Imagethief stumbled blearily to his computer this morning expecting a relaxed scan of the news but found the Chinese Twittersphere ablaze with the news of Google’s bombshell blog post, which went up in the middle of the night early this morning our time. Titled “A new approach to China”, the post, by Google’s Senior Vice President for Corporate Development and Chief Legal Officer, David Drummond, was essentially a public threat to withdraw from China. As such, it was as direct a challenge to the Chinese authorities as I have ever seen in a piece of public corporate communication.

The first half of the post discusses alleged hacking attempts on Google, apparently with the aims of both recovering Google source code and accessing the Gmail accounts of dissidents. But the second half of the post is more interesting. The money grafs below (emphasis mine):

We launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results. At the time we made clear that “we will carefully monitor conditions in China, including new laws and other restrictions on our services. If we determine that we are unable to achieve the objectives outlined we will not hesitate to reconsider our approach to China.”

These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

No doubt a great deal has transpired behind the scenes in the lead up to this announcement. To save time, here’s what I don’t know:

• Whether this is linked to rumors of Google’s possible withdrawal from China and staff exodus that circulated several weeks ago.
• The relative weights of the hacking issue, censorship issue and Google’s business struggles in China in leading the company to make this statement.
• What, if any, discussions Google had with Chinese authorities prior to making this statement (they speak of discussions “over the next few weeks”), or whether there are actually continuing negotiations.
• Whether recent blocks of Google Docs and Google Groups in China contributed to this decision.
• Whether Google would have done this if their business in China was stronger. China contributes a minuscule portion of Google’s revenue.
• What will actually happen to Google’s business in China in the long run.

Here is what I do know:

Google has taken the China corporate communications playbook, wrapped it in oily rags, doused it in gasoline and dropped a lit match on it. In China, foreign companies tend to be deferential to the authorities to the point of obsequiousness, in a way that you would almost certainly never encounter in the United States or Europe. Scan any foreign company’s China press releases and count the number of times you see the phrase, “commitment to China”. Demonstrating “alignment with the Chinese government’s agenda” is an accepted tenet of corporate positioning and corporate social responsibility work in China. This is testament to the degree of direct power that the Chinese authorities wield over the fortunes of foreign businesses in China. Even when foreign companies are in dispute with the Chinese government they tend to offer criticism obliquely as long as they have a business stake or operations in the country. Note, for example, the scrupulous diplomacy of Rio Tinto’s communications concerning the detention of its employees last summer, a far more serious situation than anything Google has encountered (although also with far more money at stake).

In this situation Google has undertaken a bet-the-farm confrontational communications approach in China. They will not have made this decision lightly. Dressed up in the polite language above is what is essentially an ultimatum: Allow us to present uncensored search results to our Chinese users or we’ll walk. The Chinese government is not likely to cave to an ultimatum from a foreign company, no matter how decorously delivered. As Richard Waters of the FT has pointed out, the language does leave some wiggle room for further negotiation. However, Imagethief cannot imagine a circumstance in which the Chinese government will give Google free reign, especially in the current, highly restrictive climate for Internet services. Barring some surprising developments, the clock would therefore appear to be ticking for Google.cn, if not Google’s overall operations in China. It will be very interesting to see how this plays out.

Would Google continue with an office in China if there was no Google.cn site? They could still conduct R&D here, for instance. But Google’s R&D operations in China have been troubled (remember the Sogou IME scandal?) and if the security issues are taken at face value continuing operations here in the absence of a local business to support might simply be extra risk. Consider how many China R&D operations are “PR&D”, designed to demonstrate that essential “commitment to China” in support of a revenue-generating business in China. It’s not that real R&D doesn’t happen here, but how many companies do high-level, primary R&D in China in the absence of an on-shore business and supporting government relations program? And could Google attract talent to a pariah operation? Distraught Chinese netizens are already laying flowers at Google’s China headquarters.

The Wall Street Journal’s story (sub) on the unfolding situation makes some interesting points (emphasis again mine):

The common assumption, however, is that no matter how onerous the limitations and challenges faced by foreign companies in China, the market is too big and important to walk away from.

