Imagethief

Tag: Internet

  • What if Yahoo abandoned China?

    If you grew up in the US reading Marvel Comics, like Imagethief, you may remember the old What If? series. In What If? the fates of Marvel superheroes were projected into alternate realities. It made for some pretty good stories as the conventions attached to characters you knew and loved were overturned. I had one issue where Conan the Barbarian was stranded in the 20th century, became leader of a street gang, kicked Captain America’s ass and was ultimately invited to join the Avengers. The classic What if the Hulk had Bruce Banner’s brain? made it into the Best of Marvel Comics anthology. It’s fun to play those kind of conjecture games, knowing that at the end of the day you’ll snap back to reality (or your regular monthly subscription) and everything will be just how you left it.

    I thought it might be fun to play this game with Yahoo, which has paid the worst price in terms of PR and brand damage for its association with China. Yahoo has been repeatedly vilified for its conduct in China, taking it on the chin from New York Times columnistNicholas Kristof (via Peking Duck), power-blogger and Global Voices supremo Rebecca MacKinnon in one of her angriest posts ever, and others. Much of Yahoo’s trouble has stemmed from their implication not only in filtering and censoring their China results, but also in turning over information from e-mail accounts belong to Chinese journalists to the Chinese authorities.

    Like all the major Internet companies who have been caught in this scandal –Google and Microsoft included– Yahoo’s response has been wholly inadequate to the challenge. All of the American companies involved have concentrated on legal defenses and studiously ignored the question of values. That is a mistake that their critics, such as Reporters Sans Frontiers (RSF), are not making. Just last week, RSF administered another slapping with the following announcement (proxy link), based upon a modest research project:

    Yahoo! clear worst offender in censorship tests on search engines

    Reporters Without Borders said it found Yahoo! to be the clear worst offender in censorship tests the organisation carried out on Chinese versions of Internet search engines Yahoo!, Google, MSN as well as their local competitor Baidu.

    The testing threw up significant variations in the level of filtering. While yahoo.cn censors results as strictly as baidu.cn, search engines google.cn and the beta version of msn.cn let through more information from sources that are not authorized by the authorities.

    ***

    The press freedom organisation is particularly shocked by the scale of censorship on yahoo.cn. first because the search results on “subversive” key words are 97% pro-Beijing. It is therefore censoring more than its Chinese competitor Baidu.

    The accompanying spreadsheet can be downloaded from RSF here.

    As a PR practitioner, Imagethief is well acquainted with the PR research study, and RSF is nothing if not masterful at PR. Media love a good study, especially if it smacks of statistical authenticity and touches nicely on a controversial topic. In fact, last week’s issue of the PR industry weekly “The Holmes Report” devoted itself to a condemnation of PR studies, due to the alarming number of shoddy studies and the ease with which statistical illiteracy can be taken advantage of. Naturally, RSF’s study, cursory though it was, has been widely reported upon in the mainstream media, along with RSF’s sharp messages. Wired News carried the following money quotes from Julien Pain, RSF’s “Internet Freedom desk chief”:

    “We simply found out that Yahoo was even worse than its local competitors,” [said Pain]. “Google.cn is censored, but it’s far less than what Yahoo does.”

    ***

    “Yahoo has absolutely no respect for freedom of information,” Pain said.

    Ouch. In fact, that’s probably not true. The guys at Yahoo probably have a lot of respect for freedom of information, and they’re probably wondering how they, a bunch of well-meaning California nerds and one ex-Hollywood mogul, got themselves into this situation and how they can get themselves out of it with minimal damage . However they’re not communicating any of that doubt to the media, who have been resolutely stonewalled in their attempts to secure comment on this report from Yahoo. A scan of Yahoo’s press releases and media information shows no acknowledgment that this report exists at all. For a company that is all about new media, they seem pretty blind to the consequences that not engaging with their plugged-in audience about this issue may have on them. Have a look at the 1300 link cloud for Yahoo+China on Yahoo-owned Delicious.

    Just because the study is cursory and shallow doesn’t necessarily mean it is wrong. Rebecca MacKinnon has done a long and interesting post examining RSF’s results and attempting, with some success, to replicate them. She supports RSF’s overall conclusions, and makes an important point which strikes at the justification that the US Internet companies and even I have wielded in support of their continued presence in China:

    This issue of who is responsible for the loss of service problem, however, does not detract from RSF’s clear and in my view correct point, which is that the Chinese user is probably no better off with Yahoo! being in China than if it ceased operating there.

    If Yahoo! is going to keep on like this, they might as well just change the name of their Chinese service to that of their Chinese partner Alibaba,which now runs Yahoo! China anyway. Then at least they’d be a bit more honest with Chinese users about what they really are.

    More seriously though, the biggest concern is that according to my sources in the industry, Google and MSN are feeling a lot of pressure from Chinese authorities to be just like Yahoo! China. Employees of certain competitors do not hesitate to tattle on Google and MSN in order to gain competitive advantage. So the point is this: Unless companies band together and push back against Chinese government censorship pressure, it’s going to become a very rapid race to the bottom.

    The emphasis above is mine. As compelling as Rebecca’s point is, there is a weakness in suggesting that the main competitive benefit that overseas search engines offer Chinese users is access to controversial information censored by the Chinese government. That is counter to how the vast majority of Chinese surfers will use these services. It also assumes that the search engines are equal in all other respects which, as any user of search engines knows, is simply not the case. A Chinese user who is researching a completely mundane topic may still find that Google’s Chinese service or Yahoo China provides more relevant results than Baidu or Sohu or another Chinese search engine. So far, US Internet companies have been scrupulous in not suggesting that their prime benefit to Chinese users is access to controversial material, a move that would likely be poorly received by the Chinese government. But nor have they done a good job of articulating what benefits theydo bring to Chinese users. Combined with their failure to adequately address the moral conundrum of operating in China –as opposed to the legal conundrum, which has been beaten to death– they have left a nifty vacuum for for their detractors to fill. They do not, nor have they ever, controlled this debate.

    That aside, Rebecca is bang-on in suggesting that Yahoo China might be more honest if they changed their name to Alibaba Search. This cuts to the heart of Yahoo’s problem in China: it doesn’t actually own or control Yahoo China. Rather, it owns 40% of Chinese Internet company Alibaba, which it bought as part of a deal widely interpreted as paying Alibaba to take the failing Yahoo China portal off their hands. Right now that is looking like the worst billion dollars they ever spent.

