The Question of Googlethics

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It’s been fun the last few days reading countless news articles, blog posts, BBS blurbs, and so on. I don’t do Twitter much these days, so that’s a further frontier I’ve failed to travel beyond.

As I mentioned yesterday, I don’t want to do a metapost or sum up everything that’s been going on since Google announced that it would no longer following censorship rules when operating Google.cn. That story, and the reactions of Beijing, have been well covered.

Some long-term issues have been debated ad nauseum, of course, some of which are amusing. Perhaps the one that has floated to the top of the fetid bog that is my consciousness concerns the actions of other foreign-invested enterprises in China.

The big question is summarized well by this PC World headline:

Google vs. China: Will Yahoo, Microsoft Follow?

Indeed. The WSJ blog explains in further detail:

Google may just have set a new benchmark for corporate morality in China. Call it the Google Standard. Other companies will be judged against it, not just by human rights groups but a host of other stakeholders whose interests Western companies must take into account, from ethical investors to consumer groups. If Google could defy China, these groups will ask, why not you?

It’s just become harder for Western companies to justify compromises, ethical or commercial,† in the China market. That could make the decision to stay or go a bit more complicated.

Is there now a Google standard? I have no idea. I’m much more interested in asking whether there should be one, whether it makes any sense for multinational corporations to be making ethical/moral decisions like this.

Let’s get one notion out of the way at the very beginning. The possibility that MNCs are going to start competing with one another with respect to ethical behavior is downright hilarious. I’m not being judgmental when I say that most corporate execs do not have morals on their minds when they make business decisions.

That being said, it is possible that Google’s actions, because of the publicity of all this, may suggest to many MNCs that if they can spin certain actions (from a PR standpoint), they can benefit from appearing to act for moral/ethical reasons. I’m not being a cynic in pointing this out. You know that meetings have already taken place in boardrooms all over the U.S. and Europe, with Corporate Communications folks being directed to come up with ways to “adapt to the new paradigm.”

So I expect a lot more bullshit as a result.

But this doesn’t help us with the normative question. What is the “proper” behavior of a corporation these days?

I noted two days ago that I found it interesting that some U.S. telecom companies cooperated with the Bush Administration a few years ago, giving the U.S. government access to private customer information, while U.S. IT companies (like Yahoo) that simply follow China law while operating in the PRC are criticized for their actions.

There certainly doesn’t seem to be a consistent opinion of what actions are “moral” by a corporation. For some people, at least, nationalism seems to be a significant factor.

For me, I like to start off with the premise that a company should always follow the law of the country in which it is operating. In the absence of any overriding issues, that should be the end of the story.

In the case of the U.S. telecom companies mentioned above, their actions were arguably violations of U.S. law, and whether the Bush Administration asked for their cooperation or not was beside the point. These companies were later granted immunity from civil suits by the hapless U.S. Congress.

With Google in China, and the issue of censorship/keyword filtering, it’s definitely a legal requirement for search companies. So the default position is to do what Google has been doing for years here: self censorship. Until recent days, that was seen as simply the price of doing business here for the Google China team.

This debate could conceivably end right there, and in fact some critics have come right out and said that if Google doesn’t want to play by the rules here in China, then good riddance to them.

This is my natural position on this sort of discussion as well, but of course there are some complicating factors at play here.

First, the matter of the hacked Gmail accounts. This is a big deal if the allegations are true. If it was government policy that any IT company like Google that provided email accounts and operated in China must allow government access, then I would be OK with that.

Sounds a bit odd, but as long as the rule was transparent and companies could opt in or out (the latter by leaving), then I would then have no problem at all saying that it was the price of doing business here, and they knew about it when they set up shop.

But that’s not what has happened. The allegations are that some Gmail accounts were hacked by government-sponsored operatives. I suppose that this is the usual spy game, so the U.S. government certainly can’t complain too much about stuff like this (they do it too). However, if this occurred, then all of a sudden Google has a problem maintaining a high level of customer service, due to the actions of a government in a jurisdiction in which it is located. It’s difficult to maintain amicable government relations, to say the least, when something like that goes on.

Second, Google has a specific corporate image when it comes to not “doing evil.” What that means exactly I have no idea. I don’t believe in the concept of “evil” at all — the term makes no sense unless you believe in things like the Easter Bunny or the Invisible Man in the Sky. However, “do no evil” is a catchy phrase and a decent shorthand for moral behavior.

So if Google’s actions in any way contribute to, for example, people getting arrested for political protest, then they have a problem with that corporate image. As owners, Brin and Page certainly have the right to support that corporate goal, just as I have the right to own/to sell Google stock depending on whether my views are in alignment with theirs.

Third, Google has had a lot of problems operating in China. Some have referred to the Gmail hacks as “the straw that broke the camel’s back.” Perhaps. Maybe censorship was OK, but the Gmail matter took things too far.

