So yeah, anyway, the People’s Daily, China’s premiere Fair and Balanced newspaper, just threw open the virtual doors to Jike, the People’s Search Engine. Will Jike make a run at Google or Baidu? We’ll have to wait and see, but with Google already having that rather large and distinct target on its back, methinks they might be first off as prey for Jike.

After reading a bit about the new search engine, I went over to jike.com.cn to give it a test drive. The results were rather confusing, mostly involving wind and solar power. I know that the government is pushing energy policy pretty hard these days, but this seemed over the top.

I was quite disheartened until I clicked on the “About Us” link and realized that I was actually on the site of an alternative energy company located in northern Beijing. Hmm, apparently the People’s Daily trademark/domain name team was on holiday when the new project was being launched.

No problem. I adjusted my address bar to jike.cn and, lo and behold, thar she blows! I spent a few minutes fiddling around with the image search, checking out the news headlines, etc. Nothing too exciting there, but I did notice that the sites run by the China Net gurus who attended the opening ceremony of Jike coincidentally had prominent placement in the news results. That’s a heck of an algorithm they got there.

But let’s get down to the important issues here. Just how to hell does one pronounce “JIKE” and what does it mean? There are several possible interpretations.

1. The Cover Story — Obviously, you’ve got the Chinese itself, ?? (meaning ‘immediate’), which transliterates to “gee kuh“. By the way, that’s a soft ‘g’ like in the words “Jesus,” “Gyllenhaal” and “ginormous”.

2. Sowing the Seeds of Confusion — In a blatant attempt to throw us off the trail, you’ve got the People’s Daily explanation of the name. They claim that it sounds like the English slang geek “representing a computer expert or enthusiast.” Right. Well, it’s a bit off, particularly with that whole “soft versus hard ‘g’” part, not to mention the extra “uh” at the end. But I promised myself I wouldn’t be too harsh on their first day.

3. The Conspiracy Theory — I’ve read on some underground BBSs that Jike is some sort of military project involving mind control. The name is apparently a reference to a mythical beast that comes up in the writings of Lewis Carroll, although others insist that it is from Monty Python or Futurama. I remain skeptical.

4. The Root of All Evil — I prefer an explanation that involves money. I therefore believe the scattered reports that claim the term (which should be pronounced to rhyme with “like” or “Mike” – as in “I like Mike”) is simply a contraction of the two words “bicycle” (“bike” for short) and “jealous.” We take the “j” from jealous and the “ike” from bike, and there you have it, Jike – a vehicle for jealousy.

Why is our new friend Jike jealous? You ask. Well, obviously, its playmates Baidu and Google have a lot of toys (also called market capitalization). If you were Jike, wouldn’t you be jealous too?

Jike is merely a commercial enterprise, put forward by folks who want to cut a bit off the end of that yummy search engine money loaf. I predict that the jealous Jike will be all about the competition in the coming months and years.

The most important issue for users of course is whether this new search engine is for real, or simply a nefarious plot hatched by the sinister denizens of the Ministry of Truth. Time will tell, but at the moment, the search engine looks fairly benign.

As a parting note, though, I will share with you some information I received from a friend who had access to Jike during its beta testing phase. This is very privileged information, so please do not tell the guy in the cubicle next to you.

Apparently in its stripped-down incarnation, Jike was simply a blank screen with a search bar with the instructions “enter harmonious search terms here” underneath. As part of his testing, my friend entered many different search terms, including some sensitive names and dates.

On one occasion, he typed in the date of a well-known public disturbance that happened a couple of decades ago here in Beijing. A window, which was festooned with a ribbon of China’s national flag and contained a small tiger running around the perimeter, popped up, which contained the words “Are you quite sure you want to search for that date?”

When the video search function was being tested, my friend typed in terms for a certain famous CNN broadcast from 1989. When he hit enter, there were only two search results: the first was a link to a CCTV discussion about foreign media propaganda, while the second triggered another popup window that said “Jike strongly suggests that you watch the CCTV show.”¹

Sounds like they made some big changes since beta testing, but I suppose that’s what it’s for.

Best of luck to our newest search friend, and I hope he works out those jealousy issues.
________________________________

1. Apologies to Yakov Smirnoff

________________________________

© Stan for China Hearsay, 2011. | Permalink | One comment | Add to del.icio.us
Post tags: Baidu, Google, Internet, Jike, People's Daily

(...)
Read the rest of Google in China: How Ugly Is It Going To Get? (258 words)

© Stan for China Hearsay, 2011. | Permalink | 10 comments | Add to del.icio.us
Post tags: Google

Instead of an exhaustive summary, let me throw out a few comments and leave it at that.

Here’s my problem. I still can’t figure out what everyone is talking about when they refer to Google facing increased censorship demands. Let me explain what I mean by this.