    Let’s be clear: Alibaba is not evil. It’s a perfectly fine Chinese technology company run by a flamboyant Chinese entrepreneur, Jack Ma. The company does nothing sinister (at least, not that I am aware of). It simply operates the way it has to as a Chinese company subject to Chinese laws. Although it is now based in Hong Kong, it was founded in Hangzhou, Mr. Ma is Chinese and its pedigree remains thoroughly Chinese. Although some aspects of the business are international, including the English language version of its namesake trading portal, most of its services are China oriented and most of its success comes from China.

    The original Yahoo press release announcing the deal with Alibaba makes heartbreaking reading in retrospect. So much optimism. It also suggests why Yahoo Corp will continue to have problems with Yahoo China. Yahoo Corp owns 40% of Alibaba, with 35% voting rights (a minority, it scarce needs be pointed out). Yahoo holds one of four board seats, against two from Alibaba and one from Softbank. Essentially, they’ve surrendered management of their brand in China to an organization over which they have little control, and which has, in turn, little stake in what happens to the Yahoo brand everywhere else in the world. Yahoo China is a bit player in the China portal scene to begin with, and –taking my colleagues as a sample– your average Chinese Internet user is completely inured to outrage over Internet censorship, which is seen as an essentially normal part of government function and a minor inconvenience to be dealt with as best as possible. (This also raises the interesting question of how the role of journalists is perceived in Chinese society, and how that perception differs from the the Western “fourth estate” role that is at the core of RSF’s mission and assumptions. But that’s a topic for another time. For the record, I’m a fan of the “fourth estate” approach.)

    As for Mr. Ma’s personal stake in Yahoo’s PR problems, an acquaintance of mine, a seasoned Chinese PR pro with long experience in the China technology industry, summed up the situation thus: “Jack Ma’s baby is Alibaba. He doesn’t give a shit about Yahoo’s problems in the United States.” It’s hard to know how true that is without being able to peer into Jack Ma’s skull (a privilege I’ve not been afforded), but it’s certainly believable.  But what’s definitely true is that the average western Internet user doesn’t know or care about the ownership and control structure of Yahoo China. For them, as for RSF, the Yahoo brand is monolithic. Yahoo’s transgressions in China are Yahoo’s troubles globally.

    So what is Yahoo to do?

    What if?
    Last week I had lunch with another China PR pro from a competing company. As you do in these situations, when the Diet Coke begin to flow and tongues loosen, we got onto the topic of US Internet companies’ travails in China. We talked a bit about Sergei Brin’srecent woolgathering about whether Google had made the right decision in going with Google.cn. In the course of the discussion my dining companion suggested that Google ought to follow through on Brin’s statement, close Google.cn and tell American and European audiences that it had been a mistake to compromise their principles to enter China. A retreat, yes, but one that might boost their brand significantly overseas at the debatable cost of the business opportunity for them in China. (Like all other US Internet brands in China, Google does not lead its segment. eBay, Yahoo China and MSN China are similarly second best or also-rans in their respective spaces.)

    Let’s transplant that discussion to Yahoo. What if Yahoo simply kissed-off China? I am not a financial expert, I’m a spin doctor, so take all the following with a grain of salt. Yahoo would have to divest themselves completely of their stake in Alibaba, or announce their intentions to do so within the limits of their contractual obligations. Alibaba isn’t publicly traded, so this would mean finding a private equity buyer or buyers willing to spend probably less than what Yahoo paid to take the stake off their hands (they’d smell a distressed sale) . Alibaba already returned Yahoo’s capital to shareholders, so, although Mr. Ma may be the largest shareholder and, thus, the largest beneficiary of that distribution, Alibaba itself might not be able to buy the stake back unless they took on debt to do it. Yahoo’s ability to sell on their Alibaba stake might also be subject to the approval of Alibaba’s majority shareholders, which could complicate things. But an announcement of intent could be the first step.

    Part of the deal would have to be that Alibaba drop the “Yahoo” brand name from the China portal. Since, despite its struggles in the China market, there is perceived value to the Yahoo name they would probably be able to wring some extra concessions from Yahoo. Forget for a moment that Yahoo essentially paid Alibaba to take over Yahoo China — that wouldn’t matter any more. Yes, Yahoo would pay to get in and pay to get out. That’s price of not seeing this coming. Yahoo would officially withdraw from China and close their China rep office, if they still have one. They would maintain Yahoo Hong Kong and a simplified Chinese site hosted offshore and carrying the full contents of Yahoo’s index. If the Chinese government chooses to block it, so be it.

    Yahoo’s management –by which I mean the founders and the CEO– would also have to publicly explain their decision in terms of values, and what role they see for Yahoo in society. They would also have to review their operating policies in less visible cases of censorship around the world (although a quick glance at the map shows few other Yahoo locations likely to be as problematic as China). It would be a hard climb-down, but necessary.

    As part of this, they could create and publicize a clear manifesto of what conditions Yahoo will operate and offer its services under, and what position it takes with regard to Internet censorship. Ideally, these would be clear and uncompromising. I notice that there is nothing of the sort on Yahoo’s “core values” statement.

    What would Yahoo lose? 40% of Alibaba at the cost of a few hundred million. Not chump change, but probably not lethal for a company that has bought Flickr, Delicious and such in in the past year and that had nearly four billion in the bank at the end of Q1. They’d also say goodbye to a China market in which, let’s face it, they were destined to be a bit player for some time to come. Possibly forever.

    What would they gain? An end to these brand-scarring attacks from RSF and other NGOs, a chance to climb back on the moral high horse and to claim to have set an example for other Internet firms. A chance to remind everyone, under the banner of the Yahoo brand, of what is best about the Internet and what it can bring to people. A chance to show that there are limits to the compromises they are willing to make. A chance to take back control of this issue and make Yahoo the visible advocate for an uncensored Internet. So, what is their brand worth to them?

    As further mental exercise, imagine if all the US Internet companies operating in China did the same thing. It would be a shocking public rebuke to a Chinese government that is increasingly image conscious in the run up to their 2008 coming-out party. It would be a reminder that if China really wants to be an enduring International business power, it will have to think about what global integration means in terms of access to information. The Chinese government would not, of course, be expected to make any accommodation for the moral qualms of troublesome foreign Internet firms. But as the Internet becomes an increasingly important tool for doing business it would have to ponder the level of inconvenience it is willing to foist on international businesses that are used to doing business in China much as they would in any other country. (One other thing that my lunch companion and I discussed was the theoretical possibility of Google setting up a paid “premium” service for business customers in China, operating from a separate, private URL and providing full, uncensored access to Google’s services. Think of it as the poor man’s Factiva.)

