Silicon Valley based Internet giant Google fighting against undamped censorship of Chinese authorities. Liberal, free market against communist protectionism. Many multinational companies accept Chinese conditions in view of lucrative business opportunities. Google was one of them - until now it seems. However, is it really the censorship that makes Google think about leaving the Asian country or is it perhaps the consequence of poor return on investment and even poorer prospects to "rule" the Chinese market?

The Economist writes:

The company has decided to stop censoring the results of Google.cn, its China-based search engine. Mr Drummond said this might result in having to shut down Google.cn and Google’s offices in China. In the face of much criticism from Western human-rights advocates, Google justified its decision to set up Google.cn in 2006 by pointing out that China often blocked its uncensored Google.com search engine. Better to offer a censored service (with warnings to users that results were filtered), the company argued, than offer nothing at all. China would certainly not allow an uncensored search engine to be based on its territory.

In Silicon Valley, the home of Google, the decision has been widely applauded. Nevertheless, some are asking whether it was “more about business than thwarting evil” to quote TechCrunch, a popular website. Despite its concessions to the Chinese government, the argument goes, Google had not made any headway against Baidu, China's leading search engine—and probably never will. In any case Google's revenues in China are “truly immaterial”, according to Mr Drummond, and its costs are not. It employs about 700 people in China, some of them royally paid engineers. Hacker attacks and censorship, critics say, may be convenient excuses for something Google wanted to do anyway–without it looking like a commercial retreat...

Just what consequences would a retreat from Google have on Baidu, the company's main search engine competitor in China? Reuters writes:

If Google exits, analysts expect that dominant local player Baidu will soak up much of the U.S. group's 30-odd percent market share. If Google stays, Baidu will be in a strong position to sign up advertisers now leery about working with Google.

"Even if Google can successfully solve this problem and continue in China, in our view Baidu will still benefit incrementally from advertisers' concerns," UBS analyst Wenlin Li wrote in a note.

Analysts also said Baidu would be in a stronger position to negotiate prices with advertisers if Google was out of the picture. Baidu has over 60 percent of China's $1 billion search market, according to research firm Analysys International.

"

If Google doesn't leave, it could be subject to more tightened controls and a strained relationship with the government," said JP Morgan analyst Dick Wei, explaining further implicit benefits for Baidu, whose name was inspired by a Song dynasty poem.

Google itself makes it quite clear stating that "like many other well-known organizations, we face cyber attacks of varying degrees on a regular basis. In mid-December, we detected a highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property from Google. However, it soon became clear that what at first appeared to be solely a security incident--albeit a significant one--was something quite different."

Do-no-evil: Google's corporate ethics at stake

Google's own reasoning reveals that there is more at stake than just hacker attacs: "We have taken the unusual step of sharing information about these attacks with a broad audience not just because of the security and human rights implications of what we have unearthed, but also because this information goes to the heart of a much bigger global debate about freedom of speech. In the last two decades, China's economic reform programs and its citizens' entrepreneurial flair have lifted hundreds of millions of Chinese people out of poverty. Indeed, this great nation is at the heart of much economic progress and development in the world today."

Sarah Lacey from TechCrunch remains skeptical, arguing that "the company has had more success in China than a lot of other big Valley names, but isn’t and will likely never be the market leader. And to get that far, many in the West feel Google has had to compromise its “do-no-evil” ethics by agreeing to some of the government’s censorship rules. Google has been damned either way: China is too big of a market to ignore, but getting as far as they have has come at a steep price to their reputation and international (read: Western) integrity."

And further, "I’ll give Google this much: They’re taking a bad situation and making something good out of it, both from a human and business point of view. I’m not saying human rights didn’t play into the decision, but this was as much about business."

Business ethics, according my favorite textbook on corporate responsibility, is increasingly concerned with the values of business as a whole and how a company integrates values, such as honesty, trust, integrity, respect, and fairness, into its policies, practices, and decision making (Blowfield and Murray, 2008, Oxford university press).

Trust? Well, trust is crucial to Google. Like nobody else (as far as I know, correct me if I'm wrong) Google collects our data and (e.g. search) behavior. We allow this because we trust the "friendly" giant and find his tools (gmail, picassa, youtube, google books, scholar ....) useful, time and money saving. What would happen to Google if we, the customers, wouldn't trust it anymore? It would either become a despot (giving a "shit") or disappear.

In the end, Chinese citizens will likely profit from the discussion, no matter if based on commercial or ethical considerations. Because only if people are aware that there exist other ways of doing things, than there is a chance for change.

Florian is an independent journalist focusing on issues such as sustainability, corporate responsibility, climate change impacts and tourism.

--
Picture credit: JasonIT