Google’s China Story – Analysis


July 19, 2005: Kai-Fu Lee, a well-known Chinese computer expert working for Microsoft in the US, crossed over into Google to help it establish an office in China — reportedly on an annual salary of US $13 million. Lee announced his switch-over in his Chinese language web site as follows: “I choose Google. I choose China.” Microsoft filed a suit against Lee. The court ruled on September 13, 2005, that while Lee could not share with Google the information acquired by him while serving in Microsoft, there would be no bar to his helping Google in setting up a presence in China. Under a compromise reached by Google and Microsoft in 2006, the latter agreed to lift restrictions imposed by it on Lee.


January 27, 2006: Google’s China service called was launched. Lee, who headed the office, helped Google in recruiting a large number of Chinese computer experts. It was reported at that time that in return for the Chinese permission to open its services in China, Google had agreed that it would abide by the rules of censorship laid down by the Chinese Government. Soon after started functioning, frictions allegedly developed in its interactions with the Chinese authorities.

The “Fortune” magazine (April 15, 2011) reported in a special article on Google in China as follows: “ Google had hoped that its decision to create a search engine in the .cn domain — one that followed government rules of censorship — would lead to a level playing field. But even as Google rolled out its .cn web address, there were indications that its compromise would not satisfy the Chinese government. Unexplained outages still occurred. (Meanwhile, Google’s competitor Baidu seemed to hum along unscathed.) And not long after Google got its operating license in December 2005, the Chinese declared that the license was no longer valid, charging that it wasn’t clear whether Google’s activities made it an Internet service or a news portal. (Foreigners could not operate the latter.) Google then began a year-and-a-half-long negotiation to restore the license.”

In June 2007, the Chinese Government restored Google’s operating license. Neither the Chinese authorities nor Google shared with the public information regarding the conditions, if any, under which its licence was restored. Had Google agreed to continue to abide by Chinese internet censorship rules?

In the meanwhile, allegations started surfacing that Google’s management trusted its American employees more than its Chinese employees. It became apparent that Google recruited Lee to make use of his China knowledge and contacts, but did not allow him an unrestricted role in operational management. He was allegedly a glorified head subject to back-seat driving by Americans enjoying the confidence of the Google management in the US.

To quote from the “Fortune” article on how Google was coping with increasing Chinese demands for censorship: “A demand would come from a government ministry to take down 10 items; Google would typically take down seven and hope that the compromise resolved the matter. Sometimes after a few days or weeks Google would quietly restore links it had censored. Every five months Google’s policy-review committee in China would meet to make sure it was filtering the minimum it could possibly get away with.”

“Fortune” added: “For all the progress, some Google executives were beginning to think that its great China compromise wasn’t working. A turning point came in 2008, the year China hosted the Olympics. In the run-up to its turn in the international spotlight, China apparently decided to increase its restrictions. It demanded that in addition to censoring the .cn results, Google purge objectionable links from the Chinese-language version of That, of course, was unacceptable to Google — it would mean that it was acting as an agent of repression for Chinese-speaking people all over the world, including in the U.S. Other search engines, including Microsoft’s, agreed to such demands. But Google stalled, hoping that after the Olympics the Chinese would back off. They did not. The demands for censorship became broader and more frequent.”

Towards the end of 2009, after discovering that the Chinese security services had been hacking into Google services for allegedly stealing personal data of Chinese using Google services, the Google management in the US decided not to accept any longer Chinese demands for censorship and to close down the services of .

China responded firmly to Google’s decision not to accept any more censorship on its search engine and its threat to review and, if left with no other alternative, to close down its operations in China if the censorship and the alleged State-sponsored web snooping continued.

The Chinese response was to reiterate the right of the State to impose reasonable restrictions in the interest of security and stability while avoiding any statement or action that might result in a break with Google, which could be bad for the international image of the country. At the same time, the Chinese ruled out any major change in their Internet security policy just because of the threat held out by Google.

Jiang Yu, a spokesperson of the Chinese Foreign Ministry, said that China’s policy would continue to be one of encouragement of an open Internet under proper regulations. She added: “The Internet is open in China, where the Government always encourages its development and has created a favorable environment for its healthy development. China, like other countries, will regulate the Internet industry in line with the law. China welcomes international Internet companies to conduct business within the country according to law.”

