economics

January 16, 2010

Silicon Valley questions Google stance

Filed under: Uncategorized — ktetaichinh @ 9:44 pm
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By Richard Waters and Joseph Menn in San Francisco

Published: January 15 2010 19:19 | Last updated: January 15 2010 19:19

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Google asked its workers this week not to pour their feelings onto Twitter about its declaration that it would end its compliance with Chinese censors.

But it could do little to stem the wave of support that welled up among Silicon Valley’s rank-and-file.

“Google isn’t above reproach. But their bold China stance is why I feel lucky and proud to have worked there,” Chris Sacca, who once headed Google’s mobile efforts, broadcast to his 1.3m followers on ­Twitter.

However, that popular groundswell of support has run into a pragmatism that has left the company looking isolated even in its own northern Californian back yard.

With China rapidly turning into one of the tech industry’s main markets, few business leaders or financiers show any interest in rocking the boat.

“At the end of the day, market size and economics dictate,” said Rajiv Dutta, a former top executive at Ebay and now a partner at Elevation Partners, one of the Valley’s biggest private equity investors. Most technology companies sell products and services to China that do not force them to take decisions about personal privacy and censorship every day and will not change course, he said.s

That pragmatism is also drawing questions at home about Google’s wisdom in opting for such public confrontation.

“I think it’s very difficult to put our values and morals on a country in a different state of development,” said Geoff Yang, a co-founder of venture capital firm Redpoint Ventures. “Face is very important to the Chinese.”

Idealism and money-making usually sit comfortably side-be-side in Silicon Valley, with its blend of engineering drive, entrepreneurial opportunism and liberal west coast political culture. But this week, Google’s public disavowal of censorship after what it said had been a sophisticated series of cyberattacks from inside China has exposed a chasm. Among tech industry workers, Google also drew support for its willingness to speak out publicly over the widespread hacking attempts that have become a hazard of doing business on the internet, but are usually swept under the carpet.

“I worked in China for four years, and everything gets stolen. God bless Google,” an employee at one of the Valley’s biggest companies said, but added: “We’re not going to say anything, because China is special to us.”

Support has been less forthcoming, however, from the tech industry’s business leaders. The chief executive officers of Hewlett-Packard and Microsoft, while refusing to comment on censorship, have both stressed the growing importance of China as a market for their companies in the wake of Google’s announcement. They also played down any suggestion that the cyberattacks exposed by Google pointed to a serious deterioration of internet security.

While trying to dismiss any wider significance from Google’s potential withdrawal from China, Silicon Valley insiders said it had confirmed that US internet companies, while dominating many online markets around the world, would almost certainly fail to play a leading role in China.

“I believe that not only will local companies be successful, but the Chinese government wants local companies to be successful,” said Mr Yang.

Speaking in an interview before news of Google’s change of stance on China broke, Carol Bartz, chief executive officer of Yahoo, justified her company’s decision to abandon its independent China venture in favour of a minority stake in a local company.

“That might sound like giving up and running away, but having an investment in a China-based media company is the way to ride the internet in China,” she said. “It’s a hard place to do business.”

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