    Back to reality
    Nothing on the scale of what I have suggested will ever happen. Time to put the comics away and come back to reality. We live in a world of compromise, and businesses are master compromisers. That’s one reason why PR people are seldom out of work. Any company that did what I suggested above could expect to find itself banned from China for the foreseeable future. In Microsoft’s case, this might extend to their bread-and-butter software sales, which are looking up in China after several dismal years. The China market still glitters too much for Internet firms to write it off, and most are willing to bend their principles in the name of grabbing a handful of that glitter.

    But one firm that has found itself back-footed for months, and which has increasingly little to lose and much to gain, might still consider it.

    Disclaimers
    Imagethief does not service any American Internet firms that operate in China.

    Imagethief has generally been a supporter of US Internet firms entering China, even considering the compromises they have to make. His oft-stated belief is that it is better for them to be here than not, and that more choice is always good. On the other hand, he is not averse to reviewing that stand from time to time.

  • The disappointing silence from the top

    It’s been nearly two weeks since representatives of Cisco, Microsoft, Yahoo and Google testified before the House Subcommittee on Human Rights about their various entanglements with China. As expected, after blowing hot in the run-up to the testimony, coverage has cooled a great deal. Unless there is substantial progress with Rep. Chris Smith’s proposed legislation, the issue will probably stay cool until the next crisis moment emerges. But emerge it surely will.

    I read the written testimony submitted by the four companies, although I’ve not read a full transcript of the Q&A. All the companies pretty much responded as expected. They all, without fail, talked about the transformative power of the Internet and the benefits it is bringing to China. They all tried to explain how they’ve weighed the implications of being in China.

    They also all addressed the specifics of their individual cases. Cisco explained that it sells the exact same equipment to China that it sells to anyone else, without special modification, and that the technology that enables content filtering is the same that enables network security. Yahoo addressed the Shi Tao case, and the fact that operational control of Yahoo China lies essentially entirely with Jack Ma’s Alibaba.com (a risk that may haunt them in future, since it may place the brand at risk). Microsoft discussed the Michael Anti case. And Google, of course, discussed the considerations that went into the recent launch of their self-censored google.cn site, as well as the ongoing drop in their market share that they feel is rooted in filtering-based performance issues.

    It was thoughtful, rational and articulate. It was full of motherhood statements about the Internet company values. It was, in short, exactly what you’d expect from three general counsels (Microsoft, Yahoo and Cisco) and a vice president of global communications (Google).

    For instance, here is Microsoft Associate General Counsel, Jack Krumholtz:

    Will the citizens of that country be better off without access to our services, or will their absence just vindicate those who see our presence in the country as threatening to their official or commercial interests?

    And Yahoo General Counsel, Michael Callahan:

    First, our principles. Since our founding in 1995, Yahoo! has been guided by beliefs deeply held by our founders and sustained by our employees. We believe the Internet can positively transform lives, societies, and economies.

    These were all the messages that needed to be delivered. But I see two problems. First, as expected, they lost the war of imagery and emotion. Out of necessity, the companies needed to be defensive and rational. Unlike their interrogators, who are playing to voters only, they are playing to three separate constituencies: the general public who are their customers and advertisers; the shareholders to whom they have fiduciary obligations; and the Chinese government, who was no doubt watching very carefully. Addressing all three of those audiences requires a measured and diplomatic approach. But in the war for general public opinion, they are then left contending with statements like this from Representative Chris Smith:

    Through an approach that monitors, filters, and blocks content with the use of technology and human monitors, the Chinese people have little access to uncensored information about any political or human rights topic, unless of course, Big Brother wants them to see it. Google.cn, China’s search engine, is guaranteed to take you to the virtual land of deceit, disinformation and the big lie.

    But the worst came in an act of confrontational demagoguery from Congressman Tom Lantos, a man who represents Imagethief’s home constituency in the San Francisco Bay Area, who carries the unimpeachable aura of a Holocaust survivor (a fact cited in most articles I read about his participation in the subcommittee) and who has long taken a dim view of China’s government (opposed WTO entry, opposed awarding the Olympics, etc.).  Lantos notoriously called all four company representatives on the carpet, asking each in turn if he was ashamed of the actions of his company. From a longer transcript on CNET:

    Rep. Tom Lantos: Can you say in English that you’re ashamed of what your company and what the other companies have done?

    Google: Congressman, I actually can’t, I don’t think it’s fair for us to say that we’re ashamed.

    Lantos: You have nothing to be ashamed of?

    Google: I am not ashamed of it, and I am not proud of it…We have taken a path, we have begun on a path, we have done a path that…will ultimately benefit all the users in China. If we determined, congressman, as a result of changing circumstances or as a result of the implementation of the Google.cn program that we are not achieving those results then we will assess our performance, our ability to achieve those goals, and whether to remain in the market.

    Yow. Trapped. A seven word question that will stick in everyone’s head, and an eighty-three word response that no one will remember, but precious few better options considering those three different constituencies. Maybe I’m getting conservative in my middle-age (I’m a longtime liberal Democrat), or maybe the CCP is spiking my drinking water, but I didn’t think much of Mr. Lantos’ approach. Here is another statement, from the press release Lantos issued the day before the hearings:

    “The hugely successful businesses that come before Congress tomorrow will have to account for their complicity in China’s culture of repression, and to begin to make amends,” Lantos said. “Government can be expected to do only so much. It is up to these wealthy entrepreneurs to help ensure that the free flow of information from which they have profited is offered worldwide.”

    Well, aside from the fact that the final statement is patently wrong, this does raise a very interesting question that cuts to the heart of my complaint about how the companies dealt with the hearings. While I don’t think the wealthy entrepreneurs have any obligation to ensure that a free flow of information is offered worldwide (that ignores political realities that extend far beyond China and in cases may simply not make business sense), I am a little mystified as to their silence.

    Here is why. The technology industry suffers from an interesting syndrome. It is a time honored practice among tech companies to build founders and CEOs up as evangelical prophets of the transformative power of technology, which is promoted as revolutionary and encompassing in a way that, say, shipping, fast-moving consumer goods, cars, energy, and so on are not. No industry is more susceptible to the CEO/founder cult of personality or mystique, and no industry more flagrantly positions founders and CEOs as “visionaries” than the tech industry does. This is especially important in the Internet generation of companies, all of whom were created in the last fifteen years and are still led by founders. It is only slightly less true for Microsoft.

