Congress to grill US net firms on China

The US government has begun to take note of what American Internet firms are doing in China. A report in CNET’s from technology policy journalist Declan McCullagh (also now picked up by Rebecca MacKinnon, Asiapundit, etc.) says that two congressional committees are planning to hold hearings into American Internet firms’ compliance with Chinese regulations and norms concerning censorship and media management. French advocacy group Reporters Without Borders (RSF) is helping to drive the agenda:

After hearing reports that American tech giants like Microsoft and Yahoo are abiding by Chinese law mandating Internet censorship, some irritated U.S. politicians are threatening to pass laws restricting such cooperation.

Rep. Christopher Smith, a New Jersey Republican, said Thursday that the U.S. House of Representatives Subcommittee on Human Rights, which he heads, will hold a hearing in early to mid- February. Smith has invited representatives from the U.S. State Department, Microsoft, Yahoo, Cisco Systems, Google, and the international watchdog group Reporters Without Borders to speak.

The effort is designed to determine what can be done, either by legislative mandate or on a voluntary basis, to “dissociate a company from working hand-in-glove with a dictatorship,” Smith said in a telephone interview with CNET

A similar hearing is planned for Feb. 1 in the Congressional Human Rights Caucus said Ryan Keating, communications director for Rep. Tim Ryan, the Ohio Democrat leading the parallel effort. The caucus, unlike the human rights subcommittee, is an “informal” committee that is overseen by about 30 House members and includes a few hundred others, Smith among them, as supporting members.

Both Ryan and Smith are in the process of concocting new laws, which will likely take cues from recommendations issued by Reporters Without Borders and the U.S.-China Economic and Security Review Commission, a 12-member, congressionally-selected governmental panel.

Paris-based Reporters Without Borders this week backed a law banning an American company from hosting an e-mail server in any “repressive” country. It’s also suggested that American corporations come up with a joint plan for how to handle censorship requests from foreign governments, including refusal to censor terms like “democracy” and “human rights.”

The companies have defended their decisions by saying that, as multinational corporations, they had no choice but to comply with Chinese mandates.

The highlight in the above quote is added by me because I think that’s the money paragraph. This is attempt to pressure Internet companies into dissociating themselves with China’s regime, and its policies. In fact, that statement is broad enough to encompass any kind of company that does business with the Chinese government, which is to say almost any foreign company in China. The article is substantial, and worth a read.

I am going to put on my PR black hat, distance myself emotionally from this situation, and look at it from a professional point of view. From where I observe, this issue is gaining momentum, and will become increasingly important for US Internet firms doing business in China. If they handle it poorly they will either find themselves legislated out of the country or, more likely, on receiving end of a growing tide of public opprobrium. Either could cause business problems and damage brand and shareholder vale.

Back in September, when the Yahoo/Shi Tao affair was emerging, I wrote the following:

[I] wonder if it will start impacting technology firms internationally. I think back to noisy, well-organized public campaigns against companies doing business in apartheid-era South Africa, or in Myanmar. So far, the calls against tech firms complicit in censorship (and now arrests) in China have been pretty scattered, and confined primarily to the digerati rather than to the great mass of customers. That might change.

So far, most of the firms confronted have given variations on the “we comply with the laws of our host country” explanation. This is accurate and understandable, but as a PR holding statement it doesn’t do much to diffuse the perception that western tech firms are knuckling under to a repressive government in search of massive bucks. Just the thing to put college students in a righteous snit. Yahoo! hasn’t issued a statement on this situation that I can find, which is also not a great idea because NGOs like Human Rights Watch and Reporters Without Borders are busy filling the silence.

I can see the dilemma for big, listed Internet companies. Their shareholders will punish them ruthlessly if they aren’t aggressively pursuing the Chinese market. But to do business in China, they have to submit to the Chinese government, in all it’s capriciousness. These are really media companies – the only foreign media companies allowed to do business here – with real influence over Chinese people and a commensurate level of scrutiny from the authorities. But none of them will dare forsake the market on principles, and that leaves them vulnerable to [PR problems].

In retrospect, I should have said, “put college students and congressmen in a righteous snit”. The comparison with Apartheid-era regulations and public pressure is what has stuck in my mind since this issue started boiling, and I see more and more of that in the growing outcry. The spread of awareness of this situation beyond the digerati and into congressional human-rights committees will drive it further into the mainstream agenda, following already widespread mainstream coverage of the recent MSN/Anti affair. RSF is a well organized and media-savvy pressure group (as one would expect), and will certainly do its utmost to ensure that remains the case. (It’s also worth reading MacKinnon’s critique of RSF’s current, problematic petition on this issue. RSF’s site is, ahem, blocked in China, but the text of their proposal is also on Declan McCullagh’s blog.)

