Sunday, April 4, 2010

Google in China (cont'd)

We have blogged in the past a couple of times about Google’s business operations in China and in the fresh from the press 3rd Edition of our book we have an entire case (in Chapter 5) on the issue. In recent weeks this story has gotten a new instalment with Google’s reaction to hacker attacks on their Chinese based servers.

On the surface, Google’s decision to leave China and to base their operations in Hong Kong (which is not subject to the same censorship as mainland China) might make good business sense. After all China contributes only an estimated 1-2% to Google’s overall turnover and the attacks on their source code by (allegedly government employed ) Chinese hackers touches on vital commercial secrets of the company. And much of the lamented censorship in fact can also be seen as nothing more than a thinly disguised effort by the Chinese to favor local competitors against foreign providers, most notably the Chinese engine Baidu.

However, last week’s edition of the German magazine DER SPIEGEL raises some interesting further aspects of the case: ‘For the first time a Western company has dared to openly criticise Beijing’s comprehensive control of the Internet as a trade barrier and to draw consequences.’ The magazine in fact sees Google’s stance as nothing less than a new phase in geopolitics: ‘Now there is war: Google against China, a new transnational superpower against another new superpower which uses ... decades old means of power and oppression. The soft power of a gigantic agglomeration of knowledge faces the hard power of a classic nation state.’

This provides a remarkable context for Google’s recent decision. By relocating their operations they have done what many heads of state have not dared to raise with similar clarity: that censorship is fundamentally opposed to the core values of most Western democracies and that the Chinese approach, to put it neutrally, is not compatible with it. Given the substantial reactions to Google’s decision by their Chinese customers and supporters one could argue that Google has attempted something similar to those who gathered on Tiananmen Square 21 years ago (hence the title of DER SPIEGEL).

In this context it is largely irrelevant whether Google’s decision was just a sound business proposition. Even if so, it shows how globalization has transformed private companies in political players on the world stage. Though in all fairness, there is also ample ground to admire Google’s decision from an ethical perspective. After all, China remains a huge future market for internet services. As Google co-founder Sergey Brin said in an interview in DER SPIEGEL, his decision was also informed by his experiences of government harassment and violence growing up in the Soviet Union. So the Google case will continue to showcase some of the basic insights of business ethics: to marry ethical and economic constraints is a struggle and the choice is rarely between the good and the evil option, rather than between the lesser of two evils or the best of two good options.

Photo reproduced under Creative Commons license.

1 comment:

  1. Very interesting post! "Corporate Social Responsibility is a form of corporate self-regulation integrated into a business model. Yet most corporations have neither the governance structure nor the systems to handle these conflicting demands.

    The IMD OWP 2010 sessions will help companies better understand challenges as well as identify some of the organizational systems, strategies and mindsets that can help firms thrive under conflicting stakeholder demands."


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