Yes, I see that exact language in the cables. But no, I still don’t see specific actions that back it up. In fact, that cable entitled “Google China Paying Price For Resisting Censorship, May 18, 2009 begins with “recent pressure by the Chinese government to censor the company’s Chinese website.” Sounds like a smoking gun. I would therefore expect to follow a discussion of what that censorship pressure entailed.

Instead, there is a discussion about removing the Google.com link and harassment involving SOE business cooperation. Neither of which, at least to me, is really about censoring the content of the Chinese site (aside from the link itself, I guess).

It’s quite possible that I’m missing something here, but here are a few possible explanations:

1. The “censorship” cited in the cable refers to the government demanding the removal of the Google.com link, or somehow otherwise controlling content on Google.com.

2. The pornography crackdown.

3. Crackdowns associated with “historical anniversaries” (we all know what that means).

4. Censoring Google Earth images.

Maybe there are others that I overlooked, I don’t know. Of those four, Google Earth is a security matter, the pornography campaign involved many other sites in addition to Google, and the “historical anniversaries” thing was similarly widespread.

My point is not that Google wasn’t harassed. Of course it was. We all knew that many years ago. I still remember back before they came onshore when Google.com was blocked for a day or two, and we all freaked out; when you typed in the URL, Baidu’s homepage mysteriously resolved instead of Google’s. Certainly everyone had to admit that the fix was in at that point and serious local protectionism was going on.

But, and correct me if I’m wrong here, Google did not pull out of China claiming that the government was out to get them. They said that they couldn’t deal with the censorship any longer, not to mention the Gmail and other hacking.

The question is to what extent China was using its censorship authority to harass Google, as opposed to other means. This is an important distinction to me because virtually all the press accounts (then and now) have painted this dispute as an epic struggle over the principle of censorship, and that as the censorship noose was increasingly tightened around Google, it finally decided that enough was enough and decided to leave.

Maybe. But my reading of the cables suggests that Google was being harassed on a variety of fronts, including the ones I noted above with respect to Google Earth images, pornography, etc. Are these censorship issues? Yes they are, but a lot of sites get hit with these demands (i.e. they are legal).

Yes, a couple of other issues, such as the hacking, are exceptions. The story about Li Changchun and Google.com is weird. Assuming that the hearsay account is accurate, all this stuff about Google.com being an “illegal site” is downright bizarre. The Chinese government can, and does via the GFW, block pages and sites. But that’s all it can do with sites that are hosted offshore. Just because Google.cn and Google.com are affiliates does not extend Chinese jurisdiction.

If the answer here is that China tried to use its leverage over Google.cn to get Google.com to censor search results offshore, then that would be big news. I don’t see that in the cables, though, just general griping about Google.com.

In other words, I didn’t see anywhere that the government was requesting that Google.com censor anything, just that Google.cn remove the link. Again, the link removal itself is a specific form of censorship, but it’s not an overall pattern that justifies the title of that cable.

The other extra-legal measure involves these SOEs. Obviously directing SOEs to stop doing business with Google would be an egregious act of local protectionism, but however you look at it, it’s just not a censorship issue.

OK, I better stop there. I think I’m arguing in circles at this point. From the comments and emails I’ve received, it sounds like a lot of folks think I’m ignoring or deliberately misstating facts. Far from it. I may be guilty of being obtuse, but this is at the very least a sincere effort to explain these claims regarding a ratcheting up of censorship on the Chinese site in an illegal manner.

That’s all I got. Tomorrow I’ll write something non-controversial about puppies and fluffy bunny rabbits.

© Stan for China Hearsay, 2010. | Permalink | No comment | Add to del.icio.us
Post tags: censorship, Google, Wikileaks

Since we are in the middle on an all-out media blitz on what the WikiLeaks cables say about Google and China, it seems as though some news outlets are throwing caution to the wind in an effort to get something, anything out there as quickly as possible, facts be damned.

I understand the excitement, but getting folks to write about the Google-in-China story is not so easy. At the time Google pulled out, a lot of our friends in the media screwed the story up royally because they did not understand how search engines worked, had no clue what Chinese Internet law had to say on the subject, or didn’t know anything at all, and probably didn’t care. I had some words to say about the press accounts of the Google story at the time.

So now we have Round Two, and the guys that are writing about Google’s actions in China are doing so with even less knowledge of what actually happened, are relying on those inaccurate original stories as background, and are probably going to get a lot of facts wrong.

I haven’t read much yet, but I did peruse the New York Times writeup, which breathlessly focuses on a sexy story alleging that Li Changchun, often referred to as being in charge of China’s propaganda/censorship efforts, somehow ordered a hack attack against Google because he didn’t like the search results associated with his name. I’ll leave aside my opinion on the veracity of that story until tomorrow, but I do want to point out how the New York Times story on that topic started off. This is the lede:

As China ratcheted up the pressure on Google to censor its Internet searches last year, the American Embassy sent a secret cable to Washington detailing one reason top Chinese leaders had become so obsessed with the Internet search company: they were Googling themselves.

