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Oana-Roxana Olariu

Google.cn - a fiasco

What made google.cn a fiasco? Why did Google renounce on remaining on the Chinese market?

Is it the Chinese government or companys ethics? These are the questions on which the

response is still debatable. A combination of political, legal and ethical factors contributed to the

disappearance of Google from China.

China is still one of the most important markets in the world and it represents a good target for

companies, as the technological development is highly considered within its borders. The

drawback for companies is that China is not willing to compromise at all. In other words, if you

want start a business on the Chinese market, you have to do it in its way, obeying its laws and

rules, regardless of the companys ethics and values.

China has always been a relatively closed society, which has tried to keep close controls on what

its citizens experience in media. Also, the Chinese government is determined to control the

inflow and outflow of information, in order to maintain social and political stability. Censorship

represents for Chinese government, the best and the most efficient way to control the information

flow, as it is conducted under number of laws and administrative regulations1. The

government not only blocks website content but also monitors the internet access of

individuals2, which means that not only media (Internet, newspapers) has a controlled content,

but people are not allowed to express their opinion freely, without any consequence.

Google is the best-known and world-widely utilized search engine that allows people to access

information without any reservation. Its mission is to organize the worlds information and

make it universally accessible and useful3. Therefore, the company does not exist only for profit

and for the interest of its shareholders, but for the interest of users allowing them to access

information saving time and frustration. At the same time, Google intends to be responsive to the

1,2

Googles exit from China-A case study, Rekha Dahiya

3 Company overview. http://www.google.ro/about/company/. Accessed 05.11.2012.

http://www.google.ro/about/company/

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local conditions without wanting to disturb in any way the economic and political environment.

In addition, the company states that they will not make ethical sacrifices just in order to increase

value to shareholders4, which means that under no conditions will the company compromise its

values and missions, as the freedom of speech and the freedom of press are fundamental human

rights5.

Since the beginning, there was a continuous negotiation between Google and the Chinese

government. Googles ethics barely matched the government requirements. Even though, Google

was aware that the censorship would apply to its search engine too, it had hoped that the decision

to create a search engine in the .cn domain, accordingly to governments prerequisites will allow

the company more freedom on the market.

The reality was far from Googles plan. Even though, google.com entered the Chinese market in

1999, the company wanted to launch its search engine on a Chinese server, as the competitors

did. Google wanted a .cn domain website because the foreign server did not do much in terms of

speed and reliability. This happened because the Chinese government had blocked access to the

site and users were instead diverted to rival Chinese search sites and the censorship led to a

slow search engine in comparison with the competition. Entering the market on Chinese server

implied that google.cn would comply with self-censorship, an unethical action as they argued.

Therefore, as its services were not reliable at all and the quality was poor, Google launched

google.cn in 2006, with respect to its users.

Having released the search engine on the Chinese market, some changes had been made. Google

wanted to make the Chinese version more Chinese, so, the name was changed in Guge,

Chinese employees were hired and partnerships with Chinese companies were made in order to

increase the market share. As the main competitors market shares had decreased (Baidu.com) in

favor to google.cn, the company had to be optimistic. We were late entering the Chinese market

4 Google in China-The Great Firewall, by Kristina Wilson, Yaneli Ramos, and Daniel Harvey

5 http://investor.google.com/documents/2008_google_proxy_statement.html#rom98719_66

http://investor.google.com/documents/2008_google_proxy_statement.html#rom98719_66

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and we are catching up. Our investment is working and we will eventually be the leader6 as the

CEO of the company stated.

Also, the company decided not to store personal data inside China, in order to avoid problems of

having the government demand any data. Therefore, some services from Google were not

available, such as: Gmail, Blogger, Picasa and other ones which were drastically altered.

Google tried to trick the Chinese government and hoped the compromises made by the company

would satisfy the officials. While the directives were to restrict 10 websites, Google would do it

only for 7 of them. Or even after a while, the company would restore the links previously

censored, wanting to filter as little as possible.

The success also depended on having a government relations point person, who could help

preserving the companys values without offending the Chinese officials. But the representative

failed to appreciate issues from the Google perspective, arguing that the company was not

flexible enough with the government and there has been done too little to please it.