    The cult of the youthful billionaire genius touches three of the four companies involved in these hearings. Bill Gates of Microsoft may be the pre-eminent technologist of the age. Jerry Yang and David Filo of Yahoo are famous and highly visible, as is CEO Terry Semel, a Hollywood veteran who knows a thing or two about showmanship. And Sergey Brin and Larry Page of Google are in a league all their own. Cisco may suffer from less of this syndrome because, although it is young and CEO John Chambers is well known, it is not first and foremost a consumer oriented firm as the other three are.

    Where were all these Internet visionaries as this storm broke?

    This is an important question because, Cisco aside, these firms are all, for better or for worse, closely associated with the personal values of their highly visible founders. Those values are part of what defines their public images and brands. This is especially true of Google, where the relationship between the founders’ values and the company’s values are formalized in the “Don’t Be Evil” mantra that has become such a millstone during the controversy. On page 211 of David Vise’s book, The Google Story (as unanalytical a bit of hagiography as you will find), it is recalled that:

    Stanford Professor Terry Winograd says that Segey [Brin] has lead the way on three Ps: Policy, Politics and People. (When once asked what the motto Don’t Be Evil meant, CEO Eric Schmidt famously replied that evil is whatever Sergey says is evil.)

    And on page 257 it says.

    [Google’s] very motto, Don’t Be Evil, was a thinly veiled way of letting the technologists of the world know that Larry and Sergey were not just the Google Guys, but the Good Guys, who did the right thing for users and employees and had fun too.

    That’s channeling founders’ values through the company, and using them to build the brand. Michael Callahan of Yahoo does the same thing in his testimony, quoted above. And it makes the silence of all these technology luminaries in the breach seem odd and  somehow discordant.

    One of the most common requests that crosses Imagethief’s desk is for communication plans to help technology executives position themselves as “thought leaders”. Unfortunately, “thought leadership” is an often abused concept in PR, with salesmanship, cheerleading and banality often masquerading in its place. The most interesting proposals are often rejected as too risky. Certainly thought leadership is easier when times are good. But it’s important when controversy arises, such as now. On the table is one of the most important issues of our time: what is the relationship between a commercial Internet and the right to freedom of speech, and should the American companies who are driving the evolution of the Internet be considered international custodians of that right?

    Leadership is about risk (something that these entrepreneurs all know). Thought leadership is about intellectual risk. If it is unlikely to be argued with or shouted down, it’s probably not thought leadership. This was an opportunity for thought leadership if ever there was one. But there was little thought leadership to be had. That is a shame, because I am sure that all of these phenomenally bright and opinionated technologists are thinking deeply about this issue and debating it inside their companies.

    But maybe there was no other choice. As I noted above, the companies are burdened with three different audiences, each of which has a substantially different interest in this situation. Consumers and advertisers want to feel good about the brands of the companies they patronize. Shareholders want growth. China wants foreign firms to toe the line and avoid controversy. Employees may even constitute a fourth important group in this kind of situation. That puts the companies in a supremely delicate position, where every public communication has to be considered from multiple angles if a disaster is to be averted.

    But if you build your brand on the company founders’ values and leadership, and they then remain silent when those values are being questioned and leadership is most necessary, then your brand is at risk. And, in the meantime, people with fewer stakeholders to please will hammer at you from all sides.

  • 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 News.com 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 News.com.

    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.

  • American Internet firms in Chinese peril

    I like talking with journalists because, naturally, they have a way of asking interesting questions. The same journalist who got me thinking about corruption in PR hit me with a poser while we were talking:

    “Name a successful American Internet firm in China,” he said.
    “Well,” I answered, “there’s always…er.” And I thought about a bit.
    “What about…nah, they’re not doing so hot.” And I thought about it a bit more.

    Ok, so there isn’t one. American Internet firms are, by and large, doing badly in China. The whys and wherefores of this could fill a few posts, but a few reasons come to mind:

    • Arrogance
    • Poor communication
    • Lack of understanding of Chinese culture, reflected in interfaces, communication tools and services provided
    • A preference for local products among Chinese Internet users

    The large portals are, of course, media firms, and they have also been victimized by many of the same things that have bedeviled traditional media firms coming into China, such as a strict regulatory regime and a sense that the services offered here are sanitized versions of the real thing. While local Internet firms are subject to the same restrictions, they seem to be able to manage appearances better. I think this is in part because they benefit from the (correct) perception that they serve the Chinese audience first. Every time a foreign Internet firm gets involved in a censorship or other scandal, it reinforces that perception. Plus, a little “root for the home team” nationalism goes a long way in China.

    Two bits of recent corporate communication illustrate the problems of foreign Internet firms in China, in different ways. The first is a statement issued by Yahoo! Hong Kong (not China) in response to the controversy over the turning over of Chinese journalist Shi Tao’s e-mail to the Chinese police, and his subsequent arrest. Here it is:

    Yahoo! Hong Kong Statement
    18 October 2005

    As a company operating in the jurisdiction of the Hong Kong Special Administration Region, Yahoo! Hong Kong adheres to all applicable local laws and regulations in Hong Kong and our privacy policy. The Chinese authorities have never contacted Yahoo! Hong Kong to request any of its user information.  Yahoo! Hong Kong and Yahoo! China are managed and operated separately and independently of one another.  As such, Yahoo! Hong Kong and Yahoo! China have never exchanged or revealed respective user information to one another.

    This is really interesting for several reasons. First, its an attempt by Yahoo! Hong Kong to distance itself from Yahoo! China. Now, checking the bottom of the Yahoo! China website will show you that Yahoo! China is also operated out of Hong Kong, by Yahoo! Holdings, Hong Kong. So it is, indeed, a different operating company from Yahoo! Hong Kong.

    There are a couple of legitimate reasons why Yahoo! Hong Kong would want to do this. First, they were probably getting a lot of misdirected media inquiries and hate mail. Second, as they serve the uppity and more democratically minded Hong Kong audience, the may wish to distance themselves from something they find unpalatable.

    Nevertheless, from an International PR point of view, this makes no difference. The damage done to Yahoo! by the Shi Tao affair was at the international brand level. Yahoo! Hong Kong, Yahoo! China, or Yahoo! Upper Volta, it doesn’t make any difference. Especially to the liberal minded Americans and Europeans who are still Yahoo!’s bread-and-butter customers. And the continued woes in that department can be seen in this recent, very interesting article from the International Herald Tribune. As previously predicted in this space, the “just following local laws” excuse is now coming under wider scrutiny:

    Yahoo, meanwhile, gets to keep its piece of the gigantic China pie, insisting like most Western companies doing business there that it must abide by the laws of countries in which it operates.