This is just awful stuff. Look, China never “ratcheted” up pressure on Google to censor search results. Why? Because Google was already censoring (for several years) due to very clear legal requirements. Once Google decided to unilaterally stop censoring, the government told them in no uncertain terms that they must, repeat must, go back to following the law or the site would be shut down.

No “ratcheting” necessary. It was “follow the law” or else. That’s it.

The NYT lede seems to suggest that Google had been offering unfiltered search results for some time, which displeased the government, and therefore Beijing was slowly turning up the heat on Google to change their policies. Absolutely, flat-out wrong!

Further on in the article, after presenting the entertaining story of Mr. Li and the self-googling, and portraying the Central Government elites as being “obsessed” with Google (what determines an obsession?), we get this:

The cables catalog the heavy pressure that was placed on Google to comply with local censorship laws, as well as Google’s willingness to comply — up to a point. That coercion began building years before the company finally decided to pull its search engine out of China last spring in the wake of the successful hacking attack on its home servers, which yielded Chinese dissidents’ e-mail accounts as well as Google’s proprietary source code.

One could interpret this language several different ways, but to me, it really sounds like the writers here have no fundamental understanding of what they are writing about, and that’s not really a good thing. I usually don’t go after journalists who are writing “neutral” news stories like this, so let me explain.

Was Google being pressured by the government to comply with censorship laws? Yes, of course. Google announced that it would break the law, so of course the government said that it must comply or it would be shut down. The context presented here in the article is clearly that the government was unfairly targeting Google, doing something to a private, foreign company that it shouldn’t. I’m reading between the lines here, but use of the word “coercion” alone, I believe, supports my contention.

The worst part, though, is the statement that this “coercion” began years before Google decided to pull out of China. But wait a minute. It seems pretty clear from the article that this coercion was designed to get Google to comply with censorship rules (see above language in the lede in addition to that second quote).

That’s obviously wrong, because Google was, in fact, complying with censorship rules until just before it fled the mainland for Hong Kong. So according to the NYT, the government was involved in coercing Google into doing something it was already doing. Or to put it another way, the government was coercing Google for years, but for reasons that had nothing to do with censorship.

Are you confused?

Here’s what I think happened here. The NYT threw these two guys onto this story (they are reportedly from New York and San Francisco) even though they don’t know the facts. They incorrectly assumed, since all the background stories on this topic are about complying with censorship rules, that the government had been pushing Google for several years to start censoring, as opposed to what really happened (i.e. Google decided to stop censoring).

If I’ve gotten this totally wrong, not to mention hopelessly confused, then I apologize to these guys. However, it looks awful at first glance, and I expect better from the Times on a story this important.

More tomorrow night after, ironically, I give a lecture on China Internet Law to my FDI class.

© Stan for China Hearsay, 2010. | Permalink | 10 comments | Add to del.icio.us
Post tags: censorship, Google, new york times

The cache of more than 250,000 U.S. Department of State cables that WikiLeaks began releasing on Sunday includes a document linking China’s Politburo to the December 2009 hack of Google‘s computer systems.

The U.S. Embassy in Beijing was told by an unidentified Chinese contact that China’s Politburo “directed the intrusion into Google’s computer systems,” the New York Times reported Sunday, citing a single leaked State Department cable.

“The Google hacking was part of a coordinated campaign of computer sabotage carried out by government operatives, private security experts and Internet outlaws recruited by the Chinese government. (Computerworld)

Not exactly a smoking gun, but merely one more source that says “China dunnit.” Wouldn’t surprise me either way, but this leaked cable will certainly not put this issue to rest one way or the other. I assume that the anti-China crowd will hold this up as proof that they were right all along, while Beijing and China cheerleaders out there will be quick to point out that this new evidence isn’t determinative of anything.

{yawn}

The fun part is that this story is also kicking around the newspaper today:

China’s top law enforcement and judicial authorities are working together on drafting a judicial interpretation to enable a tougher crackdown on Internet hacking, a senior police officer said.

Gu Jian, deputy head of the network security bureau under the Ministry of Public Security, said the ministry is working with the Supreme People’s Court and Supreme People’s Procuratorate to draft the legal document clarifying the conviction and penalty for hacking.

“China has become the main victim of Internet hacking amid a growing number of transnational cyber crimes”, he told China Daily in an interview.

This isn’t a new story either, and the government has been working on a judicial interpretation in this area for a while now, probably motivated by all the recent anti-porn activity.

One has to be amused, however, that China Daily chose to run this update on the new set of policies on the same day that this Google hacking story is resurfacing like a bad hot dog.

Poor timing. I wonder if some editor somewhere is going to get yelled at over this?

[By the way, my hacking of late has been limited to the sore throat/coughing up a kidney variety.]

© Stan for China Hearsay, 2010. | Permalink | 4 comments | Add to del.icio.us
Post tags: computer hacking, Gmail, Google, judicial interpretation, Wikileaks

A local court in the city will hear a case on Thursday in which an online shoe-seller is suing Google for damaging its reputation.

