Bloomberg
Google Inc. defied China’s self- censorship rules by redirecting mainland Chinese users to an unfiltered Hong Kong Web site, threatening its ability to operate in the world’s largest Internet market.
The move escalated a two-month dispute as the government said Google broke its promise and was “totally wrong,” according to the official Xinhua news agency. Google, which had censored results on the Chinese site since its 2006 debut, said yesterday it plans to keep its research operations in the mainland.
The U.S. government said it was “disappointed” Google and China failed to reach a compromise. The conflict has contributed to a deterioration in relations between the two countries, following disagreements over weapon sales to Taiwan and the valuation of the yuan.
“Google is playing a very dangerous game,” said Rob Enderle, president and principal analyst at business consultant Enderle Group in San Jose, California. “They could end up doing more damage than good.”
The size of Google’s China sales workforce will partially depend on the accessibility of the Hong Kong site, the company said in a statement yesterday. Google employs more than 600 workers in the country and it “can’t rule out the possibility of lay-offs,” company spokeswoman Jessica Powell said in phone interview today.
‘Falun Gong,’ Tiananmen Square
Searches from Beijing and Shanghai for outlawed terms related to the Falun Gong movement and 1989 Tiananmen Square military crackdown yielded error messages today, indicating the Hong Kong site is subject to the same restrictions as overseas Web portals including Google.com. The nation’s Web censorship system has been dubbed “The Great Firewall of China.”
China had an estimated 384 million Internet users at the end of 2009, more than the total U.S. population. Baidu Inc. held 58.6 percent of China’s online search market last quarter, compared with 35.6 percent for Google, according to Analysys International, a Beijing-based technology research company.
“It’s very likely that Google.com.hk will be blocked at least as aggressively as Google.com was and, more likely, probably more aggressively,” said Ben Schachter, an analyst at Broadpoint AmTech Inc. in San Francisco.
Brin Instigated Move
Sergey Brin, who co-founded Google, pushed the company’s executives to end censorship of Web-search results in China, a person familiar with the matter said in January. The two sides held discussions on Jan. 29 and Feb. 25, according to Xinhua.
These talks never produced any serious progress because China wasn’t willing to bend in its demand that search results be censored, the three people familiar with the matter said this week.
“The Chinese government has been crystal clear throughout our discussions that self-censorship is a non-negotiable legal requirement,” Google said in a blog post. “We believe this new approach of providing uncensored search in simplified Chinese from Google.com.hk is a sensible solution to the challenges we’ve faced -- it’s entirely legal and will meaningfully increase access to information for people in China.”
Google fell $2.50 to $557.50 in Nasdaq Stock Market trading yesterday. The shares have declined 10 percent this year.
Good PR
“For Google, it’s probably negative that the company loses a large number of customers,” Yuuki Sakurai, chief executive officer of Tokyo-based Fukoku Capital Management Inc., which manages $7.5 billion. “Nevertheless, it could be good PR for Google since it fought against censorship.”
By dropping the censorship of its site, the company broke an agreement it made with the government when it entered the market, according to China’s State Council Information Office, Xinhua reported. The Chinese government has said the dispute damaged Sino-U.S. relations after Secretary of State Hillary Clinton backed Google.
“We have previously raised our concerns about this issue directly with the Chinese government,” said Mike Hammer, spokesman for President Barack Obama’s National Security Council. “As both President Obama and Secretary Clinton have stressed on several occasions, we are committed to Internet freedom and are opposed to censorship.”
China’s Move Next
Hong Kong has a separate government and economy -- a legacy of its role as a British territory until 1997. At the time of the handover, China promised to preserve Hong Kong’s capitalist system and free press for an additional 50 years.
The Hong Kong approach forces the Chinese government to take the next step, said Jason Helfstein, an analyst with Oppenheimer & Co. in New York.
“They’re putting the ball back in the Chinese government’s court,” said Helfstein, who rates the stock “outperform” and doesn’t own it. The government could entirely block Google’s service or redirect users to rival Baidu Inc., which leads the Chinese search market.
Google, owner of the world’s top search engine, in January threatened to stop censoring content after saying that it had been hacked from within China. The company said its systems were targeted by “highly sophisticated” attacks aimed at obtaining proprietary information and personal data belonging to human- rights activists who use the company’s Gmail e-mail service.
Government Denies Involvement
The Chinese government denied that it was involved in the attacks, Xinhua reported.
At least 20 other international companies in technology, finance and chemicals were similarly targeted, Google said at the time.
“We also made clear that these attacks and the surveillance they uncovered -- combined with attempts over the last year to further limit free speech on the Web in China including the persistent blocking of Web sites such as Facebook, Twitter, YouTube, Google Docs and Blogger -- had led us to conclude that we could no longer continue censoring our results on google.cn,” Google said on the blog.
Google’s decision to stop filtering its Chinese search engine is an “indictment” of the government’s attempt to censor the Internet, the advocacy group Human Rights Watch said.
