The Case of Google in China, Case Study Example

Section 1: Introduction and situational analysis

An inevitable dilemma between Internet freedom and the expansive and extremely lucrative Chinese domestic market arose in the 21st century. One company that found itself in the middle of this dilemma was the California-based search engine firm Google. While other companies initially adopted the limitations and oversight of the Chinese government, Google held off for several years until 2006 when it finally caved in. At that time when it first entered China, it needed to explain and justify its decision to many activists, government officials and customers worldwide. This is primarily because Google aimed to be a different kind of company. By publishing its stated goals and values not long after it was initially formed, the intention was to give the impression that it was a viable, youth-oriented company that was focused on changing the world through its straightforward operation. These goals have occasionally been put to the test as it has grown. One of the most prominent examples of this was its entrance into the Chinese market less than a decade ago.

The common perception of Google’s relationship with China centers on Chinese control of content and Google’s attempted maintenance of its principles. This means that there are widely understood stereotypes about both Google and China, however true they may be. For many observers, these stereotypes proved to be accurate due to a conflict that erupted in 2010. The company announced on its website in January of that year that it might shut down operations because it had been plagued with a series of cyber attacks on its corporate infrastructure. It had claimed that there were attempts to spy on human rights activists through unauthorized access of Gmail accounts. Furthermore, it had claimed that the government also tried to obtain intellectual property in what amounted to theft. The response was to end the search engine google.cn that was being censored and traffic future requests to a Hong Kong-based site, due to the Chinese government’s “non-negotiable legal requirement”. They also announced that they would maintain staff in China primarily for research and development reasons (Drummond, 2010).

The dilemma for Google, and why it decided to enter the Chinese domestic Internet market in the first place, is ultimately about profits. It never really denied this but the firm’s stated values distinctly proposed: 1) that profits can be made without committing evil; 2) that the users are the most important aspect of the business; and 3) that its mission was to facilitate access to information for all users (Ten Things We Know, n.d.). Considering this high-minded corporate vision, it is also important to mention the fact that China’s economy has seen the most economic growth in the history of the world and much of this has been in the 21st century. For businesses such as Google, they simply could not ignore the growing legion of Internet users, estimated to be approximately 564 million earlier this year. The growth is simply phenomenal, with 51 million users coming online in 2012 alone (Osborne, 2013). This is equivalent to roughly 25% of total US users in one year’s growth, with enormous profits to be had for successful companies. It would be hard for any company that seeks to grow and increase profits, to ignore such an opportunity. Therefore, it seemed that a conflict was inevitable.

 Section 2: Stakeholder analysis

This dilemma has many stakeholders that must be considered. According to Amitai Etizoni (2011), the concept of a “‘stakeholder’ is a highly communitarian one as it holds that while the members of a given community are entitled to various rights, these go hand in hand with responsibilities for the common good” (p. 542). The most obvious in this case of course are the hundreds of millions of Internet users in China, which according to Google are the most important stakeholders. This includes the countless millions of potential users that will soon gain Internet access in the coming years, as well as those who currently have access. If Google does what the Chinese government requires and limits access then these people would be the first to suffer. There are also a subset of users in this group that have a lot at stake and these are the activists and dissidents who rely on the Internet to get their messages out to their fellow citizens. Without these means of communication, they are much less effective.

Google itself (i.e. its employees, executives and shareholders) is obviously a stakeholder, as it desperately wants access to the Chinese market, yet seeks to gain this by not sacrificing its values. This is a difficult position for Google and one that many companies choose to avoid by putting profits and shareholders first. Additionally, the Chinese government and, by extension, the Chinese Communist Party or CCP, is a stakeholder. It is important to mention this distinction because the CCP is believed to totally dominate the government. They believe that if Google and others provide uninterrupted Internet service and Chinese citizens are allowed to access material concerning, for example, independence for Tibet or Taiwan, information about the Dalai Lama and Falun Gong and their challenges to the CCP, then they could potentially be destabilizing or compromising the harmony in their society. These are controversial topics for China, so much so that the Chinese government fears that an uncensored Internet might incite some civil disobedience. From their point of view, an uncensored Internet is not worth the risk.

Additional stakeholders that should be considered are the various other foreign Internet technology companies who face a similar predicament. Even though these companies may not be as steadfast in maintaining their principles or may not have articulated them as clearly as Google, they are nonetheless affected by a global industry leader’s interaction with an authoritarian government. Finally, there are also the Internet users around the world who want to use the Internet without any government attempting to block content. The precedents of Google’s relationship with China are important worldwide. If Google allows one government to censor certain material, requests from other governments might also have to be considered.