    “What if local law required Yahoo to cooperate in strictly separating the races?” asked Max Boot, a senior fellow at the Council on Foreign Relations, in a widely circulated essay for The Los Angeles Times. “Or the rounding up and extermination of a certain race? Or the stoning of homosexuals?”

    Jim Etchison, an information technology management consultant from Pomona, California, created BooYahoo, at booyahoo.blogspot.com, a site dedicated to urging “freedom-loving citizens of the Internet” to stop using Yahoo services “as a result of their oppressive policies.”

    “I was a happy Yahoo user for about nine years and was so offended by the Shi Tao business that I boycotted them,” Etchison said in an e-mail message. “What begins in China will end where I live.”

    Of course, nobody in China can see Jim’s site because it is on Blogspot and, therefore, blocked.

    The Yahoo! Hong Kong statement is also interesting because it suggests that the legal obligations of Yahoo! Holdings, Hong Kong (operator of Yahoo! China) may be conflicted between Hong Kong’s privacy regulations and China’s demands for more-or-less complete fiat over all media firms operating within mainland borders or serving mainland audiences. But I am unschooled on such things, and this is just a wild hare.

    The other interesting announcement was one from online auction juggernaut, eBay, in response to a zero-fee deal from pesky, Chinese competitor Taobao (part of Jack Ma’s Alibaba empire, recently sold to, whaddaya know, Yahoo!):

    eBay (Nasdaq:EBAY)(www.ebay.com) today issued the following statement regarding Taobao’s pricing challenge:

    “Free” is not a business model. It speaks volumes about the strength of eBay’s business in China that Taobao today announced that it is unable to charge for its products for the next three years.

    We’re very proud that eBay is creating a sustainable business in China, while providing Chinese consumers and entrepreneurs with the safest, most professional, and most exciting global trading environment available today.

    An interesting article in Red Herring looks at the competition between Taobao and eBay. It raises industry observers’ doubts about Taobao’s approach. But it also had this to say:

    EachNet founder and Chairman Bo Shao once dismissed the Taobao approach, pronouncing, “Free is not a business model.” Free-at-first, however, does seem to have worked for Taobao’s parent company Alibaba, the business-to-business (B2B) portal Mr. Ma founded in 1999. Hangzhou-based Alibaba, which Mr. Ma claims is the largest global B2B site in the world, did not charge for its first three years, but Mr. Ma asserts that the company has been in the black since the third quarter of 2002. “We know the difference between investing money and burning it,” he says.

    Jack Ma’s success in building Alibaba suggests that he has some idea what he is doing, so it will be interesting to watch how this unfolds. He also claims, in the Red Herring article, that Taobao can make money on advertising alone, although they plan to go to a fee model eventually. There is another issue with auction sites as well. Unlike a news site, the value of an auction site, and hence its power to attract and retain users, grows as the size of its community expands. The network effect creates a more interesting and liquid marketplace. So if you can afford to spend money to build a critical audience, why not? Indeed, as Red Herring points out, this tactic was used successfully against eBay in Japan already.

    But beyond that, there is the tone of eBay’s press statement. This is the kind of thing that peaks a flack’s interest. If eBay’s plan was to project confidence, it failed. Instead, it projected defensiveness. I don’t think many people suspect that Taobao is “unable to charge”. I think most people suspect it simply doesn’t want to charge until it has to. And there is a strategic argument to be made for that. Free can be a business model…for a while. eBay could have found a more constructive way to make its argument.

    If the ultimate test of a press statement is how journalists respond to it, this one didn’t pass muster. The journalist I was speaking to summed it up in one word:

    “Snarky,” he said.

    Note: Thanks to the journalist cited above for turning me on to both of these statements, and for talking through some of this with me.

  • Do you, uh, Yahoo? You’re busted!

    Do you, uh, Yahoo? Not, one would hope, if you’re a Chinese dissident or journalist on the wrong side of the authorities.

    It seems that American technology companies can’t stay out of trouble in China. The last two days has seen widespread coverage of Yahoo!’s alleged implication in the arrest of a Chinese journalist wanted for “releasing state secrets”, which is a euphemism for embarrassing the government, among other things. The BBC has one of the more interesting articles, because it covers the bigger picture without dwelling on the usual shopping list of scare figures, like the 40,000 lurking net monitors (cited in theTelegraph’s coverage – does anyone else notice that number inflating?):

    Yaman Akdeniz is the director of cyber-rights.net, a web-based e-mail service set up in the wake of tighter laws in the UK about the traceability of e-mail communications.

    He advises activists using the web in oppressive regimes around the world to make sure they did not set up accounts with firms which have offices in the country in question.

    “Providers with offices in China have to obey specific rules. We operate in the UK so I don’t have to reply to any requests for information made by the Chinese government,” he said.

    While cyber-rights.net collects no information about its users it is not a completely untraceable way of sending communications.

    If asked by the UK government to supply information in a fraud or terrorist investigation it is likely its parent company Hushmail would comply, even though it is based in Canada and not bound by UK law, said Mr Akdeniz.

    “But if the request was for information about the account of a journalist it is likely it would be more reluctant to comply,” he said.

    I don’t know if Yahoo! is guilty or not, but, as a PR pro, and in the wake of recent scandals concerning the conduct of fellow tech firms Cisco, Google and Microsoft in China, something is clear: there should be a whole category of crisis public relations for tech firms named as complicit in Chinese government censorship or detainments.

    It doesn’t make much difference to those firms’ business in China, of course. For one thing, not many people are likely to hear about it here. But 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 Wach 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 foresake the market on principles, and that leaves them vulnerable to PR problems whether petty, as in the case of Microsoft’s banning of general words from it’s MSN China Spaces blogging site, or sinister, as in Yahoo!’s possible complicity in an arrest. It doesn’t seem that many of them have thought in advance about how to deal with these problems.

    Sooner or later, these companies are going to have to come up with a better explanation than “just following the law of the land”, or they will end up on the wrong side of a really aggressive, negative PR campaign that will hurt a lot. For the life of me, I can’t think of what that explanation might be; give me some time to work on it. But public statements of principle on matters of free speech and protection of the rights of journalists might be a good start. These are media companies, after all. Manufacturing companies have been down this road with China sweatshops and sketchy contract manufacturers. They’ve had to submit to independent monitoring and create codes of conduct for their contractors. And they’ve been held to account, although not often enough. Could a similar situation arise for the media companies doing business here?

