economics

March 25, 2010

Why Google pulled plug

Filed under: Uncategorized — ktetaichinh @ 11:55 pm
Tags: , ,

Behind Google Inc.’s dramatic decision to shutter its China-based search engine this week was co-founder Sergey Brin’s change of heart about the compromises required to do business in a land that was increasingly reminding him of his native Soviet Union.

The beginning of that change came just after the 2008 Summer Olympics in Beijing, Mr. Brin said in an interview about the China decision.

As the glow of the Olympics faded, he said, the Chinese government began ratcheting up its Web censoring and interfering more with Google’s business. Around that time, he said, the murky rules of doing business in China grew even murkier.

“China was ever-present,” he said. “One out of five meetings I attended had some component that applied to China in a different way than other countries.”

The 36-year-old co-founder said he was also moved by growing evidence in China of repressive behavior he remembered from the Soviet Union, which he and his parents fled when he was six years old.

Mr. Brin said memories of that time—having his home visited by Russian police; the anti-Semitic discrimination against his father—emboldened his view that it was time to abandon Google’s policy.

China has “made great strides against poverty and whatnot,” Mr. Brin said. “But nevertheless, in some aspects of their policy, particularly with respect to censorship, with respect to surveillance of dissidents, I see the same earmarks of totalitarianism, and I find that personally quite troubling.”

On Jan.12, Google said it would stop self-censoring its search engine in China, citing cyberattacks it believes were motivated by an attempt to spy on Chinese activists’ emails. On Monday, Google implemented that policy, routing mainland users of its search engine to a site in Hong Kong that the company wasn’t censoring.

The cyberattacks were the “straw that broke the camel’s back,” Mr. Brin said. A heated debate in the company about whether to cease censoring ensued, say people familiar with the matter. Mr. Brin and other executives prevailed over Chief Executive Eric Schmidt and others who felt that Google ought to stay the course in China to continue to push its principles from the inside, say people familiar with the discussions.

“We did have a long conversation about it, several long conversations,” Mr. Brin said. “We heard all the arguments.” When asked if Mr. Schmidt and co-founder Larry Page were available for comment, a Google spokeswoman said Mr. Brin was speaking on behalf of the company.

What’s next for Google in China is uncertain. Its business is in jeopardy. Some partners— like Hong Kong media company TOM Group Ltd—dropped their search agreements with Google, citing the need to abide by Chinese law. Employees are contemplating defecting to rivals like Microsoft Corp., according to recruiters.

Tianya, an Internet company which runs one of China’s most popular online forums, said Wednesday it would discontinue working with Google on several projects in light of the company’s decision to snub Chinese authorities.

Beijing has called Google’s move “totally wrong.” Internet experts are skeptical that China will let Google continue to route traffic from its China site to Hong Kong. While Google isn’t censoring that site, China’s Internet filters are blocking some results for users in China.

Mr. Brin’s doubts over Google’s early agreement to censor in China hark back to his childhood in the Soviet Union, which his family left in 1979 to escape anti-Semitism. Mr. Brin was six, but he said he is reminded of the constant fear of surveillance through memories such as police visiting his family’s apartment to question his parents after they made the decision to emigrate.

To this day, Mr. Brin said, he and his family often reflect on the significance of the move. His father, he said, wanted to be an astrophysicist, but because of ethnic discrimination became a mathematician. He relished the freedom to pursue “his own entrepreneurial dreams,” he said. His father became a professor of mathematics at the University of Maryland.

China was a big test. Google was eager to be a player, hopeful that it could increase access to information and sensing business opportunities.

Google set up a Chinese research-and-development center in 2005, and executives began to debate whether they should open up a search engine on Chinese soil—a move that would require them to filter out content ahead of time that they thought the Chinese government would deem objectionable.

Messrs. Brin, Page and Schmidt agreed that launching a search engine—and putting a disclosure on the site saying that some information had been removed—would generate awareness among Chinese Internet users that information was being restricted.

In late 2008, just after the Summer Games, the censoring stiffened Mr. Brin said. Chinese authorities also began to tell Google it needed a number of additional licenses to operate its business, according to people familiar with the requests.

Last year, Google was further hamstrung when Beijing accused it of having too much pornography on its site and forced Google to disable some features. Google’s YouTube video service, which China had blocked periodically over the years, became inaccessible in the country.

Mr. Brin said Google was still evaluating its options when it discovered it was struck by a highly sophisticated cyberattack in late 2009.

After Google discovered evidence that the motivation of the attacks was to peek at the emails of Chinese activists, Mr. Brin said, he had had enough. “Ultimately I guess it is where your threshold of discomfort is,” Mr. Brin said. “So we obviously as a company crossed that threshold of discomfort.”

As for China, Mr. Brin said Google is reviewing its businesses, including the ones it still hosts in China like maps and its music search service. “We have stepped into a new world and will be looking at all the services,” he said.

And he is still holding out hope for the end-game. “I certainly hope that the long-term solution is the liberalization of the Internet in mainland China,” he said.

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