“China is one of the world’s largest economies, but hundreds of millions of Chinese Internet users are denied the basic access to information that people around the world take for granted,” Arvind Ganesan, the business and human-rights director for the U.S.-based group said in a statement.
The U.S. government said it was “disappointed” Google and China failed to reach a compromise. The conflict has contributed to a deterioration in relations between the two countries, following disagreements over weapon sales to Taiwan and the valuation of the yuan.
“Google is playing a very dangerous game,” said Rob Enderle, president and principal analyst at business consultant Enderle Group in San Jose, California. “They could end up doing more damage than good.”
The size of Google’s China sales workforce will partially depend on the accessibility of the Hong Kong site, the company said in a statement yesterday. Google employs more than 600 workers in the country and it “can’t rule out the possibility of lay-offs,” company spokeswoman Jessica Powell said in phone interview today.
‘Falun Gong,’ Tiananmen Square
Searches from Beijing and Shanghai for outlawed terms related to the Falun Gong movement and 1989 Tiananmen Square military crackdown yielded error messages today, indicating the Hong Kong site is subject to the same restrictions as overseas Web portals including Google.com. The nation’s Web censorship system has been dubbed “The Great Firewall of China.”
China had an estimated 384 million Internet users at the end of 2009, more than the total U.S. population. Baidu Inc. held 58.6 percent of China’s online search market last quarter, compared with 35.6 percent for Google, according to Analysys International, a Beijing-based technology research company.
“It’s very likely that Google.com.hk will be blocked at least as aggressively as Google.com was and, more likely, probably more aggressively,” said Ben Schachter, an analyst at Broadpoint AmTech Inc. in San Francisco.
Brin Instigated Move
Sergey Brin, who co-founded Google, pushed the company’s executives to end censorship of Web-search results in China, a person familiar with the matter said in January. The two sides held discussions on Jan. 29 and Feb. 25, according to Xinhua.
These talks never produced any serious progress because China wasn’t willing to bend in its demand that search results be censored, the three people familiar with the matter said this week.
“The Chinese government has been crystal clear throughout our discussions that self-censorship is a non-negotiable legal requirement,” Google said in a blog post. “We believe this new approach of providing uncensored search in simplified Chinese from Google.com.hk is a sensible solution to the challenges we’ve faced -- it’s entirely legal and will meaningfully increase access to information for people in China.”
Google fell $2.50 to $557.50 in Nasdaq Stock Market trading yesterday. The shares have declined 10 percent this year.
Good PR
“For Google, it’s probably negative that the company loses a large number of customers,” Yuuki Sakurai, chief executive officer of Tokyo-based Fukoku Capital Management Inc., which manages $7.5 billion. “Nevertheless, it could be good PR for Google since it fought against censorship.”
By dropping the censorship of its site, the company broke an agreement it made with the government when it entered the market, according to China’s State Council Information Office, Xinhua reported. The Chinese government has said the dispute damaged Sino-U.S. relations after Secretary of State Hillary Clinton backed Google.
“We have previously raised our concerns about this issue directly with the Chinese government,” said Mike Hammer, spokesman for President Barack Obama’s National Security Council. “As both President Obama and Secretary Clinton have stressed on several occasions, we are committed to Internet freedom and are opposed to censorship.”
China’s Move Next
Hong Kong has a separate government and economy -- a legacy of its role as a British territory until 1997. At the time of the handover, China promised to preserve Hong Kong’s capitalist system and free press for an additional 50 years.
The Hong Kong approach forces the Chinese government to take the next step, said Jason Helfstein, an analyst with Oppenheimer & Co. in New York.
“They’re putting the ball back in the Chinese government’s court,” said Helfstein, who rates the stock “outperform” and doesn’t own it. The government could entirely block Google’s service or redirect users to rival Baidu Inc., which leads the Chinese search market.
Google, owner of the world’s top search engine, in January threatened to stop censoring content after saying that it had been hacked from within China. The company said its systems were targeted by “highly sophisticated” attacks aimed at obtaining proprietary information and personal data belonging to human- rights activists who use the company’s Gmail e-mail service.
Government Denies Involvement
The Chinese government denied that it was involved in the attacks, Xinhua reported.
At least 20 other international companies in technology, finance and chemicals were similarly targeted, Google said at the time.
“We also made clear that these attacks and the surveillance they uncovered -- combined with attempts over the last year to further limit free speech on the Web in China including the persistent blocking of Web sites such as Facebook, Twitter, YouTube, Google Docs and Blogger -- had led us to conclude that we could no longer continue censoring our results on google.cn,” Google said on the blog.
Google’s decision to stop filtering its Chinese search engine is an “indictment” of the government’s attempt to censor the Internet, the advocacy group Human Rights Watch said.
“China is one of the world’s largest economies, but hundreds of millions of Chinese Internet users are denied the basic access to information that people around the world take for granted,” Arvind Ganesan, the business and human-rights director for the U.S.-based group said in a statement.
