The Great Wall of Google

    January 29, 2006

Google’s decision to filter search results on behalf of the Chinese government was certainly not an easy one.

I had hoped that Google would be different, a citizen of the net. But corporations are not citizens, not even of their home country.

Corporations gained legal status as individuals under the precedent set by the Thirteenth Amendment which abolished slavery. Bizarrely, the logic was if slaves are 5/5ths of a person, instead of 3/5ths, then so too should be a corporation. They gained legal rights as individuals, but not the responsibility of citizens with obligations to society. All they do is pay taxes, mostly. Their obligation is to their shareholders and the profit motive.

Today corporations are multinational, and the incorporated form as individual is inherited throughout the world. If there was such a thing as international law, corporations would transcend it. The social responsibility of a corporation defaults to the lowest common denominator across jurisdictions. A corporation may take advantage of lower environmental regulations in one country and child labor in another, while receiving the benefits of incorporation in tax sheltering countries. Financial and political risk is evenly distributed.

There is no societal obligation for the corporate form, however, long term profit motive rewards the socially responsible corporation. This raises interesting questions in the case of Google’s China market entry strategy.

If you read the tea leaves, you will see conscious succumbed to at least the short term profit motive.

Filtering our search results clearly compromises our mission. Failing to offer Google search at all to a fifth of the world’s population, however, does so far more severely. Whether our critics agree with our decision or not, due to the severe quality problems faced by users trying to access from within China, this is precisely the choice we believe we faced. By launching and making a major ongoing investment in people and infrastructure within China, we intend to change that.

But John Battelle is probably right:

I think they convinced themselves it was the right thing to do. They thought themselves into it. And deep down, they aren’t sure they did the right thing. At least, that’s what I want to believe. Sure, Microsoft is going to go in. Yahoo and IBM are going to go in. But Google? We thought…well, we thought you were different.

As multinational information services corporations enter China under China’s rules the undoubtedly gain in short term profit. They all do so, however, with the promise of accessing what will be the largest market in the world. Playing by the rules respects the sovereignty of China, which in some ways should be acknowledged, as many a corporate abuse stems from a multinational being prescriptive in policy. And, in fact, one of the greater fears societies hold for multinationals is their ability to not only transcend, but make policy.

But this is the network age, where even the physics of information are different. I’ve had a chance to meet blog service providers and gain an understanding of the operational model of censorship. Most critically, users transcend the filter, creating their own language to gain freedom of speech. Which raises a very interesting scenario: is launched, users as publishers and searchers optimize search for freedom, the filter is calibrated, users calibrate, rinse, lather and repeat. Two potential outcomes: (1) the transaction costs imposed in search for this model become so great that Google exits, or (2) China gets to hold a party line and the volume of business to Google out-weight the impact on margin. It’s probably number two.

I’m not sure I buy the argument that not playing by China’s rule capitulates the market to others. Congressmen are calling for hearings on why American companies are playing by these rules. Reporters Without Borders launched an online campaign for US firms to refrain from hosting email servers, filtering search engines, hosting blogs and discussion forums in repressive countries. Still, some will undoubtedly play by the rules, but users will route around the wall. Enough, at least, to make a market until change in China happens.

China is growing, but it’s growth and structure is unsustainable. Growth is in the cities and benefiting a minority, with unprecedented negative externalities such as pollution. Meanwhile, the bulk of the country remains rural and poor. The potential to leapfrog into the network age is being realized despite censorship for some. Censorship in the network era ultimately fails because there is no such thing as control. It does work for a subset of less savvy users. The very same users and potential users that are being left behind in economic growth. “What is the fear?” said a Chinese censorship official at Davos. “We are afraid about the disorder of the society.” He should be more afraid of the economic and societal disorder that happens with unsustainable growth. This is the one digital divide that is potentially revolutionary, bread riots over bandwidth.

China fears Google. With Market-Leninism, the greatest succession of control is to multinationals, especially those in the information business. But Google’s fear of China is irrational because market access is granted when the physical network is in place. China thinks with a longer time horizon than any other country, Google could too. Initially serving the very influential Chinese diaspora and circumventing users, while waiting for a larger change — may prove more profitable.

My hope is that Google is the first to yield to US political pressure, plays by rules more consistent with their mission than corporate convention, justifies the action to it’s shareholders as long-term profit motive and provides a model for corporate citizenship to others.

Ross Mayfield is CEO and co-founder of Socialtext, an emerging provider of Enterprise Social Software that dramatically increases group productivity and develops a group memory.

He also writes Ross Mayfield’s Weblog which focuses on markets, technology and musings.