That calculation has forced a number of foreign firms to accept conditions in China that they might not tolerate elsewhere. The country has 338 million Internet users as of June, more than any other country.

Google would be the most high-profile Western company in recent years to draw a line under the kind of compromises it is prepared to make and walk away from China.

It would be an extremely rare case of a foreign company taking a stand on human rights, and placing that issue over commercial considerations. A number of foreign companies exited China after the Chinese army crushed student protesters around Tiananmen Square in 1989. But they mostly came back in the following years.

A Google withdrawal would also be an implicit rejection of the argument made by many technology companies that their presence in China overall helps expand access to information for Chinese citizens, despite censorship.

That’s the very last line in the story, but I found it one of the most interesting. If you followed the original justifications offered by many American Internet companies for launching businesses in China, or the congressional hearings on the matter in 2006, you will recall that the argument that even a censored presence in China improved access to information for Chinese Internet users was central. If Google repudiates that argument it will put pressure on other American Internet firms currently toeing the regulatory line in China, especially Microsoft, and weaken one of their core public arguments for a continued presence in China. Then again, it may also represent an opportunity for them. After all, “Google” doesn’t phoneticize well in Chinese, as the flap over the “谷歌” branddemonstrated. But “Bing” works quite nicely indeed.

This only the latest chapter –albeit potentially a critical one– in the very interesting story of Google in China. Someone needs to write the book. Anyone want to step forward for that?

See also:

• Rebecca MacKinnon’s roundup of responses.
• James Fallows’ analysis on how this development fits into a broader picture of increasingly tense economic relationships for China.
• Sarah Lacy in TechCrunch, citing tweets from both Bill Bishop (@niubi — now also blogging again at Digicha) and Marc van der Chijs (@chijs).
• Brief US State Department statement.
• CNBC interview with David Drummond (Video – also embedded below): “We’re not saying one way or the other whether the attacks were state sponsored…” Note also the silly use of the word, “cyberterrorists” by the interviewer.
• Brief, relatively straightforward report from the People’s Daily online (Chinese).
• Chinese telecoms analyst Xiang Ligang calls it “psychological warfare”, doesn’t think Google will pull the trigger, and doesn’t think it will be a cataclysm if they do (if I read it correctly – Chinese).

Updates:

• On the corporate communications aspect, this quote from Jonathan Zittrain of Harvard’s Berkman Center, in a Mercury News story (via Jeff Jarvis’ BuzzMachine):

“In a world in which we are so used to public relations massaging of messages, this stands out as a direct declaration. It’s amazing,” said Jonathan Zittrain, professor of Internet law at Harvard Law School and co-director of Harvard’s Berkman Center for Internet & Society.

• Jeremy Goldkorn (of Danwei) at the Guardian:

The fallout will be interesting. I can’t recall a single case of a major international company with operations in China taking a stand like this. As someone who agreed with Google’s reasoning when it entered China, I also support this move. If it cannot operate here in accordance with its global standards, it should leave. I have given up on getting my own website unblocked by the government and am resigned to the fact that it’s only accessible to people who are outside China or know the technical tricks to get over the Great Firewall.

I’d rather be outside the wall and free than inside it with the icy hand of the censor around my throat.

• Wired’s “Threat Level” blog on some of the considerations within Google (via @kaiserkuo).
• Full disclosure: Imagethief is a supporter of foreign Internet services operating in China. Elaboration in this comment, below, in response to a point from a reader.
• Isaac Mao’s open letter to Google (English), via Harvard’s “Difficult Problems in Cyberlaw” blog.
• Xinhua English report on the statement: “‘It is still hard to say whether Google will quit China or not. Nobody knows,’ the official said.”
• Gady Epstein’s column on Forbes.com: “Dreams of Internet openness in China appear to be a fantasy.” Indeed.
• Evgeny Morozov punctures the feelgood balloon at Foreign Policy: “If…you believe that [Google] did the right thing in China by offering their limited service (rather than no service at all), I don’t see how this move could make you feel good…”

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