    In the meantime, there is some good advice in the BBC article above. If you’re a Chinese journalist or dissident, perhaps you shouldn’t host your e-mail with a company doing business in China. Perhaps the Electronic Frontier Foundation, an advocacy group for online privacy and anonymity, would care to make some of its very good privacy information available in Chinese.

    Of course, it would probably be blocked…

    Update, Sept 9: And sure enough, Yahoo!’s defence is just as predicted above. From Reuters, via the Australian:

    “Just like any other global company, Yahoo! must ensure that its local country sites must operate within the laws, regulations and customs of the country in which they are based,” Yahoo spokeswoman Mary Osako said in a statement emailed to Reuters by the company’s Hong Kong arm.

    This is meeting the predicable response from Reporters Without Borders, who ask:

    “Does the fact that this corporation operates under Chinese law free it from all ethical considerations? How far will it go to please Beijing?” it asked.

    “It is one thing to turn a blind eye to the Chinese Government’s abuses and it is quite another thing to collaborate.”

    People who read this site know my opinions on the Chinese government’s treatment of journalists and the media. But looking at this strictly from a PR point of view, I think Yahoo! and the other firms will find their “just following the law of the land” defence progressively less tenable. That is because the NGOs and activists targeting them are attacking the morality of the laws that these companies are claiming to comply with. Go back to the apartheid comparison, above. If a company had cited compliance with the law of South Africa in submitting to apartheid, how do you think activists of the era would have responded?

    The explanation still needs to evolve. Expect more trouble ahead.

    Update 2: Other interesting links (both via Peking Duck)
    Angry Chinese Blogger translates the document that got Shi Tao busted. (Proxy link.)
    ESWN dissents on condemnation of Yahoo, although I suspect he will be a voice in the wilderness.

  • Why American tech companies betrayed me, not China

    American technology companies are helping China censor the Internet. I am angry and disappointed — probably more than the Chinese people actually affected. Yet, in a world full where corporate amorality is often taken for granted, why does this bother me so much? I’ve been trying to understand the reasons for my anger.

    The remaining wisps of my youthful idealism are largely responsible. I started using commercial online services in 1992, and I started building websites in 1994 when I was in grad school. The Internet’s promise as a publicly accessible and democratizing mass medium hypnotized me and dictated the course of my career, into the technology industry, to Singapore and then to China.

    The story of the technology industry’s moral collapse before the gleam of Chinese gold is the story of my commercial coming-of-age. The reason why I am so disappointed by the concessions of Microsoft, Cisco, Google and other complicit companies is that these are the companies of my generation. In my naïve heart of hearts, I hoped they would be different. Different from the oil companies that we somehow naturally expect to do business with sordid governments and wallow in environmental depredation. Different from old industrial giants, the car makers and manufacturers that we linked with rust-belt smokestacks, layoffs and economic decline. Different from the defense companies that were happy to sell weapons to our despotic allies. Different from everything that had come before.

    It didn’t help that I was deeply immersed in the utopian fit of the technology bubble. I was so steeped in the rhetoric of the unstoppable, transformative power of the Internet that I internalized those beliefs and carried them even after the once bright-eyed startups auctioned the last of their Italian furniture. But technology companies still do their best to keep these fantasies alive. To this day, they market to us in the lexicon of freedom and transformation.

    Where do you want to go today? asked Microsoft, suggesting that it could be anywhere you want, and never hinting that they might choose to keep some destinations off limits.Any time, any place, any device, they said, but not any word, they neglected to add.

    Do no evil, lectured Google. The first line of their mission statement: Google’s mission is to organize the world’s information and make it universally accessible and useful.Universally accessible. That’s a nice idea. I wonder if it would work, now that we know Dan Gilmore was wrong all those years ago.

    Our culture drives us to set high standards for corporate integrity and to give back by using our resources for a positive global impact, says Cisco, in explaining their corporate citizenship. But some parts of the globe are impacted more positively than others.

    As a spin-doctor for technology companies I have written words like these myself. I, above all people, should be cynical about them. But I always carried that core of idealism with me. The Internet would be different, I thought to myself, and the people who had founded technology companies, many of them from my cohort, would somehow bring a different set of values than business had previously known. These were the companies of my generation. I had forgotten the core of greed and shallowness that lurked behind the technology industry’s evangelical mask in the terrible years of 1999 and 2000, when we all piously awaited the digital Rapture.

    It was foolish, of course. The system is what it is, and it exerts its own terrible, transformative power, even on the most noble of companies. I had ridden one of those companies myself, a once promising venture in Singapore that crumbled from the inside as we succumbed to our own avarice and desperately pushed numbers around to please investment bankers with fast smiles and empty eyes. In the end we were unemployed, poor and bitter, but wiser. Or so we thought.

    Technology entrepreneurs told us they would transform the world, and they were right. It has been a miraculous decade, and I wouldn’t change what the Internet brings me, especially here in Beijing, so far from my friends and family. But when we heard “transform the world” we only saw the good implied in that statement. Any technology brings its dark side, and we have spent the last five years discovering the Internet’s teeth. A tool for opening minds can be a weapon for closing them, and the arms merchants can turn out to be people we thought we knew.

    So we confront the uncomfortable question of how we expect American companies to represent “our” values. By this, I mean the noble American ideals that we casually throw around in conversation but which are so fiendishly tricky to nail down in practice: freedom, democracy, human rights. The same words that vanished from MSN Spaces in a cloud of dark irony. The depressing reality is that public corporations, as much as they have their place, generally make dismal ambassadors for these ideals. It’s not because they’re evil, or because they are run by bad people. They’re not. It’s simply that the incentives the system creates lead in a direction where idealism is hard pressed to follow. But that doesn’t make the disappointment less bitter.

    Meanwhile, the Chinese will manage without our hand-wringing. They can use the proxies if they want, choose to avoid MSN Spaces, cheerfully internationalize despite the best efforts of the CCP. They’ll wrestle with the problems in their own way. They might discover that there are places besides the Internet where interesting ideas can flow more easily. And if the climate in the US was ever to change, we might someday discover the same thing.

    And that’s why I am so sad, and why it doesn’t matter whether the Chinese themselves care about this or not. It wasn’t about China’s expectations. It was about my own. In the end I wasn’t angry because technology companies had betrayed China. I was angry because they sold out the promise that I fell in love with twelve years ago. They betrayed me.

    Some notes:

    Several recent events made me want to write this. The first is a tightening of control domestic websites and blogs by the Chinese government, most recently with the MII’s website registration act. This is part of a general trend that has also affected mainstream media. (Both of those links from the invaluable Danwei.org, and see also this good storyfrom the UK’s Guardian via Howard French’s “A Glimpse of the World” blog.)

