2010 January 12 Tuesday
Google Might Pull Out Of China

The Chinese government has already stacked the deck in favor of domestic search engine companies. Now an internet attack on Google computer servers in China has Google threatening to pull out of China entirely.

In a blog posting by David Drummond, the corporate development and chief legal officer, Google said that it had found a “highly sophisticated and targeted attack on our corporate infrastructure originating from China.”

“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,” Mr. Drummond wrote in a blog post.

Internet search is one of the industries where the mercantilists who run China aren't going to let a foreign company become a big player anyhow. So it is not like Google loses that much by withdrawing. Google already suffers reputation damage by restricting or censoring search results in China in order to satisfy the censors in the Chinese government.

Neither Google nor the US government want to publically admit that the Chinese government carries out cyber attacks against them.

In a separate development, Google officials said, the company discovered that the Gmail accounts of dozens of China human rights advocates in the United States, China and Europe "appear to have been routinely accessed by third parties." The hacking occurred most likely through phishing scams -- luring users to download malicious software by opening innocent-looking e-mails -- or malware placed on users' computers, rather than by breaking into Google's corporate infrastructure, the company said.

China is among a handful of countries considered to have impressive cyber offensive capabilities, but U.S. officials have refrained from publicly accusing the country because determining with certainty who is behind an attack is quite difficult.

The next largest and most powerful country in the world plays by rules that are just not cricket. In the 21st century less democratic and less open China is going to become much more powerful and the West's appeal as role model will weaken.

Global Equities Research analyst Trip Chowdhry claims that Google gets 8-10% of their revenue from China. I find that hard to believe because Google is not the biggest search player in China and Google dominates most other markets. Anyone know if Chowdhry is correct?

Update: The native search engines more thoroughly censor. So if Google leaves the Chinese people will have a harder time learning the truth about political topics.

Frank He, research analyst at BOCI Research in Hong Kong, said home-grown players such as Baidu program their search engines to more effectively censor content on issues sensitive to Chinese authorities -- such as Tibet's autonomy or the Tiananmen Square massacre -- than Google.

A Google search on China's Communist party, for example, gives much different results than the same search on baidu.com, he said. "Baidu plays smart in China, they know the local culture."

With all the censorship within China I would expect search results to be skewed simply because fewer web sites link to pages that contain truths inconvenient to the Chinese Communist Party.

Google's marketshare in China is unclear.

According to data from comScore Inc., Baidu's share of the Chinese search market stood at 62.2% as of November, compared to Google's 14.1%. Analysys International, a research firm based in Beijing, pegged Baidu's fourth-quarter market share at 58.4%, compared with 35.6% for Google.

Google probably gets more searchers from people who are looking for info about censored news. So Google's exit would have a disproportionate effect on those looking for censored news.

Share |      By Randall Parker at 2010 January 12 10:54 PM  China

Bob Badour said at January 13, 2010 1:13 PM:
Google Might Pull Out Of China

Take-lesson: This is what one gets for an abstinence-only education... ineffective prophylaxis and no protection against transmission of disease. Hey, they already have censorrhea. Ew!

Advocatus Diaboli said at January 13, 2010 10:39 PM:

But you can do so much with google maps, street view, exif tags, iPhones and girls who take their own "pictures"..


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