 Section 3: Analysis based on ethical theories

Cultural relativism is an interesting point to consider in Google’s China dilemma. However, if we look at other countries that share similar cultural backgrounds in the region, this may be useful. For example, Taiwan is predominantly made up of ethnic Han Chinese and there have been many exchanges between China and Taiwan in recent years. Yet, Google’s business thrives in Taiwan and there are no similar issues of censorship that are evident. In fact, Google recently announced that they will be building a major data center on the island and they consider this an important step forward for the company’s operations in Asia (Google Is Proud, n.d.). It is safe to say that Google is very comfortable with its operations in the country and there does not seem to be any cultural obstacles for the continued growth and uninterrupted access to information. South Korea is another country that has historical and cultural linkages and where Google counts many of its newest users.

These societies seem to view Internet access as important to their democratic foundation. However, and this is where there is a clear split with China, according to Christopher Hughes (2010), “71% of Chinese respondents to a poll by World Public Opinion…agreed that they should have the right to read whatever is on the Internet” (p. 24). This shows that the majority of Chinese society thinks that China’s position is unacceptable in this case. The Chinese government’s response nevertheless is that there is an established legal tradition that aims to protect the public and “virtually every conceivable medium which transmits and conveys information to the people of China falls under the bureaucratic purview of the CCP Propaganda Department” (Shambaugh, 2007, p.28). The CCP is known for its position that it does not want to interfere in any other government’s affairs and it demands the same in return. Therefore, according to David Shambaugh (2007), from the perspective of the Chinese government, propaganda is seen as “a legitimate tool for transforming and building the kind of society sought by the Party” (p.19). This is ostensibly the reason why they evoke the cultural norms of harmony and socialist spirituality.

Viewing this case from a teleological perspective, we can identify the original censorship that Google agreed was acceptable. This was related to the Google executives’ belief that by entering the market and providing access to Google’s advanced and always improving service, they would be providing a greater good than the harm caused by censoring particular search terms. Other Internet technology companies have applied the same view. Microsoft’s Bill Gates has expressed this view repeatedly in response to criticism about their involvement in China. According to one critical view, Hughes (2010) calls this the “old orthodoxy that the net impact of the Internet in China has been to help free expression” (p. 23). It might be difficult to argue with this considering how many people use the Internet in China currently and do so to discuss critical issues in their lives.

Yet overall, it would be difficult to truly say if the consequences truly outweigh the original act of censorship that is widely perceived as problematic in modern democratic societies. David Shambaugh (2007) discusses this as part of his conclusion in a study of the Chinese propaganda system and its many complex operations and actors:

“Though the efficacy of China’s propaganda system has eroded considerably from its Orwellian past and is being buffeted by the information revolution and globalization, the system remains effective in controlling most of the information that reaches the Chinese public and officialdom.” (p. 25)

This means that there has been progress as a consequence of modern developments and technology such as the Internet, however, the government continues to dominate the social interactions and this may be harmful to individuals and groups who don’t believe in the party doctrine.

One example of this, which is often mentioned, is the case of Shi Tao, a Chinese journalist for a business newspaper. He was convicted and is serving a 10-year prison sentence because the government found him guilty of sending a Communist party document that told journalists to beware of covering events for the 15-year anniversary of the Tiananmen Square massacre. The company that turned over private emails that the government used to prove Shi Tao’s guilt was Yahoo!, likely because they feared losing access to the Chinese market (Chung, 2008). Therefore, for Shi Tao, his family and supporters, and others who might be convicted in the future because of these relationships between foreign companies and the CCP, it is difficult to say that Yahoo!’s behavior was justified.

The perspective deontology offers reaffirms the commitments Google made in its statements and values mentioned earlier: the idea that you don’t have to do anything bad to make money, that the user is most important, and that the need for information crosses all borders. All of these beliefs rely somewhat on the deontological perspective that argues people should make sure every action they take is in line with their beliefs. This philosophy is similar to the ‘golden rule’ that instructs people ‘not to do to others what you do not want them to do to you.’ Is it possible to imagine that Google or Yahoo! executives would personally accept limitations on their freedom to access information? Most likely, this would not be acceptable, so that means they are sacrificing their values and disobeying the rules of deontological ethics. These decisions become even more dramatic when dealing with harsh political repression that exists in the countries that might be enabled by such concessions these Internet companies make.