Just over a week ago, I wrote a post analyzing Microsoft’s motivations for keeping the Chinese government on-side. Its situation is not unique, and most American Internet companies are negotiating a similarly complex web of issues in a staggeringly complex regulatory and governmental environment. In that post, I reiterated that I would like to see US Internet companies taking a much more open approach to communicating around how and why they do business in China, and what policies they follow and will enforce. In response to that, a good friend of mine who works at Cisco (and who’s name will soon appear again in a forthcoming post on crappy automobiles) wrote a rational and thoughtful comment on why most companies, ever conscious of their legal exposure and share price, would be horrified at such an approach. It’s worth reading [note: the comment originally linked to here is no longer online -WM].

But I think the CNET article above illustrates the countervailing risks of following a strategy of opacity. When you leave space, forces opposed to your interests will likely fill it. And the more this issue penetrates into the mainstream, the more of those forces there will be. I think it’s unlikely –at least in the near future– that the US government will legislate in a way that prevents US Internet companies from doing business in China. Regardless of the outcome of congressional testimony, too many dollars are at stake, and the lobbyists will already be sharpening their policy papers and booking tables at lavish restaurants. But it is possible that legislation could be passed, and that would significantly damage or destroy the China business prospects for US Internet companies by making a huge, potential audience either inaccessible, or far less accessible (since the Chinese will simply block access to the US versions of services they don’t care for). Even if legislation is not passed, consumer pressure, in the form of boycotts or other activism, could damage the reputation and sales of US Internet companies. Third party nations more easily swayed by NGO arguments might apply their own sanctions against US Internet firms, especially if goaded by domestic competition. None of this might come to pass, but these are the risksthat should be considered.

Three things give this situation legs it might not otherwise have. First, while many US companies do business in many dodgy regimes, none of those regimes is positioned as a major strategic rival to the US. Anti-China sentiment runs high these days. If you need to be refreshed on that, review some articles about CNOOC’s attempted takeover of Unocal last year, the valuation of the yuan or Pentagon appraisals of Chinese military capabilities. As a result, China is visible in the US in a way that very few foreign countries are. Second, running a polluting refinery or setting up sweatshops in third world countries, to pick just a couple of examples, are reprehensible. However neither cuts against the grain of afundamental American value. If you ask random Americans on the street to name a freedom guaranteed by the US Constitution, chances are that “freedom of speech” will be at or near the to of list. Freedom of speech is a pillar of American national self-image, and when American companies are seen to be betraying that pillar you move into very charged and dangerous territory. Combine that with all the baggage around China and you can see where the risk comes from. (This is not, of course, solely an American issue, as VOiP operator Skype is now discovering.)

I have mixed feelings about this situation. I have used the Internet since 1993 and run my own website or blog for much of that time. My master’s thesis (in a broadcasting program) was written about the Internet in 1995, with a focus on its mass media potential and censorship and popular media issues. I spent several years working as an Internet and e-commerce consultant before moving into technology PR. I am attracted to the Internet for its media aspects far more than its ability to, say, improve supply chains or procurement. I believe that the strongest societies encourage free and open exchanges of ideas. I’m a blogger. Therefore I tend to react with visceral loathing to censorship and media controls. Hence my description of the deleting of Michael Anti’s blog in a previous post as “abhorrent”. In general, I still stand by that assessment.

Stepping back from that, however, and divorcing my natural inclination to project my Yanqui values onto China from my analysis, I come to the following conclusions:

1) American Internet firms should not quit or be drummed out of China
That is pointless for everyone involved. At worst, American Internet firms here operate subject to the same requirements as Chinese ones. At best, they offer a valuable alternative that still functions as a gateway to a wider world, even if parts of it are missing. Drive American Internet firms out and everyone goes to Baidu and Bokee, or their brethren, and you slam the door on the one area of Chinese media that is open to foreigners to any degree at this point. I am not sure how that helps to carry the standard of liberty to Chinese Internet users (assuming this is neccessary – see below), although it does deny business opportunities to American companies. Furthermore, every foreign company that operates in China is somehow in hock to the regime, if even indirectly. Are you prepared to tell Boeing, GM, IBM, Intel, GE and all the other pillars of American industry to get out of China as well? All of these companies engage the Chinese government, seek its custom and pay taxes in China. Were I one of these firms, I would be extremely worried about the precedent that pressure on US Internet companies might set.

China isn’t Myanmar, North Korea, 1980s South Africa or some other politically inconvenient backwater that can be isolated and forgotten about. It is an emerging great power and an immense US trading partner increasingly bound with America’s economy on a number of fronts. The implications of isolating it, were that even possible, run beyond inconveniencing a few American corporations and extend deep into the realms of foreign policy, economics and Asian security.

