Monday, January 30, 2006


Google releases its quarterly results tomorrow and everyone is expecting another blowout quarter (in the last one, the numbers were up some 90%). It won’t need to be wrong by much – where wrong is not exceeding the estimates by as much as everyone thinks it will, in that peculiar world of whisper numbers – for the stock to get whacked. Betting against it would be a risky deal though, at least where its financial reporting is concerned. In other areas, from all the noise this week, you’d think that Google, far from not being evil, was rapidly taking the place of Mahmoud Ahmadinejad as the devil incarnate. This whole China thing may just have taken the normally laidback Googlers by surprise, although I doubt that they will be displaying much sign of being fazed. New readers start here, with the faithful Beeb for background. It seems that Sergei and Larry got themselves stuck between a rock and a hard place. They want in on China, they want the money that could flow from a market where, probably in the next few months, there will be more people online than in the USA (for comparison, mobile phone penetration in China is far lower than other major economies, but because of the size of the country there are already more phones than in the USA). Only 8.5% of Chinese are online, but that's 110 million people! But getting into this market may mean giving up on truth, liberty and the pursuit of justice (ok, so slightly changed those from the original). They have to censor search results so that sites that include references to “democracy” or “falun gong” or “Christopher Columbus found America first” are removed. Oddly, the list of terms that they have to remove doesn’t appear to be fixed – it’s not given to them once a day or once a week or whatever, they just get a call from the Ministry of (dis)information when they need to kill something off. You can just imagine how big an operation that is … and you start wondering what search engine is the Ministry using to find the sites it wants to censor and who is doing the searching (and do they go home every night having passed through a “Men in Black” style memory wiper lest they pass on details of what they saw to their friends in the local pub/tea shop? On announcing this decision which, being even handed, only puts Google in the same space as other search providers such as Microsoft and Yahoo, a torrent of negative press was unleashed. Pretty much all of the press agreed that Google had no choice but to do this but still lamented that, somehow, we expected more from the boys (and their adult supervision, Eric Schmidt). One or two pieces, notably that by Rees-Mogg in today’s Independent, brought up the whole topic of Google putting small publishers (mostly his own he is candid enough to admit) out of business through publishing hard to find books completely online. Google’s defence is that a little information is better than no information - and to slightly confuse this argument, they are not making their blogging, email or IM-type services available. If they’d stayed as they were then their engine would have been slower than local rivals and would, anyway, have been censored by the Great Firewall of China in the sky. This way, they can start to show Chinese folks what they’re missing – because every page with something removed will have a disclaimer letting the user know something was there (accompanied, I suspect by a banner ad from an enterprising company offering to sell you whatever information was supposed to be there – I wonder what the going rate for the keyword “democracy” will be on I find myself leaning towards Google’s view of things - they've made a tough, pragmatic decision where bad decisions were in all directions. I don’t see many other options. They could have held out of course – after all, (to name but one) is still available, albeit somewhat restricted unless you use an anonymous proxy like but it isn’t in Chinese; they could have negotiated further to see if they could break the resolve of the Chinese government (seems unlikely doesn’t it) or, worse, they could have caved in even more and not even flagged that items were being censored. Bill Gates, commenting on this issue at Davos, quipped that “Don’t be evil” was not a relative statement – but, then, MSN had already folded its hand. I am, I have to say, a little intrigued with the timing of an announcement the other day – that Google would not be complying with a request from the USA’s federal government to provide (amongst other things) a dump of one week’s search requests (and presumably results). If you add this story and the China story together, you get an interesting mix – if the Chinese government ask for the same thing, Google has, at least, set a precedent not to comply in its own country … but, then, it doesn’t censor results in the USA (apart from, so some people say, occasionally tweaking its algorithm so that previous winners of “top site” award suddenly tumble to the bottom of the list). With the apparent tendency towards piracy in full flow, it would be easy to imagine a site “” appearing in google’s place had no deal been done. After all, there is already much swiping of car maker IP – producing, shall we say, “binary compatible” cars for the local market at half the price of their western competition (sometimes building them just across the street from the Western factories from which they have, umm, borrowed the IP). Hongda anyone? A couple of years ago, over dinner with Microsoft’s CTO at Comdex in Las Vegas, Craig Mundie, we talked about the thorny problem of car model piracy in China. Craig noted that with only the costs of “build it” to meet without any of the “design it” or “make it safe” costs, then their cars would always be cheaper. Western companies would have to find ways to deal with that – but they’d have to stay in China because, if they left, the market would close to them and who knows when they’d be able to get back in, if ever. We know already, from long years of experience that dealing in any local market requires adhering to certain rules. In Saudi Arabia, you must have a local front your business if you want to trade; in France, you must pay up to 65% of an employee’s salary to the government to cover benefits and health insurance; in the UK you must collect VAT for the government; in many African countries, you need to understand how to bribe officials at multiple levels … should we not just add this to the list of “things the internationally expanding company must know”? Is this a big deal because it’s Google and we expect more from them? Is it a big deal because the last bastion of freedom has fallen? Don’t forget folks, as Simon Moores pointed out in only the other day, Google retains records of every search you’ve made, forever; if you’re using the desktop toolbar, it knows as much about your internet habits as anyone and, maybe, it’s going to have to tell the US government as much as it knows. And, anyway, as everyone who works in a corporation knows, if you search for the wrong thing through your intranet, or visit a website that is deemed unsuitable for corporate use, you'll be flagged to your internal thought police ... whether the site is one that tells you the latest video game charts or, in the case of many parts of UK government, Xinhua Chinese news service or anything with the word "terrorism" in the title. Censorship is part of life - but, like life, it tends to evolve with time and ebb and flow. Google are hoping they're catching the flow at the right time.

1 comment:

  1. Anonymous8:38 pm

    What ****s me off about Google is that they go beyond blocking forbidden ideas. They substitute the hits with counter propoganda.

    Instead of getting useful info on how many Falun Gong the Govt. have neutralised, instead Google gives you links telling you why the FG are heretical and evil.

    I have no trite answers to China's brutality or American rendition to torture, but they still turn my stomach.