Beijing Letao Culture Development Co Ltd, which runs letao.com, accuses Google of unfair competition and violating advertisement laws, through ads on google.cn and google.com.

In early May, a Letao employee searched the name of the company on google.cn, and the second result showed: “If you want to buy sneakers, OKBuy is better than Letao.”

Letao asked that the ad be pulled and was put off, allegedly, until the suit was filed. The plaintiff is asking for RMB 500,000 and a public apology.

This is of course interesting in one sense because anything that happens to Google in China these days is going to be scrutinized. Whether its other problems will translate into less favorable treatment in a Haidian courtroom remains to be seen, although I have confidence in the experience and professionalism of Beijing jurists, who are a heck of a lot better than their colleagues in many other parts of the country.

So aside from the Google angle, what are the legal issues here? The plaintiff’s lawyer explains:

“Google acted illegally by using the Letao brand as a keyword to trigger ads of other companies on its website,” Letao’s lawyer Hua Jianming told reporters on Tuesday.

“The ads telling customers that its competitor is better than Letao, leads potential Letao buyers to turn to its competitor. It has tarnished Letao’s reputation and harmed its interests,” Hua said.

OK, looks like at least three separate issues here:

1. Internet keyword dispute. China has a keyword registration and dispute resolution system, so this is not exactly a new issue. Whether Letao ever registered its name as a keyword is not clear.

2. Advertising law violation. I assume the issue here is the claim “If you want to buy sneakers, OKBuy is better than Letao.” Generally under Chinese advertising law, competitor comparisons like this are not allowed. I’ve seen ads like this get pulled by AIC (the government regulator) before, so I’m not sure what OKBuy was thinking here.

3. Reputation damage. This one might just be a catch-all, tacked on as a matter of course. Whenever I see the term “reputation” now, though, I am quite aware that there are some new possibilities for litigation based on the new Tort Liability Law and the included right of reputation. Since the only claim here was that OKBuy is better than Letao, I’m not sure what the specific claim is with respect to reputation (if there is one).

If the court finds that the ad in question violated the Advertising Law, then perhaps it would need to determine whether Google failed to take it down in a timely fashion or whether it is liable for posting it in the first place. I’m pretty sure that with most online platforms like Google, there isn’t any formal legal oversight/due diligence of ads before they go up — it’s all in-house (the high volume does not allow for anything else) and not done by folks who necessarily know the finer points of China’s advertising laws and regulations. Whether they have decent training or not, I have no idea.

Anyway, fun stuff. Based on the keyword issue and the advertising law matter, I’m not at all surprised that this case, under an unfair competition theory, made it to the hearing stage.

Stay tuned. If anyone has details you can share, please do so.

© Stan for China Hearsay, 2010. | Permalink | No comment | Add to del.icio.us
Post tags: China advertising law, dispute resolution, Google, google.cn, Internet keywords, unfair competition

News flash. For those of you who spend most of your time living under rocks, eating moss and drinking rainwater, you may be unaware that Google.cn decided to suspend its self-censorship of search results in March, at which time they were politely told by the government here that since that was against the law, it might be a good idea to stop the domestic Google.cn service.

Google in fact did so, sort of, by redirecting users to its Hong Kong site. If my understanding is correct, mainland users are getting pretty much the same experience they would get as if they accessed Google.com, which is often what I do when I need a little English search engine goodness.

Sites offshore do not have to censor, but their contents are still subject to the Great Firewall. This means that 1) if I type in a forbidden search term, my attempt to access Google will result in a crash that will not reset for a minute or two; and 2) even if I do get search results that include forbidden topics, when I try to click on those sites (assuming they are blocked), I will be frustrated in the attempt.

Similarly, if I do an image search on Google.com, there are often a lot of blank image results, no doubt naughty stuff that I shouldn’t look at. I often wonder, though, why there are so many blocked images that pop up from the search of keywords like “income gap,” “RMB value,” and “copyright infringement.” Just what sort of twisted stuff am I missing?

Anyway, I had assumed that the Hong Kong redirect basically resulted in the same thing. Maybe I was wrong? I still can’t figure it out.

Beijing certainly doesn’t like it. Even though the government can still filter sites or pages via the GFW, it still doesn’t want Google.cn redirecting to results on Google HK. Google’s fallback position seems to be the change it from a direct link to an indirect one (users are sent to the HK page itself for searching). Somehow I doubt that this distinction is going to be persuasive.

So I’m wondering, why should Beijing care if folks here can get to Google HK? They can get there directly by typing in that URL anyway, and there are plenty of other Google sites, including the .com, that operate in the same fashion. The draw for the HK site, of course, is the Chinese language capability and search scope, but let’s put that aside for the moment.

