After four years of uneasy operation in the People’s Republic of China, yesterday Google practically dared the Chinese authorities to ban it. A press release from the internet giant all but accused the Chinese Government of orchestrating the hacking of Google’s servers and the theft of its intellectual property. Suggesting that the private email accounts of Chinese dissidents had also been targeted in the attacks, Google said it would no longer restrict search results in accordance with the wishes of the Chinese regime and implied that the decision was based largely on a concern for the privacy and safety of its Chinese users. Google conceded that this may mean that it would no longer be allowed to operate in China and indicated that it was prepared for this consequence.
As of yesterday, previously censored topics seemed to be searchable on google.cn, and the Chinese Government’s next move was not clear. The news was greeted on social media and some blogs as a victory for free speech. It may yet be. But the calculation Google is making by risking its presence in China is more complex — and less courageous — than some imagine.
Australia’s own reliance on China as an export market can bring an exaggerated sense of its importance across different sectors of the global economy. With its expanding middle class, and its sheer demographic scale, China may be the market of the future. At present, though, for western internet companies, it is less lucrative and more difficult than they might prefer.
After entering the Chinese market in 2006, Google has struggled to displace the market leader for search engines in China, Baidu. For some time, Google has hovered at around 30 per cent of the search market, and Baidu has consistently achieved around 60 per cent although there is some disagreement about this, as there is about many internet metrics. This puts China alongside South Korea and Hong Kong as the only Asia Pacific territories where Google isn’t the market leader. (In Australia, Google captures a staggering 83 per cent of searches.)
Surveys of Chinese internet users indicate that many continue to use Baidu because they are simply used to doing so and because of perceived advantages with Chinese character searches. Baidu is seen as the "Chinese" search engine, not least by the governing elite. It’s proven very difficult for Google to gain ground in this environment. The issue of market share is not only important for its immediate benefits, but because of the advantages that inexorably accrue to incumbent leaders in specific markets. Google itself has benefited from this, and knows the powerful impediments to overhauling entrenched leaders.
But even if Google had managed to gain more ground on Baidu, it’s not as though this would have significantly improved its global business. In the third quarter of 2009, the entire Chinese search market was only worth US$293 million. To put this in some perspective, in the same quarter Google’s total revenues were US$5.94 billion. About half of these came from the United States — the rest of the world contributed a 53 per cent share. Yes, China has more internet users than any other territory — and that’s with a small degree of penetration — but Google’s bottom line will not take a significant hit if it is given the boot from the PRC.
With all this said, we’re entitled to view Google’s claims — that human rights and freedom of speech were major factors — with some scepticism. Yesterday, Google repeated the argument always made about entering the Chinese market: "Google.cn launched in January 2006 in the belief that the benefits of increased access to information for people in China and a more open internet outweighed any discomfort in agreeing to censor some results."
This claim seems even more disingenuous now than it did in 2006. Dissidents were spied on, imprisoned, and executed the whole time Google was in China. More immediately, information was and continues to be heavily censored with the collusion of major internet and technology firms. And Google wasn’t just aware that this was going on — it helped make it happen. The real source of this current grievance appears to be the temerity of the Chinese hackers and the refusal of the PRC to live up to what Google sees as its end of the bargain.
Given this, it might be best to take a more complex view of the trade-offs that Google will be making if it leaves the Chinese market. For now, it would lose a very small amount of its total revenue and risk its position in a growing market. Chinese internet users would notice the sudden absence of google.cn and the Chinese Government would no doubt prefer it to carry on effecting subtle forms of censorship on their behalf.
On the other hand, in the West, where the vast majority of Google’s interests lie, it’s a positive PR gesture at a time when a dogfight is looming over Google’s continuing capacity to index various kinds of content (especially news), and where competitors like Microsoft have indicated a willingness to collaborate with publishers in indexing paid content in new ways. There are also battles looming for Google in western countries over privacy and the gathering of user information and looking like the good guy in China will help here, too. For Google, in the short to medium term, the battle for hearts and minds over these issues may seem more important than its difficult Chinese venture. Even burning its bridges there may seem like a low-risk strategy.
Beyond Google’s own fortunes, though, we shouldn’t let ourselves be distracted from the broader questions that Google’s power ought to provoke. If the hackers were keen to go after Google to uncover dissident activities, it’s because of the wealth of information that Google has about all of its users. The perniciousness of China’s surveillance of its own citizens is clear and certainly worrying, but Google’s possession and use of information about us all — especially in countries like Australia where it dominates the online search environment and has ventures in many other areas — should also give us pause. Democracy is not only about voting and civic freedoms afforded by the state. At its heart is an idea of popular sovereignty which places checks on large and powerful institutions.
More than anything, Google’s announcement yesterday made it clear that in its relations with repressive governments, and in handling users’ information securely, it doesn’t see itself as bound by any standards other than its own. Wouldn’t true democracy allow us proper oversight of this organisation which possesses a wealth of information on almost all of us, and considers itself powerful enough to take on the People’s Republic of China?
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