    The second event is the renewed vigor of the Chinese government’s censorship of foreign blogging engines, with Typepad the most recent in a string of victims. The third is the outing of Microsoft’s entirely voluntary attempts to placate China’s censors in advance by preventing the use of the words “freedom”, “democracy” and “human rights” in the titles of posts in the China version of their Spaces blog engine. While the blocking of Typepad has been noticed mostly by bloggers themselves, Microsoft’s move was widely reported and generated scorn and outrage. (Wired; BBC; Financial Times, etc.) Rebecca MacKinnon haswritten a good piece on the overall situation for Yale Global, and it has been picked up by several newspapers. She’s also explored the Cisco situation in some depth.

    The entire trend is part of a worrying regression by the Hu Jintao government (here analyzed by Philip Pan of the Washington Post), long suspected of a somewhat less progressive outlook than that of Jiang Zemin (and there’s an alarming statement). The combined effect has been to call scrutiny to the complicity of American technology companies in China’s strengthening censorship apparatus. We should keep that issue alive.

  • Sanitized For My Protection: Imagethief’s Self-Censorship Policy Explained

    In a recent comment, an old friend of mine posed a very interesting question:

    Do you think much about where the “line in the sand” is for you personally? Just how far can you take criticism of China in your Blog before you potentially attract unwanted attention? While I doubt you would be subject to arrest, being a Caucasian American citizen and thus capable of evoking American political and media attention if such were to happen, you could theoretically be “invited” to leave the country and not return. Do you already impose limits on your rhetoric and subject matter as you write?

    Well, first, let’s not over-estimate the amount of righteous fury that would be provoked by the incarceration of one loudmouthed PR flack. Nevertheless, despite recent post topics, I like to think that my criticism of China is leavened by wonder, appreciation and affection as well. No one is forcing me to stay here, and I wouldn’t be in China if I wasn’t enjoying it. But dewy sentimentality won’t jerk any tears from the apparatchiks down at the Ministry of Information. So, the short answer is, yes, I do impose limits on my rhetoric and on the subject matters that I broach, although perhaps less than I should.

    I don’t worry about being thrown in jail (when that happens it’ll be because the apocalypse has come and all spin-doctors are being put against the wall). I certainly worry about having my website blocked, which is probably the most likely result of transgression. The worst-case would probably be finding my residency and employment permits cancelled. I have not heard of anyone being expelled for blogging. If anyone is aware of confirmed cases, please comment.

    In the spirit of full disclosure, I am going to explain my self-censorship policy. There are three reasons why I self-censor:

    First, I don’t blog anonymously. Maybe this is a mistake. Many people do blog anonymously, including many of the China bloggers that I follow. And some of them aren’t even in China. (For those who want to know how to blog anonymously, the Electronic Frontier Foundation has a guide here.) But as long as I’ve had a website (twelve years now) my name has been on it. And I’ve always felt I ought to be willing to take responsibility for what I wrote. Perhaps I’ll regret that someday.

    Second, China is a good place for a little paranoia. It seems like arrogance to think anyone official would care what I write in this space. But, as I wrote recently, I’ve met journalists here who have been hassled by the authorities. Other bloggers have simply decided that its too dangerous to have an opinion here, and have thrown in the towel. One blogger believes (with some cause) that the Ministry of Information has been lurking about his site. The foreign journalists I know take it as a matter of course that they are under surveillance. And I am a foreigner who deals regularly with both the Chinese and foreign media in the course of my work. That is probably grounds for some caution. On the other hand,searching Technorati for “China” yields 411,780 posts, so what is the chance that I am attracting particular attention? If it is true that China has 30,000 Internet content weasels, I guess the chance is measurable. (The post cited for that widely disputed number is an excellent precis on China’s Internet policies.)

    Third, speaking of my work, it is an issue as well. Since I am not blogging anonymously, I have to consider what will happen if someone from my company stumbles across my blog. Sooner or later, it will happen (if it hasn’t already). This is fraught for a variety of reasons, especially considering my line of work. As one of the company experts on blogging and online media, I wouldn’t have much credibility if I wasn’t blogging myself. But I won’t write anything about my company’s clients unless it is in the most general terms. If I puff them, I destroy my own credibility. If I denigrate them, I betray my obligations as their consultant. It also, to an extent, limits what I can say about PR in China in general. This is a shame, because there are some things that beg to be written about. The only  post I have ever written to completion and then decided against publishing was not a China government or policy post. It was a China PR post.

    I’ve always self-censored to some degree, usually for purely pragmatic reasons. Back in my angry youth, in 1995/6,  I wrote some inflammatory things in the Report from Singapore, my proto-blog on the rise and fall of Games Online. In tiny Singapore, where everybody in a given business knows everyone else and you bump into the same people throughout your career, this could have really haunted me. You never know when someone you scorch will have the influence to ensure that your permanent residency or employment pass doesn’t get renewed. Or simply be interviewing you for your next job. When I republished Report from Singapore on my website, in 1999, I scrubbed the most incendiary material, removed a few real names and softened some ill-considered rhetoric written in the heat of emotional trauma.

    In China, the issue is less one of scorching individuals and more one of irritating the State. So where is my line in the sand? (Or dust, as it is in Beijing.)

    Well, like many blogs, most of mine is either my own opinion or my opinion combined with information freely available on websites not blocked in China (since I can see them). I don’t usually re-publish stuff blocked in China, although there have been occasional exceptions, such as Reporters Sans Frontieres’ statement on Ching Cheong.

    I don’t spend much time on arch-taboo subjects. I don’t generally talk about Tiananmen Square in the 1989 context both because that is a lightning-rod issue and because there are people much better able to comment on it than I am. I don’t talk about certain quasi-religious movements that China has banned (and, as you can see, I have not even mentioned them by name). Sometimes I wish I could, but that seems like a fast road to exile behind the Great Firewall.

    When I first got to China, I published the same assortment of expat-blogger, hayseed abroad “gawrsh!” stories written by every other foreigner who has come to China. (Written, I hope, in my own inimitable style.) That was fine in its time, but the longer I live here, the less of that there is likely to be. Instead I now find myself writing more of the kind of posts you would expect from someone who has been a media professional for nearly fifteen years. I didn’t plan it that way. My interests simply shifted, as did what was happening around me. That has put me pretty squarely on sensitive territory, and I try to respect that. But, as a media pro, how can you ignore the role of propaganda in the recent wave of anti-Japanese nationalism? How can you ignore the arrest of Ching Cheong? How can you ignore the way China represents itself to the world, or to its own people? How can you ignore any of it?