2) There are shades of gray in this situation
We see the Internet companies as different because we see freedom of speech as different — as a universal human right. But, as an intellectual exercise, let me pose the following: even in the US has limitations on freedom of speech. No libel; no obscenity; no yelling fire in a crowded theater. All of these limitations are predicated on mitigating harm (libel, false advertising) or respecting established social boundaries (obscenity). One might, then, concede that different countries and societies might set the boundaries of permissible free speech in different places based on those same criteria. Now, if you are China, and obsessed with maintaining social harmony in a fractious country of 1.3 billion, the vast majority of whom are shockingly poor, you might interpret the role of free speech in society somewhat different than developed, Western countries. Now, this doesn’t excuse locking up journalists or arbitrary censorship of politically inconvenient opinions. And it certainly doesn’t excuse cloaking regime-preservation in the trappings of respect for social boundaries. But it does serve as a warning to beware of letting ethnocentric value-creep color your arguments. China is not the US or Western Europe and it never will be.

There are also shades of gray in the prosecution of restrictions on speech. Removing blogs and filtering websites and keywords is a shame, but I will entertain a defense of it (note that this is different than agreeing with it) in the interest of keeping your business in China. Thought it might be antithetical to our values, it’s hard, without verging into philosophy, to argue that anyone is being directly harmed. However, supporting arbitrary prosecutions and application of the notoriously malleable “state secrets” law and jailing of inconvenient journalists and activists for long periods is hard to defend. Where, then, is the line of complicity that American Internet firms should not cross? When is it OK to surrender information to the authorities? Dare an American firm question when a Chinese prosecution is justified and when it is not? Probably not. As ESWN has pointed out in a post worth reading, if a foreign company operating in China is served with a legal warrant by the authorities, it probably has no choice but to comply. The PR risk in this situation –beyond the obvious– is that companies desperate to protect their interests in China may take a liberal interpretation of what represents due process in China. An informal “request” from the Chinese government may not have legal force, but in a country where government patronage is crucial to many businesses, that may not matter. The Gods of PR (dark and terrible gods that they are) help any American company found to have been surrendering information on Chinese users via extra-legal processes. That’s why it is important to articulate under what circumstances records will be turned over.

3) The debate will be framed in an oversimplified view of China
Those who argue that US Internet firms should either get out of China or reject government demands to filter content (which equals getting out of China) will likely frame the debate in very stark terms rooted in fiery rhetoric about the evils of the CCP, China’s sinister national ambitions and the need to protect universal values (a malleable concept) and to pressure China to improve its human rights. Many of the people making those arguments won’t know much about China, or will ignore nuanced reality in the pursuit of powerful headlines that can advance agendas. (Example: here are the digerati of Boing Boing with a satirical image that aptly demonstrates how even US cultural sophisticates view China.)

China’s government is pretty awful in a lot of obvious ways, but it is not some cackling, cartoon vulture perched atop the nation. It is not a caricature dictatorship or a Kim Jong-il-style one-man fiefdom (at least, not anymore). For all its problems, the government here has genuine ambitions for improving the country. But it governs 1.3 billion people –that’s four USAs–, two thirds of whom are desperately poor and many of whom speak different dialects, and who are beset by a range of tensions and deeply structural problems. Furthermore, the Chinese government cannot rapidly escape the legacy of its origins. It is factional and divided and there is often a pronounced lack of common cause between the central government and provincial and local governments. Progress will not be smooth or even.

But there is progress. Consider where this country was thirty years ago, when it was just emerging from the Cultural Revolution. In the space of one generation it has gone from complete isolation and destitution to a fair state of development and engagement with the world. The target audiences that US Internet firms are trying to reach are the children of people who lived through Cultural Revolution as youths. To make this example more accessible to Americans, basketball player Yao Ming’s mother was a Red Guard. Think about the progress this represents. Where once there was uniform poverty there is now growing prosperity. Where once there was isolation there are deepening international connections. Where once there was only state controlled  propaganda there is now a lively and growing commercial media, and a fair amount of access to international media. This doesn’t excuse the bad things that the government does, but it highlights that we are not talking about a Myanmar-style irredeemable military dictatorship or a sub-Saharan kleptocracy busy reducing its people to ever greater penury.

4) Chinese Internet users may not need or want to be rescued by us
When MSN killed off Michael Anti’s blog he didn’t need help from an NGO to move to Blog City (blocked in China, I note with some irony). Chinese people aren’t idiots or naifs wandering in the wilderness, waiting to be lead to civilization by foreigners. Certainly in my office they discuss government control and management of information matter-of-factly (of course, they are all also media experts).