Virtue in ethics is regarded as moral excellence that takes practice in the form of habit, ultimately questioning what kind of person one should be, as opposed to how one should behave in a dilemma. It seems that Google was attempting to come across as a virtuous corporation but found that this was easier proclaimed than practiced. A corporation’s main function is to make increasing profits and virtue requires principles put into practice in every situation because that is who the person, or in this case the organization, is. In their approach to China, other companies such as Yahoo! and Microsoft, have not necessarily claimed any other guiding principle aside from profits. Their public relations approach was, at best, representative of the utilitarian view. Google, however, in an attempt to portray itself as a different, maybe even virtuous company, was set up for an embarrassing fall from grace because of the natural contradictions. It now stands that they lost credibility and still missed the opportunity to compete in one of the most important markets in the world.

The Chinese Internet users might suffer as a result of Google’s decision to stay in China or leave with their principles somewhat intact. These users may have preferred to use Google’s superior services and might have accepted the damage to the company’s principles as part of a reasonably fair trade off. The subset of activist or dissident users may have gained from Google’s decision to challenge the CCP on this issue but this remains dependent on future developments. For example, if Google returns to full operations in China someday soon, then these gains for freedom activists would be short-lived. Another downside for such users is that the CCP may still go after these users’ information and acquire it from companies that regard Google’s decision as foolish. They may even acquire information from Google, as the company is still potentially vulnerable to cyber attacks, though they are no longer operating their Chinese search engine. China, as a stakeholder, may have gained from this by showing how serious they are about maintaining their requirements. Yet they have also lost a public relations battle that has reinforced the stereotype of a totalitarian state apparatus that is likened to the Soviet Union by Google’s founder, Russian-born Sergey Brin (Ferata & Chao, 2004).

 Section 4: Conclusion and recommendations

Upon concluding, it is useful to mention the latest developments in this case. Google executives told the Wall Street Journal in 2012 that they recognize “the large business opportunity” (Ferata & Chao, 2004) of the Chinese market. They also wanted to be clear that they never left China and now seek an expansion through a number of services. The article also quoted one former Google China executive who argued that the popular Twitter-like service, Weibo, is accomplishing what Google hoped to accomplish, adding, “engagement is the right approach”.

This is useful because it demonstrates that for corporations such as Google, the lure of major profits and huge markets are more important than values. Many people were initially excited by the fresh approach of Google, obviously including the founders themselves. These people wanted to believe that their values could be maintained, but this is difficult as a company grows more powerful and has to make decisions that may impact their shareholders and their business image. The company apparently made a bad decision when it decided to pull out because it had already compromised its values when it initially entered China in 2006. From a profit-making perspective, closing down their search engine and losing all of the momentum they had gained now looks like a bad idea. Also, from a principled and ethical perspective, trying to re-enter the market now will further damage the image of the values-first company that they had tried so hard to maintain. It seems that the company should never have entered the market in the first place if the Chinese government was placing such restrictions on it as it was. That way at least, they could have really shown the world that corporations can be virtuous somehow by sticking by their do-no-evil philosophy. To avoid similar problems in the future, perhaps they might revise their list of values and specifically address the embarrassing case of their entry in China. By being honest with their employees and customers, they can at least show that they have learned from their mistakes and that they now recognize the major complexities of being a highly profitable corporation in the modern world.

References

Chung, J. (2008). Comparing online activities in China and South Korea: The Internet and the political regime. Asian Survey, 48(5), 727-751.

Drummond, D. (2010). A new approach to china: An update. In Google Official Blog. Retrieved from http://googleblog.blogspot.com/2010/03/new-approach-to-china-update.html

Etizoni, A. (2011). Is china a responsible stakeholder? International Affair, 87(3), 539-553.

Ferata, A. & Chao,L. (2012, January 12). Google softens tone on China. Wall Street Journal. Retrieved from http://online.wsj.com/article/SB10001424052970203436904577155003097277514.html

Google is proud to call Taiwan home to one of our data centers. (n.d.). Retrieved from http://www.google.com/about/datacenters/inside/locations/taiwan/

Hughes, C.R. (2010). Google and the great firewall. Survival: Global Politics and Strategy, 52(2), 19-26.

Osborne, C. (2013, January 15). China’s Internet population surges to 564 million, 75 percent on mobile. ZD Net. Retrieved from http://www.zdnet.com/chinas-Internet-populationsurges- to-564-million-75-percent-on-mobile-7000009813/

Shambaugh, D. (2007). China’s propaganda system: Institutions, processes and efficacy. The China Journal, 57, 25-58.

Ten things we know to be true. (n.d.). Retrieved from http://www.google.com/about/company/philosophy/