In a statement on its official blog site, David Drummond , Google’s corporate development and chief legal officer, said that the company intended to “review the feasibility of our business operations in China.” According to him, its disputes with the Chinese Government and unidentified attacks targeting Google’s services in China forced the company to make the review and possibly to “shut down” and potentially its China offices.

While reiterating the right of the State to impose reasonable restrictions, the Chinese authorities strongly denied that Governmental agencies had any hand in cyber attacks on Google. The spokesperson of the Foreign Office pointed out that Chinese laws “prohibit hacker attacks in any form.”

Wang Chen, Director of China’s State Council Information Office, said on January 14,2010, in an interview to the “People’s Daily”: “China firmly opposes cyber attacks because China itself is a victim of such attacks. Every country needs to effectively regulate the Internet and to make sure their own problems on the web do not affect other countries. Internet security has become a significant problem that does not only involve China but also other countries.”

Comments made by Chinese non-governmental analysts and Internet users made two points. Firstly, the decision of the Google’s executives to review the continuance of its operations in China appeared to have been triggered off by its failure to make a commercial breakthrough in China after nearly four years of its operations in China and by its inability to face the competition of Chinese search engines, which continued to enjoy a monopoly of the Chinese market. Instead of admitting its commercial inadequacies, it was trying to blame the alleged web censorship and snooping for its decision to review its future operations. They accused Google of looking for moral scapegoats to cover up its commercial failure. In this connection, they pointed out that the so-called censorship regulations were there even in 2006 when Google entered the Chinese market. It did not find anything morally wrong with them at that time, but after its failure to break through in the local market, it started talking of morality issues by making a hue and cry over censorship after having informally accepted censorship for nearly four years.

Secondly, they alleged that Google was guilty of double standards. They pointed out that there were regulations in the US prohibiting access to children to pornographic sites. Similarly, after 9/11, to prevent terrorists from having access to pictures and other information which could be useful for planning a terrorist strike, the US Government had been asking Google to remove certain photographs and other materials from the web. Google found nothing wrong in such requests or instructions emanating from the US security agencies and carried out their wishes, but when Chinese agencies issued similar instructions they were accused of coming in the way of the free use of the Internet.

The Chinese were hoping that ultimately Google would realise that it had over-reacted to the difficulties faced by it in China and would decide to continue its operations in China in its long-term business interests. However, if Google stuck to its threat and decided to wind up its operations after the proposed review, the Chinese were prepared to face it. They made it clear to Google that they would not be intimidated by its threats to close down its operations in China. They were confident that any decision of Google to wind up would not have any impact on China’s relations with the US and on the confidence of international companies in the business environment in China.

Both Google and Beijing started looking for a face-saving patch-up, which could enable Google to stay on in China if Beijing promised to undertake a review of its Internet censorship and security regulations, if not immediately, at least in the foreseeable future.

This was evident from the statements and comments that emanated from both sides. A spokesperson of Google was reported to have told the Bloomberg news agency on January 16, 2010, that it was operating business as usual in China, was still censoring search results on and its employees in China were still going to work. The Reuters news agency quoted Google’s China office as saying that it would hold talks with the Chinese Government over the next few weeks.

The “Global Times”, published by the party-owned “People’s Daily” group, quoted Google as saying that its planned retreat from China was limited to, hinting that other services such as android phones and Gmail would not be affected. The “Global Times” further said: “A spokesman of the Google company who declined to be named said that Chinese users will possibly be able to continue using the search engine in Chinese through “The only thing we have announced is this: We will be talking to the Chinese authorities about the possibility of operating an uncensored search service within China. If it is impossible to operate an uncensored service within the law, we will close,” said the spokesman. “We will obviously continue to offer Chinese-language search on our global search engine. Beyond that, we are making no announcements on any other aspect of our business.”