Critics have of course pointed out that Google had some business problems here in China and this is a convenient way to leave the market, one which make Google’s withdrawal from the market seem heroic. I’m not at all sure I buy that speculation, but I am somewhat skeptical that a company willing to accept censorship and other restrictions suddenly grows a conscience now.

So Google has some special issues. Where does this leave Yahoo, Microsoft and other MNCs? Have the rules of the game changed?

I say no. I go back to my original position, which is that you follow the rules of the country in which you are doing business. For Google, this was acceptable until recently. It should also be acceptable for other MNCs, particularly when it comes to issues like censorship, at least unless/until their home country governments pass new rules governing this sort of behavior.

If Google, the hero of the moment, was willing to engage in behaviors now being referred to as “unethical” for a period of time, it’s difficult to determine what exactly has changed with regard to China’s censorship regime that would make it inadvisable for an MNC to continue meeting those legal requirements.

As for those “special” issues that Google has had with the government — by their very nature they do not apply to all other MNCs. Yahoo has had their own problems with information security in China; they were criticized and decided to keep doing business here anyway.

Who knows what the future holds? If Microsoft learned that the Chinese government was installing spy cameras in every XBox to monitor political dissidents, well perhaps that would be a game changer for Microsoft.

But in the absence of something that startling, I doubt that a new “Google standard” is in the offing. I think this will remain a somewhat important issue for companies doing search, or those in industries that deal with information security, but without other smoking guns like the Gmail hacking, this may remain simply a singular event.

That isn’t to say that Google’s decision will not have repercussions for MNCs and for US-China relations. As I mentioned above, many MNCs will certainly be cogitating on how to respond to this, and several have alreay been asked by the press whether they will follow Google’s lead. But don’t hold your breath on that.

I do worry that this will inject yet another sensitive issue into already-strained US-China relations. In addition to everything else (econ, trade, climate), this matter deals with what China perceives to be internal security and sovereignty, and they will not be happy at all when US government folks start admonishing them on censorship, etc. Google execs apparently have good guanxi with the Obama Administration, so you can bet this will be dealt with at a very high level.

6 responses on “The Question of Googlethics

  1. allroads

    Great Post Stan.

    What I think pisses me off about the current debate over what is going on is that people are so quick to point move towards a “google couldn’t make it in China stance” without realizing what was going on.

    Google had been compromised, and while they may have signed on to filter results, they certainly did not sign on to be an instrument of a government agency.

    Further to that.. what in house lawyer (much less the CHIEF LEGAL OFFICER) do you know who would write this to get clicks on a blog or as a negotiating tactic for better China position. I think people are really missing just how this is playing out.

    Anyway, this is certainly going to get far more interesting than Wahaha, and while some like to think this case will be contained to a few IT firms.. I would say that a number of firms outside of this area are closely looking at this and evaluating what they do/ do not put into China.

    R

    1. Stan Post author

      I can’t for the life of me see Google’s decision as a negotiating tactic. If it was, it was incredibly stupid. You don’t screw around with the issue of censorship with the Chinese government and hope that they will somehow make an exception in your favor. Anyone who believes that — and I’ve read a few opinions to that end — must be high on goofballs.

      I do tend to think that the effects of all this will be less widespread than it appears today. Everything eventually has a tendency to die down, and this situation will simply not effect a lot of big MNCs that engage in brick-and-mortar type businesses.

  2. Chris Devonshire-Ellis

    Well done Stan. A thoughtful piece from someone who is actually based here, rather than pseudo commentary from “China” legal and related erstwhile bloggers who are not. Additionally thoughtfully cynical about some of the cynicism. Welcome back. – Chris

  3. Realclearchina

    “For me, I like to start off with the premise that a company should always follow the law of the country in which it is operating.”

    So if China declared a law tomorrow that said “all Tibetan/Taiwanese independence sympathizers working in China with foreign passports must be thrown in jail/killed/put on trial”, then you would be okay with following the law?

    Surely there is a difference (and at times conflict) between following one’s ethical values and following the laws in a given country. Why do you categorically give precedence to laws?

    1. Stan Post author

      Apparently I should have used bolded italics with the words “start off.” Those two words were included in that sentence to suggest that the “rule” was the default, which could be altered depending on the situation.

      I think my comments on the alleged Gmail hacking, not to mention my over-the-top example of the XBox camera, made this all clear.

  4. allroads

    “I do tend to think that the effects of all this will be less widespread than it appears today. Everything eventually has a tendency to die down, and this situation will simply not effect a lot of big MNCs that engage in brick-and-mortar type businesses.”

    I would agree that things tend to die down (although the official communique from Clinton may ramp things back up), but China is not out actively courting brick and mortar.

    They are courting banks. Finance. high value IP projects. Projects where information stored on computers has commercial (and other) value.