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“The fact that many very large corporations have indicated they had all been victims of this ... and many issued public statements and took a stand, that's not something we've seen before,” said computer security specialist at Purdue University Eugene Spafford who has advised two US presidents and numerous companies and government agencies.
“The most likely possibility is that Google will leave China and lose a few hundred million in revenue,” says professor of electronic business at Stanford Graduate School of Business Haim Mendelson. “From Google's perspective, it better aligns what they say and what they do.”
Last week, Google CEO Eric Schmidt told reporters in a conference call that “in a reasonably short timeframe now, we will be making some changes” in China. But he also seemed to downplay the differences. “Our business in China today is unchanged. We continue to follow their laws. We continue to offer censored results. We've made a strong statement that we wish to remain in China.”
The Google – China tussle, though, may have taken on a bigger political dimension. US Secretary of state Hillary Clinton named China, among other countries, as having stepped up web censorship. She called on Beijing to investigate Google's claims that China had stolen intellectual property and hacked into email accounts of human-rights activists. On the other hand, China accused the Obama administration of leveling “groundless charges” after allegations that Chinese hackers penetrated computer systems of dozens of US companies, including Google Inc.
Chinese foreign ministry spokesman Ma Zhaoxu insisted that the Internet was open in China and warned that the US should “properly handle differences” over the issue or risk damaging bilateral relations.
In spite of the political backlash the bigger problem with Google’s possible sudden exit from China is the outcome it might have on people, advertising agencies and the economy in general. According to estimates, Google has an audience of more than 40 million users in China. “It's a tragedy if Google pulls out of China,” says Xu Hao, a junior studying Japanese at Tongji University in Shanghai. Wu Zhiwei, studying philosophy at Fudan University in Shanghai, said “a lot of people are very angry at government censorship,” and also said he understands that it contradicts Google's philosophies on free-Internet use.
Google’s statement was widely followed in China on the internet and was initially treated as a major story by local web sites till China's official state media offered limited coverage of the issue. Taking a cue, news portals began restricting coverage of the story.
Some worry their Google e-mail accounts would be deleted while others expressed concern that Chinese authorities were further tighten its internet controls. “Our postings on the internet are deleted by web sites or when we upload pictures showing bad things on the street, they are deleted, said Xu, who added “I don't know what to do without Google,”
If Google’s decision to leave China leads to closing of its website, Google.cn, it could throw the future of its investments and partnerships into question. For example, Motorola and Samsung are partnering with Google in China to launch their cheap cell phone sets built upon Google's android operating system. Also, Google last March launched a music service in cooperation with Top100.cn, a Chinese company in which it owns a stake, and with the world's four biggest music labels.
It would also potentially create opportunities for Chinese rivals. China’s own search engine Baidu could see a huge jump in traffic. But would it also create a market for companies from India? It would seem unlikely. “China is not an attractive for players like us for two reasons. One it already has a dominant local player in Baidu, and second the language issue of Chinese unlike in India where there is more scope for English, says vice-president of marketing at Guruji.com Soma Biswas. Guruji claims some 7-8 per cent of the desi search engine market, but it does not want to foraying into any new markets. “The Indian market is still nascent and growing rapidly. It is much more attractive and we need to focus on this market,” said Biswas.’’
If Google does exit from China, it would leave a big whole in the search engine’s market. But a compromise may be in the works. Both sides seem to have watered down their comments. Like many other things in China, this may be one of those where both sides gloss over their differences and learn to live with each other.
(With inputs from BM Thanuja in Bangalore)
The writer is doctoral candidate at Carnegie Mellon University, Pittsburgh, PA and also Knowledge Editor of Financial Chronicle
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