An article carried by the “Global Times” on January 17, 2010, under the title “Google-China split would be loss for both sides” said: “Google CEO Eric Schmidt had a famous “5,000-year plan” for China, “We will take a long-term view to win in China. The Chinese have 5,000 years of history. Google has 5,000 years of patience in China.” Yet Schmidt’s promised patience for developing in China seems to be fading away now. The company’s “threat” to pull out of China amid concerns over censorship and cyber attacks has shocked the world and brought down Google’s share price by 1.3 per cent. The price dip reflects investors’ worries over a huge potential business loss from the parting of ways. With its roughly 33.2 per cent share of China’s $1 billion search market in 2009, Google’s possible exit would signal that it is giving up a booming Chinese market with 350 million Web surfers. Its strategic loss would be greater than its business loss. While other search engines, Chinese and foreign, would predictably grab a slice of the business abandoned by Google, the Internet giant’s inability to localize and tackle difficulties in China would be an incalculable loss to its long-term commitment to innovation. Google’s “New approach to China,” as spelled out in the title of its recent statement, would do no good to China, either. Should the world’s most populous nation fail to provide a foothold to the world’s top search engine, it would imply a setback to China and serious loss to China’s Net culture. The information highway demands not only safe driving but also free flow of traffic. And, in the interests of the majority’s right to know, free flow of information should take precedence in a civil society. In a transitional society like China, the existence of censorship can be justified, as allowing full play to multifarious and disorderly search results poses unprecedented risks to vulnerable netizens and social stability. But the Government must face up to the challenge of where and how to put the checkpoints on the highway. A sensitive and shrewd Government should have the vision and savvy to place the right kind of checkpoints at the right place and at the right time for ensuring the free flow of highway traffic as much as possible in the public interest. When Google entered China’s market about five years ago, it named itself “Gu Ge” (Grain Song) in Chinese. Google and China going their separate ways would hurt both sides. Let the song of sowing and expectation continue to be heard in China, for a win-win situation. ”

In an editorial on the subject the next day, the “Global Times” said: “The world’s top search engine needs to reflect on why it is lagging behind a local rival in China and why it is not getting as much support from Chinese Web users as it had expected. …..Technology and business should not be affected by political interests and diplomatic concerns. Though Chinese people have called for further steps to be taken by the Government to ensure free flow of information, it is always in their interest to have any foreign company operating in China abide by Chinese laws. Certainly, Google cannot be an exception. A split between Google and China will hurt both sides. And the Internet giant would lose further ground among its supporters if it is made a political football. Conciliatory negotiation may help in solving any issue. The West’s arrogance will not work.”

Apparently, Google decided to close down its services due to the increasing censorship demands from the Chinese authorities, but to continue its other services. The conditions under which it took this decision were not made public. In the meanwhile, Lee was reported to have quit as the head of the office in China.

In March,2011, reports started circulating that G Mail too was facing difficulties due to alleged interference by the Chinese security agencies. In a press statement on March 21,2011, on difficulties allegedly faced by G Mail subscribers in China, Google said: “There is no technical issue on our side; we have checked extensively. This is a government blockage carefully designed to look like the problem is with Gmail.”

In its blog, Google also spoke of “politically motivated” attacks against users. It said: “We’ve noticed some highly targeted and apparently politically motivated attacks against our users. We believe activists may have been a specific target. We’ve also seen attacks against users of another popular social site.”

A report published by the “Wall Street Journal” on June 2,2011, indicated continued interference with G Mail services in China from sources allegedly associated with the People’s Liberation Army”.

The WSJ report said: “The city of Jinan, which Google described as the origin of the latest attack, sits 400 kilometers south of Beijing and is important technologically and militarily. Jinan houses the headquarters of one of China’s eight regional military commands and is home to one of the PLA’s technical reconnaissance bureaus. The bureaus serve as arms of China’s equivalent to the U.S. National Security Agency, according to a 2009 report from a committee created by Congress to study China.”

The WSJ allegations have been denied by the Chinese authorities.

The position seems to be as follows: Google was operating two search engines for its users in China. was using a server based in China. was using a server based in the US. From the beginning of its operations in China in 2006, Google was rejecting censorship demands relating to, but informally complying with censorship demands relating to When the Chinese censorship demands on increased and when the Chinese also started demanding censorship of the results of, it decided to transfer to Hong Kong and to continue to reject censorship of

B. Raman

B. Raman (August 14, 1936 – June 16, 2013) was Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and Director, Institute For Topical Studies, Chennai and Associate, Chennai Centre For China Studies.

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