The restrictions were very hard on the search engine. But even as Google rolled out its .cn web

address, there were indications that its compromise would not satisfy the Chinese government. In

2008, when China hosted the Olympics, the government decided to increase its restrictions. It

demanded that in addition to censoring the .cn results, Google block the objectionable links from

google.com for China. To such a demand, the company was not willing to obey. They tried to

stall until after the Olympics, hoping that it was just a phase, but its strategy did not work.

Therefore, some Google executives began to think to a way out.

The final decision regarding the companys exit from China was made when the operating

system from Google was hacked. These regular cyber-attacks resulted in theft of intellectual

property, which contravened with the privacy policies from Google. "The more we learned as

we looked into it, the more we realized this wasn't just a classic hack, but folks who were after

6 Google in China-The Great Firewall, by Kristina Wilson, Yaneli Ramos, and Daniel Harvey

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something. This was hacking with a purpose"7.There was evidence as the hackings were tied to

China - the company believes that the government was involved in this process. This led to the

decision of not censoring its engine anymore, and ultimately exiting google.cn from the Chinese

market.

In my opinion, Google was aware from the beginning that the Chinese government is not

indulgent at all, but they tried everything possible to gain some freedom. At every step made by

Google, the government was able to restrict the companys expansion. This happened for two

reasons. Firstly, because the inflow of information could allow the critical thinking of the

population and in this case it would jeopardize the political system ruling in China, system that is

based on control and obedience. And the second reason, I believe that China did not want a

foreign company to gain too much access on its market in the informational area. I imagined this,

because Yahoo!China kept it simple without wanting to step on the government toes and the

company is still existing today on the Chinese market

The Chinese officials blamed the company for not having the potential to compete with the

domestic player Baidu.com and that there are many ways to resolve a problem but every

foreign company including Google will have to abide by Chinese laws8. To a certain point I

agree to these statements. Google thought that it will change the Chinese points of view, simply

by staying true to its values. But in a country like China, with that great amount of population

which is satisfied with the way things are going in its country, it is more difficult and it takes

time to implement new ideology. Google should have stayed more in China, though the company

was struggling. Instead they preferred to retreat, motivating that their ethics do not allow the

company to pursue its mission in China. If the real reason for the exit was the ethics of the

company, in the first place Google would not compromise and launched google.cn. Therefore, I

strongly believe that the political system in China is still powerful and maintains the stability

wanted, no matter what.

7 Inside Googles China misfortune. http://tech.fortune.cnn.com/2011/04/15/googles-ordeal-in-china/. Accessed on

05/11/2012

8 Googles exit from China-A case study, Rekha Dahiya

http://tech.fortune.cnn.com/2011/04/15/googles-ordeal-in-china/

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Bibliography:

Articles:

1. Googles exit from China-A case study, Rekha Dahiya

2. Google in China-The Great Firewall, Kristina Wilson, Yaneli Ramos, and Daniel

Harvey

Websites:

1. http://money.cnn.com/2012/02/13/technology/thebuzz/index.htm. Accessed on

07/11/2012

2. http://online.wsj.com/article/SB10001424052970203436904577155003097277514.html.

Accessed on 06/11/2012

3. http://tech.fortune.cnn.com/2011/04/15/googles-ordeal-in-china/. Accessed on

06/11/2012

4. http://www.economist.com/node/18866989. Accessed on 05/11/2012

5. http://www.economist.com/node/21528262. Accessed on 05/11/2012

6. http://www.google.ro/about/company/. Accessed on 06/11/2012

7. http://www.nytimes.com/2012/06/02/world/asia/google-to-alert-users-to-chinese-

censorship.html. Accessed on 07/11/2012

8. http://www.ziare.com/google/retragere-china/china-se-pregateste-pentru-plecarea-google-

1002691. Accessed on 07/11/2012

http://money.cnn.com/2012/02/13/technology/thebuzz/index.htmhttp://online.wsj.com/article/SB10001424052970203436904577155003097277514.htmlhttp://tech.fortune.cnn.com/2011/04/15/googles-ordeal-in-china/http://www.economist.com/node/18866989http://www.economist.com/node/21528262http://www.google.ro/about/company/http://www.nytimes.com/2012/06/02/world/asia/google-to-alert-users-to-chinese-censorship.htmlhttp://www.nytimes.com/2012/06/02/world/asia/google-to-alert-users-to-chinese-censorship.htmlhttp://www.ziare.com/google/retragere-china/china-se-pregateste-pentru-plecarea-google-1002691http://www.ziare.com/google/retragere-china/china-se-pregateste-pentru-plecarea-google-1002691