And then I realized something when I put my lawyer hat back on. Google’s current problem is that it is applying for a renewal to its ICP license, a mandatory regulatory approval that all similar sites must obtain to do business here. As long as Google follows China law, it should be able to get its ICP license renewed.

But wait. Yes, back in March when they decided to stop filtering, they shut down the local search service. However, in redirecting to the HK site, what exactly was the company doing? What exactly is Google.cn these days, as far as its operations are concerned?

This is where I frankly get confused. Google.cn is not a search engine any longer. The information you get from that site is really coming from Hong Kong (in fact, users are accessing the information from the HK site). Given that reality, Google is still asking the government to recognize it as a China mainland site that is deserving of an ICP license so it can continue to sell ads.

I don’t get it. If I went out tomorrow and set up a U.S.-based web site that was chock full of content, and then I set up a Chinese company that did nothing but redirect to that U.S. content, there’s no way I’d get an ICP license approved. Despite my attempt at getting local revenue, I would not really be operating as a local web site — my server would be in the U.S.¹

One further issue. What should the Chinese government do with Google’s pending application? I’m no fan of censorship, but if Google is not really operating a Chinese site, then they shouldn’t get an ICP license. I feel like I’m missing something here, but that’s where I am at the moment.

If I take politics into account, then I’m definitely going to piggyback on Shaun Rein’s advice to Beijing:

The smart move would be to delay making any decision on Google’s license approval until the issue dies down again in the overseas press. It should neither approve nor deny for the moment, but let the status quo continue.

Makes a great deal of sense. I suspect that Shaun is predicting a negative result for Google, otherwise a delay of that nature would be unnecessary. At this point, I’d have to agree with that as well. Sure, a delay on the regulatory approval would only benefit the government, and besides, the way things are going for Google.cn right now, there might not be a hell of a lot left in a few months anyway.

If anyone would like to educate me on Google’s China business model and fill in some gaps, feel free to comment, send me an email, or look for me lurking on Twitter (@chinahearsay). In the meantime, I’ll have to be content with reading Elizabeth Lynch’s excellent post on Google at China Law & Policy.

________________________________

1. Yes, I understand that there are some exceptions. But generally, if you are running an online business in China and have an ICP license, your server should be here.

________________________________

© Stan for China Hearsay, 2010. | Permalink | 7 comments | Add to del.icio.us
Post tags: censorship, GFW, Google, google.cn, Great Firewall

First, though, a quick prefatory remark. During the Google “incident,” a lot of commentary assumed that the search company’s game of chicken with Beijing was some sort of watershed event, that perhaps the Net would never be the same here. Well, we know how that worked out.

Other commentators, including the one I responded to in today’s C/D post, suggested that Google’s pullout would have an effect on the foreign investment environment in China.

Looking back at the usual foreign investment topics that I’ve written about over the past six months or so, one thing seems clear: the U.S.-China relationship is complicated, interrelated, fast-paced and subject to a large number of outside pressures. It seems quite far-fetched that one company’s decision to pull out of the country because of existing legal requirements would have a profound impact on such a complicated bilateral relationship.

I think that sets the proper mood. Here are the first few paragraphs of today’s C/D post. If it piques your interest, a link to the entire article is below.

I try to stay away from Google, and they keep pulling me right back in:

In a recent roundtable discussion hosted by Wallace Forbes, [Vahan] Janjigian [Forbes chief investment strategist] said, “I think we’re on the brink of a very serious trade war and that this Google exit from China is only the beginning of what we may see. There’s no question China’s going to retaliate for Google. And the way the Chinese view it is that, you know, Google is not some private company that’s making it’s own decisions. As far as they’re concerned, you know, this is a U.S. decision and they’re going to have to find some way to retaliate. Whether it’s a big way or a little way remains to be seen.” (Forbes)

Trade war? Maybe. More likely because of Google? Very doubtful.

When we were in the middle of the Google media frenzy, a lot of crazy talk was thrown around. Some of the speculation was that Google was the proverbial ’shot heard ’round the world’ that would spark a trade war with China, or alternatively, a global dawn of a new day in Internet liberalization.

I don’t buy in to the hype that the Google pullout was all that significant to China’s trade and investment policies. It seems that in order to bolster the argument that Beijing is lying in wait to retaliate, you have to make several assertions (or at least something similar) that are very difficult to support.

1. Beijing sees the Google decision as a U.S. decision. I took this statement directly from the above quote. I can see how this might appeal to a nationalist world view, but it does not accurately reflect reality. What evidence is there that China saw the Google move as somehow connected with the U.S. government?

If anything, the Google decision was a distraction for the Obama Administration’s China efforts; it caused an uproar in Congress and forced the administration’s China group to spend time and energy dealing with the Google issue instead of other pressing bilateral matters.