    Unless you are in a coma, to live in China is to wonder, why are things this way? What to the Chinese want? Where is it all going? What are the forces driving it? What the hell am I doing here? I don’t know about you, but I process what I see around me every day by talking about and, especially, by writing about it. If I stopped, I would have to wind iron bands around my head or my skull would explode.

    So will keep posting. And when I feel paranoid, I will remind myself that there are things being written in un-blocked mainstream media that are far more influential and powerful than anything I will lay before my tiny handful of readers. But I will also be mindful that I and my wife live in a society that doesn’t work the same as the USA does. There is no right to freedom of speech here. There is no right to freely access what much of the rest of the world takes for granted. There are taboos. Like a game of digital hopscotch, I must be mindful of how I step around the lines that have been drawn.

    I suspect many of us here do the same.

  • In praise of Google in China

    The BBC’s website is blocked but many international apartment buildings get BBC World. My colleague was watching the BBC in her Beijing apartment this morning when a report on Google’s agreement to censor key words and sites via its upcoming google.com.cn service aired. Needless to say, they were only moments into explaining how Google had agreed to meet Chinese content control restrictions when Nanny dropped the hammer on the Beeb, leaving legions of bewildered expats to wonder exactly what it was Google was doing with the Chinese authorities. Censoring of censorship news seems like one of those things that might cause the universe to collapse in on itself.

    For the record, Imagethief thinks that Google is doing the right thing, and taking a reasonable approach to the conundrum of operating in China. I have to confess some disagreement with RSF’s take-no-prisoners approach to complicity with the Chinese government censorship regime, despite my respect for them as an organization. I believe that American Internet firms should remain in China, but should take as many reasonable steps as they can to avoid putting themselves in untenable situations, such as turning over e-mail communications belonging to Chinese dissidents or journalists. As I wrote previously [note: this link now dead – WM], I think there are shades of grey in this situation, where the benefit of offering Chinese people more choice can be balanced against compliance with some of the Chinese government’s less onerous restrictions. Filtering keywords is bad, but it is not in same league as becoming an unwitting tool in the imprisoning of dissidents.

    As reported yesterday, Google’s approach is to post notifications that some content has been removed when search returns are filtered. It will also refrain from offering its “Blogger” blogging service and Gmail service in China, so as to avoid placing itself in a situation similar to Yahoo’s recently, when it was required by the Chinese authorities to turn over journalist Shi Tao’s e-mails. Those are reasonable steps, and, as someone who has been party to a few boardroom discussions (PR people get to be flies on lots of walls), I am willing to believe that there was substantial debate within Google as to the merits of proceeding down this path before they made a final decision.

    That being said, for any company with interests in China there will be no perfect defense. Once Google has an established business in China that they have a stake in protecting, the Chinese government will gain a degree of leverage over them regardless of whether google.com.cn in separately incorporated or where the mail or blog servers live. If the authorities wish to receive information on a Gmail user, they’ll still effectively be able to hold Google’s Chinese business hostage. What would be an interesting –and traumatic– test for Google would be how they would react in such a situation, where they have no obvious legal obligation (as Yahoo apparently did), but a clear interest in protecting their China business. That is a situation carrying substantial PR risk because the widely-used “legal obligation” PR shield, thin as it is, would no longer be available as a defense.

    As to why I support US Internet firms being in China, it’s a matter of providing choice for Chinese users, even if that choice isn’t as rich as what users in other countries would get. This is essentially what Google has offered up as an explanation, and I accept it. We need to be clear with ourselves what group we’re trying to serve by pressuring US (and European) Internet firms to withdraw from China. It certainly isn’t average Chinese users. Perhaps I see this issue through too much of a personal filter. (Perhaps all of us bloggers working and living in China do; we seem to have similar opinions on this issue.) I work with seventy Chinese colleagues, almost all of whom use Google to run searches as part of their work and 100% of whom use MSN messenger to chat with friends, colleagues etc. (Don’t ask me why; that’s what they like. I’m an AIM user myself.) I certainly wouldn’t want to be the person wandering around the office explaining that the MSN Messenger servers were no longer accessible to them because Americans felt it was inappropriate for Microsoft to offer it as a service to them as long as it meant following Chinese content restrictions. And I certainly don’t see how restricting them to Chinese Internet services only serves their interests, even though it may salve our national conscience.

    But, as I also wrote previously, US Internet firms need to be clear on where they draw the compliance line, without having to wait to be pressured into it or forced into it by a crisis. There does come a point at which the tradeoff is no longer worthwhile. Personally, I think it’s worth making concessions to content filtering to offer wider –if crippled– choice. But is it worth being complicit in the detention of journalists and dissidents? Answering at a personal level again, no. Google’s decision not to offer certain services in China is recognition of this division, even if it is imperfect and a bit risky. Other companies need to be clear where the line is for them, and explain it to their stakeholders at home. Otherwise we won’t have seen the last of this issue.

    Finally, some will be tempted to say, “they’re just doing it for the money!” Yes. That’s what listed, joint-stock corporations do, and what they should do, pursuant to sensible regulation. I’m not aware of there being any mystery or hidden agenda about that. From a business point of view it’s totally understandable that companies should want to pursue the China market. The fact that many do is directly responsible for Imagethief having a job right now (just so you are clear on my personal interest in this issue). But, at the same time, companies need to be consider what costs and risks beyond the obvious financial ones they are willing to endure to pursue the market here. And exactly what compromises they are prepared to make.

    Disclosure: Imagethief does not represent any company currently affected by Chinese Internet censorship issues. But he is damn happy Google is available in China. He is also awaiting the inevitable flames for taking the position stated above, and is aware that some bloggers he likes and respects feel otherwise.

    As always, personally I think censorship is abhorrent. But I lay it at the feet of the Chinese government, not Google, and I’d still rather have Google here than not.

    Other (blog) reading (various points of view):
    Peking Duck 1: His original post on this issue. Conflicted.
    Peking Duck 2: On Google fighting a US government subpoena. A double standard?
    Roger Simon (Via the Duck): Boycott Google.
    Rebecca MacKinnon: “Don’t be too evil.”
    Danwei: Keep cool…still.
    Fons: Yi koutou! Er koutou! San koutou!
    Life After Jiangxi: Agonizing…

    Added Jan 27th:
    Asiapundit: Dumb move by smart guys.
    Billsdue: Ka-CHING…Not.