The Tightrope Google Has to Walk in China
Chinese consumer market is a tempting target for technology companies. Of course, it’s also a risky place to do business. The recent news that Google is considering a re-entry into China further highlights a troubling balancing act that technology companies looking to do business there have to engage in. There are very real dangers for Google or any internet firm in underestimating the threat that Chinese meddling poses. These include intellectual property theft, escalating government demands, regulatory creep and the risk of alienating employees. Internet companies need to think carefully about the business costs of conceding to Chinese regulation. In addition to the threat to their reputations, there are material risks that are equally dangerous.
With over 1.3 billion people, the Chinese consumer market is a tempting target for Western technology companies. Of course, it’s also a risky place to do business. The recent news that Google is considering a re-entry into China further highlights a troubling balancing act faced by technology companies looking to do business there. The company last entered China in 2006 with a censored search engine, but pulled the plug on the operation four years later after it discovered that human-rights activists’ Gmail accounts had been hacked. While the economic opportunity in re-entering China could be massive for the firm, there are very real dangers for Google or any internet firm in underestimating the threat posed by Chinese meddling.
Any internet platform company doing business in China has to negotiate a major business and ethical dilemma: The Chinese government enforces overbearing regulations that censor speech in the name of national security and, under common conceptions of international norms, violate human rights. Reports indicate that Google has discussed some of its re-entry plans with Chinese government officials, including offering a search service that would “blacklist websites and search terms about human rights, democracy, religion, and peaceful protest.”
Google’s bind is a common one. Apple, for its part, gave in to a new, privacy-impinging Chinese data security regulation last year when the firm announced it would build a data center in Guizhou, partner with a Chinese cloud service provider, and accommodate Chinese government demands that it should be able to examine private data held by Apple. The potential loss Apple would have sustained had it not caved and, in the view of many, compromised human rights interests, was huge — its access to the vast Chinese market for devices, as well as its manufacturing base there. Reportedly, Facebook has also attempted to enter China, though it has faced tremendous public outcry and difficulty in doing so.
Google’s departure in 2006 and the maneuvers of other tech companies trying to negotiate this minefield illustrate the difficult choices their executives face. Companies are compelled to maximize shareholder value; should the firm’s executives ignore human rights concerns and seize economic opportunities, or should they take the ethical course and forego the profits to be had?
While ethical considerations should rightly be a central concern, there is an array of potential threats internet firms would be wise to think through as well as they seek to balance the costs and opportunities of entering China.
China has long enforced a strict media and information regime. It’s unlikely that this policy framework will change any time soon. The ethical case for resisting Chinese regulation is clear. But Internet companies need to also think carefully about the business costs of conceding to Chinese rules. In addition to the threat to their reputations, there are material risks that are equally dangerous.
The Tightrope Google Has to Walk in China
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