Google Inc. has conceded a tiny fraction of its overall revenue in order to take the moral high ground.
For years, the Web giant's willingness to censor content in order to access the Chinese market has stood in stark contrast to its unofficial motto: "Don't be evil." But after publicly alleging a cyber-attack on its operations, rebuking Beijing for its repression of Internet freedom and threatening to leave China altogether - a move unheard of for a major corporation - Google has forced other technology firms, American politicians and even the U.S. government to support its cause, even if only in words.
"We have been briefed by Google on these allegations, which raise very serious concerns and questions," U.S. Secretary of State Hillary Clinton said in a statement. "We look to the Chinese government for an explanation. The ability to operate with confidence in cyberspace is critical in a modern society and economy."
Indeed, Google's threat to discontinue its Google.cn website and the rest of its services in China may well do more to bring discussion of the country's human rights record to the forefront than myriad governments and activist groups could ever have dreamed of.
"It's really quite huge if Google withdraws from China," said Charles Burton, a political scientist at Brock University. "The bottom line on this is that the regime itself loses prestige in the eyes of its own people through this kind of action."
In many ways, Google may well have already burned its bridges in China - not only because it chose to take its allegations of cyber-spying and criticism of Beijing public, but also because the remedy it seeks is almost certainly unfeasible. As Mr. Burton notes, if China doesn't acknowledge cyber-spying or industrial espionage in the first place, how can it assure Google those things won't happen again?
"From Google's point of view, if it can't ensure the security of its worldwide services because the Chinese services are subject to manipulation by [Chinese state security apparatus] the only solution may be to cut off Google.cn in the interest of protecting the rest of their services," he said.
Although the Chinese market is home to about 300 million Internet users and is one of the fastest-growing in the world, even Google admits that China is currently insignificant to the company's bottom line.
"Our revenues from China are really/truly immaterial, and that revenue is primarily from the export sector. In other words, Chinese companies advertising internationally on Google," Google spokeswoman Wendy Rozeluk wrote in an e-mail.
In fact, Google's primary business concern right now appears to be assuring customers who use its enterprise services that those products were not compromised by the cyber-attack.
Google's current revenue in China may be small, but the market's potential is huge. Still, since entering China three years ago, Google has failed to recreate the dominance it enjoys in other markets. Of almost 20,000 employees globally, Google has about 700 in China. Google shares dropped less than 1 per cent in trading yesterday.
Other technology firms have often faced the same problem in the Chinese market. Yahoo Inc. gave up on its efforts there four years ago when it instead bought a 39-per-cent stake of Alibaba Group, a Chinese Internet business that has soared in value in the years since.
When it still operated in China, Yahoo came under intense criticism from human rights activists for handing over information about Chinese journalists to Beijing.
Yahoo released a statement Wednesday saying the company is "aligned" with Google in its reaction to the hacking incident. It appears unlikely, however, that the alignment will prompt Yahoo to drop its lucrative stake in Alibaba.
If a decision to move out of China is prompted by financial rather than moral concerns, Google is essentially sacrificing Chinese market potential in favour of protecting the integrity of its global services. The most important part of the company's brand is the trust people put in it, said David Cheriton, a Stanford computer science professor and one of the first people to invest in Google when it was still an idea in the brains of Larry Page and Sergey Brin.
"I would hope China down the road becomes more democratic and more open," Mr. Cheriton said in an interview. "I think [Google is]favouring the winning side."Report Typo/Error