(Link to Full Article on China/Divide)

© Stan for China Hearsay, 2010. | Permalink | No comment | Add to del.icio.us
Post tags: bilateral trade, foreign investment, Google, Great Firewall, internet censorship

I didn’t get a chance to post anything here yesterday on account of a little thing called the “Reader_S” virus. Lovely little bastard – I’m still waged in mortal combat with that insidious creature even after spending a good eight hours last night doing the old scan, delete, scan, repeat dance step. Wish me luck.

Anyway, I will try to get to some non-Google related items at some point. I expect that everyone is rapidly getting sick of the 24/7 Googlefest.

However, one related issue that has been rattling around inside my mostly-empty head involves companies like Google whose business decisions are, at least partly, influenced by moral principles. By all accounts, Sergey Brin in particular has pushed Google’s move out of China because he believes that censorship is wrong.

This is one of the big discussion points when it comes to Corporate Social Responsibility – at least it is for me. If a privately-held company makes a decision based on moral principles that might be bad for business, no one cares. But listed companies have lots of shareholders and are under certain disclosure obligations. What should be the standard in these cases? (Disclaimer: I am not an expert in securities law, so I will not pretend to know the current standard here, or even if there is one.)

Consider the ramifications of the Google China decision as discussed in this Yahoo news article:

A Google exit from China clearly opens the door for rivals such as Baidu and Microsoft while leaving the search leader with few near-term options for capitalizing on the fastest-growing Internet market in the world, analysts say.

A decision to remove its search engine from China would cheer human rights activists and freedom lovers, but would anger some shareholders.

At least in the short term, Google’s decision to leave China is obviously a poor business decision. In the medium to long term, however, it’s not so clear. Perhaps Google’s stance on censorship will engender a great deal of goodwill, and Google will reap the benefits in greater market share and customer loyalty in other countries. Impossible to predict.

Google is a good example of why corporate law in most jurisdictions gives executives and Boards of Directors a great deal of latitude in making such decisions. It’s simply too difficult to judge what is a “good” decision, and we don’t want juries or judges second-guessing businesspeople.

But if the Google situation may be murky, certainly as more and more companies institute CSR policies and, perhaps following the example set by Brin and Google, begin mixing in moral principles with purely profit-making motivations, will we start seeing decisions made on behalf of public companies that are obviously not in the best interests of the company?

If so, what to do about that? Will shareholders start suing corporations, alleging that their interests have been harmed by such decisions?

My personal feeling is that disclosure is key. Everyone knows that Google places a premium on not “doing evil.” Shareholders are/should be aware of this before buying Google stock. When Google makes a decision based on moral principles, therefore, it should not come as a shock to an investor, nor should they have an action against Google for making a poor business decision.

This should also hold for other public companies. If among the business goals of certain companies is the support of certain moral principles, and the company may make certain decisions motivated by moral principles that are at cross-purposes with purely profit-making activities, it should let investors know about this ASAP, preferably when the company is formed and its By-Laws written. If “moral principles” are incorporated into the company’s goals sometime after formation, that goal should be added to a company’s By-Laws and perhaps in all prospectuses.

Just some musings. I have a feeling that this will come up more often in the future.

© Stan for China Hearsay, 2010. | Permalink | 2 comments | Add to del.icio.us
Post tags: corporate law, corporate social responsibility, csr, disclosure rules, Google, google.cn, securities law

And then I woke up to the news that Google had finally announced their intentions regarding their future in Mainland China, saying via online announcement (as they did in December when all this started) that they would essentially be shutting down Google.cn in China and offering that service from Hong Kong at Google.com.hk.

Because I had written about this issue at length on China/Divide, that seemed to be the best platform for a response to this latest issue. I therefore spent some time today on a bit of commentary for C/D. I would like to specifically point out, though, that my post on Google is in fact the third one of the day on C/D. Charles Custer and Kai Pan have already sounded off on the subject. All three links are as follows:

Custer: Google Losing the Message

Pan: Google Redirects! But Will The Chinese Government Block?!

Abrams: Google’s Hong Kong Gambit Is Public Relations Victory (will go live after 12:00am China time)

Enjoy. The short version of my piece is that Google’s “move” to HK doesn’t really change anything since the site will still be subject to censorship via the Great Firewall. That being said, Google seems to be winning the messaging war if the first round of press accounts are an accurate indication.

One additional topic for this post. As you recall from last week’s post, I attended a conference this past weekend at the University of Michigan Law School. I might write more about it later, but for now, I wanted to first say that the event itself, which was organized and run by the students of the Asia Law Society, was absolutely brilliant.

I’ve attended LOTS of conferences and seminars over the years, and these students got the job done in style. I suppose I shouldn’t be surprised that if you entrust an event to a bunch of very smart, well educated, law students (traditionally perfectionist, anal retentive types), you’re going to get good results.

Substantively, the conference dealt with Corporate Social Responsibility (CSR) and the Rule of Law. There were three panel discussions, concerning the environment, labor, and access to information. I was a speaker on the last panel.

