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Google versus China: Round Four

Last week I flew around the world—literally. Starting in San Francisco, I flew to Singapore, then on to Brussels, and finally back to San Francisco. The fact that I did not achieve the same frequent flyer status with United Airlines in 2010 that I did the previous five years made the trip much more uncomfortable. I was upgraded only on one relatively short flight segment. Still, I got enough sleep to be able to be sufficiently awake to stay in tune with the unfolding drama involving Google and the government of China.
You may remember that the government of China pressed Google to hand over information about dissidents in that country. Google refused. Then the Aurora incidents, almost without a doubt originating in China, involved massive break-ins into Google’s (as well as others’) computing systems. In the case of Google, speculation says that China was seeking information about dissidents in that country. After considerable deliberation (and also indignation—after all, China ostensibly rifled through Google systems at will), Google decided to move its China operations to Hong Kong, something that I believe was a move that the Chinese government had not at all anticipated.
Round four of this drama is currently underway. The Chinese government blasted Google in a communist party newspaper. Some of Google’s partners and advertising customers in China have suddenly turned against Google. For instance, China’s second-largest mobile phone company recently announced that it will no longer use Google’s search function on two of its new phones. All this threatens to drastically slash Google’s China-based revenues. Consequently, Google’s stock price has dropped six percent since January, presumably in part due to Google’s struggles in China.
What we are witnessing here is truly a war between titans. (The use of the word “titans” is not in any way related to the so-called “Titan Rain” break-ins from China earlier this decade.) Google is an economic megapower. China, on the other hand, is not only the largest country in the world, but its economy has been growing at rates that Western nations cannot begin to match. Who will win?
The answer is—I can’t really predict. This is truly a spectacle to behold—a huge Western entrepreneurial power versus the government of a nation that many economists believe will have the number one economy in the world by 2050. China is fighting to preserve its authoritarian control over people in the country. Google is fighting for profits. In the short run, China-based search engine company Baidu appears to be the winner. Additionally, even though China has agreed to keep its hands off of Hong Kong, I would not count on it. Remember, this country is that same one that illegally invaded and took over Tibet.
The real “lesson learned” here is that Western corporations need to be wiser. They rush to China in the name of business opportunity without taking the time to carefully analyze the risks involved. The Chinese government is “hard core.” You cannot mess around with this government too much, especially when it comes to conflict between your business goals and the Chinese government’s goals.
Meanwhile, stay tuned to your favorite station or Internet news source. The battle between Google and the Chinese government is by no means over. And if you like to bet, you’d better think twice—anything could happen in this drama.

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