We westerners seem to be conflicted in how we feel about China. We have an idealistic conviction that the simple flow of our ideas and culture and the relentless march of technology will somehow precipitate change, yet we can’t resist an interventionist desire to actively impose our values. At the same time we mythologize China into something unknowable and impenetrable. The result is that no matter what we do we risk patronizing the Chinese Internet users we want to help, and driving them further away.

Imposing foreign activism on China has a pretty dismal record of failure. In a country where nationalist sentiment runs high and is easily provoked, it is liable to backfire. Imagine for a moment that American Internet firms are drummed out of China by legislation or activism. My guess is that Chinese youth would not swell with admiration for courageous, highly-principled foreign companies. Rather, they would likely seethe with nationalist contempt for companies that don’t “get” China and for foreign governments that are trying to dictate what is good for China. That won’t do wonders for dialogue. I can tell you who would be happy though: Bokee (who launched a devastatingly self-interested attack on MSN prior to Anti’s removal, as reported here by ESWN) and other Chinese blogging engines who would be pleased to see off foreign competition.

Not that they need to at the moment. Most Western Internet companies in China are not doing very well. In the grand scheme of forces affecting China, the inclination of American (as opposed to Chinese) Internet companies to toe the censorship line is so far down the list as to be nearly beneath concern. The free operation of China’s domestic mainstream media ranks substantially higher. Although the two issues are tangentially connected via the Shi Tao case, US Internet companies and American interventionism are probably not the key to freeing Chinese media. (Howard French’s recent International Herald Tribuneopinion piece on China’s information control efforts is worth reading.)

What does all this mean for communication?
I have said many times that the “just obeying local laws” excuse, widely used by American Internet firms when they explain their compliance with Chinese censorship requirements, is inadequate. It is inadequate because it ignores the visceral reaction that their American stakeholders have to issues of censorship and free speech and the emotionally and politically-charged complexities of all issues China, especially in the United States.  American Internet companies need to start communicating better now how they see this situation, why they feel it is justified to do business in China, why they will conform to local regulations, why this is not selling out American values, and under what circumstances they will reveal customer information or communications to governments. They need to do it before they are on the defensive in congressional hearings, when everything they say will be greeted with skepticism reserved for the proclamations of those already convicted in the press.

While they are communicating, US Internet companies need to be mindful that their audiences include the US government, their US customers, the Chinese government and Chinese customers and that public messages must be considered in that context. US Internet companies need to be prepared to act as rational advocates for China, aware of its problems while resisting attempts to demonize the country or oversimplify its situation. They need to understand China well enough to be able to explain its complexities to foreigners who might otherwise take a simplistic, emotionally charged view. They must be able to provide context for their decisions without condescending to their Chinese customers or to western stakeholders who have legitimate concerns about what their national business champions get up to abroad.

Most important, they need to remember that this is a situation driven by social values, and values have to figure in the communication, if even in explaining why they have to be applied differently in different times and places. The terse “obeying local regulations” reply is insufficient because it leaves the values part of the equation unaddressed. As long as that “values” hole in the communication is not filled by Internet companies, others, such as RSF or anti-China agitators in the US, will start filling it themselves.

This approach won’t stave off confrontation or debate about this issue, and nor should it. Part of believing in free speech is believing in the value of the debate. But it will put Internet companies in a better position to answer the accusations that will inevitably be flung their way as the rhetoric grows hotter.

Update: At the risk of creating a circular link, it’s worth reading Roland’s post on this issue at ESWN. His capsule intro: “If the subject is about Chinese Internet censorship, then this had better not be a decision made by the US Congress, Reporters Without Borders, Cisco, Yahoo, and Microsoft.  It would seem that you better ask the Chinese Internet users themselves.  I assert that they couldn’t care less about Yahoo but the loss of MSN Spaces would be a blow.”  Go check it out.

Also, Danwei’s metaphorical take.

Also, for balance, Daai Tou Laam Diary’s different take on this issue, including his deconstruction of my own arguments. Apparently I’ve made it to “arrogant China hand”, thus fulfilling one of my childhood ambitions. Not bad for only a year-and-half in China. Also in trackbacks, below.

Disclosure: Imagethief is a strong believer in freedom of speech and feels that censorship generally does far more harm than good in a society. I believe that China would benefit greatly from a more open and unfettered discourse, that the arbitrary jailing of journalists and activists is appalling and that universal human rights carry the label “universal” with some justification. My point behind writing this is not to disavow my own strong affinity for free speech or my anxieties about the complicity of American firms in practices I personally finds reprehensible, nor is it to be an apologist for the brutalities Chinese regime or for censorship. My point is to explain why I feel this is a much more complex and nuanced issue than it is generally made out to be and, thus, to illuminate some of the communication challenges and explain why current communication efforts are inadequate.

Imagethief does not represent any companies currently caught up in this issue. He does, however, represent other companies that do business with the Chinese government.

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