The lunch speaker was Stanford Prof Chip Pitts, who I think basically gave us the introduction to his new textbook on CSR. It was an amazingly scholarly lecture. I don’t recall attending another lunch event where discussion included such disparate topics as Hugo Grotius‘ influence on international law and Google’s China strategy. By the end of the presentation, I was convinced that I needed to put together a CSR unit for my FDI class, which I plan on doing this Fall.

The panels had a great mix of academics, activists, businesspeople and legal practitioners. It was a pleasure meeting and speaking with them on a variety of issues.

With respect to my presentation, I discussed a bit of the content last week, so I won’t rehash. However, I would like to point out two interesting things. First, to be provocative, I did suggest that if China had given in to Google’s demands regarding censorship, it would have negatively affected Rule of Law in China.

Here’s what I meant. China has censorship rules. Google was supposed to follow them just like anyone else. If Beijing gave them a special pass, the public (I think justifiably) might not have appreciated the government giving special treatment to a huge, foreign multinational when other companies cannot just ignore the rules.

The other side of the argument, which I mentioned, is that the Rule of Law can be strengthened via free access to information. Scholars, activists, lawyers, the general public need information and a means of communicating with one another to push for institutional reforms and keep the system honest. In that sense, general liberalization of censorship is also good for the Rule of Law.

So which is preferable? I don’t think I really came down one way or the other, although I might have said that if Beijing changed the rules just for Google, then that would have been a poor decision.

Three of the speakers, all Americans, politely disagreed with my contention, suggesting I think that any win against censorship was worth it, even if Google received what appeared to be special treatment.

On the other hand, I noticed several of the Chinese students nodding their heads in agreement with me when I talked about special treatment. No surprise, I suppose, that I received different reactions based on nationality.

Second, and speaking of nationality, the conference reinforced something that I’ve seen over and over again when talking to Chinese students abroad. My presentation was meant to be the most fair, neutral treatment of the Google dispute as possible, an analysis of the legal situation without allowing my conclusions or comments to be prejudiced by normative concerns. In other words, I did not want my legal analysis “polluted” by my personal feelings about free speech or other outcomes.

That’s usually my standard approach at conferences (blogging, too, when I can), and it certainly isn’t remarkable. However, I consistently get very nice comments from Chinese students, who seem incredibly relieved that I didn’t simply engage in China bashing. (Just for the record, none of the other speakers were China bashers either.)

The favorable comments make me feel good, I suppose (I have a fragile ego, after all), but it really makes me wonder what sort of presentations/lectures/speeches these kids are used to attending (Chuck Schumer press conferences perhaps)? Is China bashing that common in the U.S. or are these students just super-sensitive? Maybe both.

This also made me realize that although there is a huge amount of foreign expat blogging on China out there, there really should be more (in English, on international-China topics) from Chinese expats overseas. This would fit in perfectly with what we’re trying to do over at China/Divide and provide a nice balance to our current stable of writers.

I’m therefore on a mission to find some good Chinese expat (or ex-expat) writers who can fit in with the China/Divide style and content. If anyone’s interested, please get in touch.

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Post tags: asia law society, corporate social responsibility, Google, internet censorship, rule of law, university of michigan law school

2010 Symposium

Here’s a link to the info page, and here for the agenda.

Should be fun, although I will end up spending more time in transit than on the ground conferencing. Such is life.

I’ve already written several times now on the topic of Google and its travails with Beijing. In addition to everything I’ve posted on this blog, I wrote an inadvisably long rant on China/Divide in response to a protectionist Op/Ed posted on The Huffington Post (see below).

I’m planning on a couple of posts on the conference when I get back, but here are a few bullet points on Google as it relates to the conference topics:

• Google dispute has been touted as a CSR case study. Because it is a special case that will not be replicated with other MNCs, its value as precedent is minimal.
• Use of this dispute to push a protectionist agenda is inappropriate. This is not an anti-foreign investor stance by Beijing.
• Rule of Law would be undermined more if Beijing caved to some of Google’s demands than by being firm on censorship rules. This opinion will probably make me unpopular with the human rights crowd, but so be it.

Everything else pretty much flows from those points, so I’ll leave it at that for now. Depending on various and sundry issues related to free time and Wi-Fi access, I may be lurking on Twitter (@chinahearsay) or posting here or China/Divide over the next few days. I should get back to a normal schedule on all fronts by next Tuesday.

© Stan for China Hearsay, 2010. | Permalink | No comment | Add to del.icio.us
Post tags: asia law society, censorship, csr, Google, rule of law, university of michigan law school

As usual, the media reaction to a hot story like this includes: 1) beat the thing unmercifully until you’ve extracted every last drop of blood; and 2) try to tie the Google dispute in with as many other China stories as possible.

The problem is that there are a lot of things going on with respect to foreign companies in the China tech industry at the moment. Some of them are related or overlap, while others are wholly independent.

