Daniel Macht
|  Wednesday, Jan 13, 2010  |  Updated 9:24 AM CDT
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Google Waves Goodbye to China

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A women polishes a dais before the Google global Chinese name launch on April 12, 2006 in Beijing, China.

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Tech giant Google is reconsidering its oft-criticized relationship with China after discovering a "highly sophisticated and targeted attack on our corporate infrastructure originating from China." Translation? It appears, according to Google brass, that Chinese hackers were breaking into Gmail accounts for what can only be described as sinister reasons.

"A primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists," Google said in a corporate blog post written by Chief Legal Officer David Drummond. While it did not point the finger specifically at the Chinese government, Google did say it was finished going along with China's censorship.The move likely means the search engine can pull out of China or wait to be banned.

Google drew praise for its stance, with some pundits wondering if it might trigger an exodus of U.S. corporations:

  • Salon.com's Andrew Leonard spoke for observers who hoped other U.S. corporations would now take a harder line on China's lack of free speech and "political expression on the Internet." "The willingness of American technology companies to facilitate surveillance and censorship is despicable," he wrote. "It's nice to see the search engine giant deciding that some things are more important than market share in the Middle Kingdom."
     
  • Giving up on the world’s biggest growth market is “easier than you’d think,” writes ZD Net Editor in Chief Larry Dignan. Google's top priority is maintaining customers’ trust, he argues. “Google can’t let one country—even one that could be insanely profitable—erode the company’s goodwill it has built up in its short history,” Dignan writes.
     
  • Joseph Tartakoff breaks down the financials for PaidContent, writing that Google sacrificed long-term growth but stands to lose just two percent of the $26 billion most analysts expect the company to rake in this year. Even that "immaterial" loss is based on an "excessive" estimate by JP Morgan, he writes.
     
  • Google's threat turns the heat up on that other tech titan -- Microsoft, writes Nick Eaton on the Seattle Post Intelligencer's tech blog. "It will be interesting to see what Microsoft does in response. Surely, there will be calls for Bing to follow suit and stop censoring Chinese search results," he writes. "But Microsoft did recently peg China as its top search priority."
     
  • Google has now put other American Internet companies in a “very difficult position,” and may play to the Chinese government’s benefit writes Tom Krazit for CNET.  China's government now “emerges with even stronger control over the Internet if domestic firms with fewer reservations about censorship or surveillance take [American firms’] place,” Krazit laments.


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