By Steven Mufson
Washington Post Staff Writer
Wednesday, January 13, 2010; 10:06 AM
BEIJING -- Google's threat to shut down its Chinese Web site and offices over cyber-attacks and censorship puts the government here in the awkward position of choosing between its devotion to restricting information and the possible ire of the roughly 80 million Chinese who use the search engine.
Few political and Internet analysts doubt that China's government will stick to its tough stance and reject Google's proposal to stop censoring its Web site.
But Google's audience of Chinese "netizens," a few of whom placed flowers outside the company's offices here in Beijing, is large enough to make the government's likely stance a touchy one.
"This would adversely affect a lot of people, not just the technorati elite that is Western-oriented anyway," said Kaiser Kuo, an independent technology consultant. "The government could face a serious backlash this time."
"This will make the extent of Chinese censorship a lot clearer even to ordinary Chinese people who are not aware of it," said Jeremy Goldkorn, who does the blog and runs an Internet research firm. He also runs a Web site called danwei.org, which has been blocked since July.
"Many people think Google should negotiate with the Chinese government," said Zhou Shuguang, a blogger who has done investigative reporting across the country and has used the name Zola.
But he said that "the withdrawal from China will wake up more Chinese and make more people discover that China lacks freedom on the Internet and the government has very strong censorship online. There are no benefits to people at all if Google continues to make concessions with Chinese authorities."
Another Internet campaign aimed at getting municipal governments to make their budgets more transparent has made some progress. The city of Guangdong made its budget more open, as did a district of Shanghai, though the Shanghai-wide municipal government refused.
But businesspeople in Beijing were pessimistic, as were many people at Google itself, about the prospect of a crack in what is known as the Great Firewall of China. "China can't lose face over this, and it's not going to let anybody run an open search engine," said an industry source close to Google.
The government has shut down or blocked thousands of Web sites before. Twitter, YouTube and Facebook are all blocked. Just this week, the General Administration of Press and Publication boasted of taking down 136,000 non-registered Web sites and more than 1.5 million pieces of "bad information." It also said that it shut down 15,000 pornographic Web sites.
For now, the government has said only that it would seek more information from Google. Just about the only comment in official channels came in the form of a signed opinion article on the People's Daily Web site, a style of editorial that does not carry the well-considered weight of an unsigned editorial, which is usually vetted by top Chinese leaders. The article compared Google to a "spoiled child" and said that even if it stormed out of China, it would be back because of the importance of the Chinese market.
Other pro-government comments online said that Google, which lags far behind the Chinese-based search engine known as Baidu, was simply dressing up a business decision in moral clothing. Baidu has about two-thirds of the market. Some independent analysts have estimated a 30 percent or so market share for Google, but well-placed industry sources said the actual number is closer to 20 percent and has never been more than 26 percent.
Dan Brody, who set up Google's China office and who now runs an Internet media investment firm here called Koolanoo Group, estimates that Google has about $300 million to $400 million in revenue in China.
Brody said that that revenue pales next to the revenue Google earns elsewhere. Moreover, he said, if Google loses even a small percentage of users in Europe or the United States because it is seen as making too many compromises with China's government, then the company could lose much more revenue than it's earning in China.
"From a business and moral perspective, user trust in the West is so important to them," Brody said.
Another industry source close to Google said on condition of anonymity that although the firm's market share has lagged, "this isn't something being used as a smokescreen."
The company has clashed with the Chinese government since it set up google.cn in 2005. Google agreed to remove information that China's leaders might find too sensitive. But Google and the government differed over what should fall into that category.
Last summer the company was sharply criticized in state-run media for providing access to "pornography." The industry source said that in addition to well-publicized incidents, Chinese officials were making weekly demands for items to be removed. He said when the cyber attacks were discovered "it was the last straw."
If Google closes down its Chinese site, or if the Chinese government closes it down, Chinese users could still try to use the U.S.-based site. But China's government could impede access. Currently, the U.S. site works more slowly and access to many pages is blocked.
Where would that leave the Chinese market and China's estimated 370 million Internet users?
The closing of Google's China site would boost Baidu and Sina, most industry analysts said, and hurt Google in the long-running rivalry.
Despite expensive outreach campaigns at universities and secondary schools, Google has had trouble catching up to the domestic competitors. Analysts say Chinese Internet users favor the crowded, busy sites of Baidu and Sina to the no-nonsense sparseness of Google's homepage. Baidu and Sina also feature bulletin boards and music downloading services that are not available on Google. Moreover, surveys have shown that most Chinese have trouble spelling Google or don't know its Chinese name, guge, which means valley song.
There is also a nationalistic component to the other companies' success. A Baidu ad played on those sentiments by portraying a bumbling foreigner at a wedding speaking Mandarin poorly. A character known as Tang Baihu then talks circles around the foreigner, who is dressed awkwardly in Chinese traditional clothing.
Google China, which was based in Beijing's high-tech corridor near the main universities, has also suffered from high turnover over the past five years and the company recently was forced to replace a number of its locally hired, Mandarin-speaking staff with managers from its headquarters in California. The head of Google China, Kai-Fu Lee, who was recruited away from Microsoft, quit in September.
Ironically, however, the departure of Google is no guarantee of harmony on the Chinese Internet given the vast scope of content on the Web. This week Baidu's site was attacked by hackers who claimed to be from Iran.
"This is a lose-lose solution for both Google and China," said Hu Yong, associate professor specializing in online media at the School of Journalism and Communication at Beijing University.
"For Google, China is a huge market with very big business potential because China has a large number of netizens," Hu said. "For Chinese netizens, it's a bad result as well. A search engine is very important for the free transportation of information online. And we need competition," he added, otherwise "the number information sources will decrease."
Post researchers Zhang Jie and Wang Juan contributed to this report.
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