Case in point, a Businessweek article from Wednesday, whose headline suggests that it is a story about the foreign software industry’s travails in China. Indeed, this is what the article covers for the most part, starting off with a straightforward discussion of piracy rates (high, but lower than they used to be) and persistent problems:

That’s not good enough, says Robert Holleyman, president and CEO of the BSA. The Chinese, he contends, are not maintaining their momentum on getting PC users off of illegitimate software. “We’ve really stalled on this process,” he says in an interview from Washington. Although the BSA won’t have data on the 2009 Chinese piracy rate until May, Holleyman says, anecdotal evidence suggests “we are not making further progress.” In the past, Beijing has pledged that state enterprises would use proper software, he adds. “There is nothing that I have seen or heard that suggests that commitment has been met.”

The BSA has had a good run for a few years, with successes on the government procurement front in particular. But that was relatively low-hanging fruit. Trying to get SOEs nationwide to follow these rules is a tough job, and no one should be surprised that the promises on this are not being kept, or at least not yet.

So far, so good. This is where the article runs off the rails, though.

Holleyman went to Capitol Hill on Mar. 10 to spread the word about the software industry’s impatience with China. He was a featured speaker at a hearing on Beijing’s censorship of the Internet.

Come again? The BSA certainly has more on its plate than piracy, but seguing from copyright infringement to Net censorship in one paragraph like that makes me dizzy. The only common thread here seems to be the participation of Mr. Holleyman, the BSA chief.

So now the article is about Net censorship? No, unfortunately immediately after the paragraph describing who was speaking at the House hearing (shout out to Rebecca MacKinnon!), the subject heading of the next section was “Intellectual Property Transfer?” What that has to do with copyright piracy and/or Net censorship is beyond me.

Actually, IP transfer does concern the software industry, sort of, and the article next turned towards recent problems with indigenous innovation policy, which is leading some to call foul over local IP requirements for government procurement contracts. Again, important topic, but it has nothing to do with Net censorship.

I’m not trying to single out this article, or at least not much. It’s just that with so much in the news about Google, I think it’s become very attractive to throw the subject into anything you’re writing. This article is actually about what problems the software industry is facing in China. If the author had stuck to government procurement and IP, things would have been fine.

© Stan for China Hearsay, 2010. | Permalink | 4 comments | Add to del.icio.us
Post tags: Business Software Alliance, copyright infringement, Google

At Tuesday’s Senate hearing on Internet censorship, someone in the press asked Google VP and Deputy General Counsel Nicole Wong about an action against the Chinese government at the World Trade Organization.

Well, the press (again) has taken the bait and is talking about the possibility. The Financial Times kicks their coverage off with this tagline:

If Google chooses to take its case to the WTO, the battle could be both bloody-minded and counterproductive.

Sounds dramatic. I like the blood part.

So, should Google take China to the WTO? Great idea, if the WTO allowed non-Member States entities other than Member States to initiate proceedings. IT DOESN’T!!!(...)
Read the rest of Google, China & the WTO: Financial Times Brings the Stupid (645 words)

© Stan for China Hearsay, 2010. | Permalink | 3 comments | Add to del.icio.us
Post tags: China, financial times, Google, internet censorship, national treatment, world trade organization

Latest news goes against conventional wisdom:

The computer attack which led Google to threaten leaving China and created a firestorm between Washington and Beijing appears to have been deployed by amateurs, according to an analysis by a U.S. technology firm.

“I would say this particular botnet group was not well funded, in which case I would not conclude they were state sponsored, because the level of the tools used would have been far superior to what it was,” said Gunter Ollmann, vice president of research at Damballa, an Atlanta-based company that provides computer network security. (CNN)

Hmm. What does that say about all those stories of high-level military involvement, hacking academies, scary espionage initiatives? Well, it has the potential to tarnish them a bit, or at least make all that hyperbolic language look stupid in retrospect.

The level of sophistication certainly does not come across as high end:

The botnet used in the attack began being tested in July, nearly six months before the attack, according to Damballa analysis.

He added, “Some of the codes within the malware were at least five years old” — ancient, by software development standards. The attackers used technology “that had been abandoned by professional botnet operators years ago,” he said.

On the other hand, as some of the comments to the CNN article reflect, them Chinese sure are sneaky, and this new information tells us nothing:

. . . and do you think we believe it? This looks like a paid news item from China to hide its military’s hacking activities. Since when amateur Chinese started to hack so sophisticatedly [sic]?

and

the best hackers are not state controlled silly.

I’m surprised that no one suggested the unsophisticated nature of the attacks was actually proof of a highly sophisticated misdirection campaign by the PLA.

First you use outside contractors, then you give them shitty software, and finally you make sure that they use servers that can’t be traced to the government. It’s brilliant!

I guess we’ll all just continue to believe what we want to believe.

© Stan for China Hearsay, 2010. | Permalink | 2 comments | Add to del.icio.us
Post tags: china foreign investment, computer hacking, Gmail, Google, internet censorship