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Google Gets Little U.S. Corporate Support in Internet Fight With China

Google is using Internet freedom as a rallying cry in its confrontation with China.
But the deafening silence from U.S. corporations underscores how increasingly isolated Google looks in its hope to rewrite the rules in the country with the biggest number of Internet users.
Only GoDaddy.com, the Internet domain name and Web host company, immediately followed Google’s lead in protesting Chinese policies. It said that it would no longer register domain names in China because of new rules requiring it to collect customers’ photos.  


The action by GoDaddy, which has not been known in the past for taking a strong stance on Internet freedom, contrasts sharply with the modest responses from other companies.
Microsoft, Yahoo and others have trumpeted the general principles of Internet freedom, but none have directly echoed Google’s call for an end to Web censorship in China. And, GoDaddy aside, no other technology company has hinted at a change in business practices in China to protest regulations and restrictions there.
“China is a very important market,” said Jim Friedland, an analyst with Cowen & Co. “What’s the incentive for a government or another company to join with Google? There is none, and that’s why you haven’t seen it happen.”
Google’s difficulty in enlisting allies could hint at the challenges ahead for it in China, where organizing broad support has in the past proved to be an effective tool for negotiating with the government.
Last summer, a concerted pushback from industry groups and U.S. officials caused China to back off from a plan to require makers of personal computers to adopt special filtering software known as Green Dam on computers sold in the country.
But U.S. officials appeared to be taking a hands-off stance this time, calling Google’s move a business decision in which Washington played no part. The State Department, however, said it would continue discussing Internet freedom with Beijing.
Unlike the Green Dam episode, Google’s stand on censorship is not a cause with which many technology companies want to be seen publicly identifying. Many of them have much more substantial businesses and assets, like factories and warehouses, in China and thus more to lose than Google, the world’s largest search engine. Analysts estimate Google’s China business is a modest 1 percent to 2 percent of its $6.5 billion in annual net profit. Similarly, GoDaddy said that China contributes less than 1 percent of the $1 billion in revenue it expects to generate this year.
“The Chinese government and the Communist Party have a unique ability to reach out and touch companies in a way that can make it very difficult for them to do business in a market,” said a person at a business group who did not want to be identified for fear of offending the Chinese. “So foreign companies are very cautious and very circumspect about how they speak out.”
Google announced in January that it would no longer censor search results in China.
That announcement followed a sophisticated cyberattack on it that it traced to the country and that it said had been intended to gain access to e-mail accounts of Chinese human rights activists.
After unsuccessful negotiations with the Chinese government to operate an uncensored search engine in China, Google effectively closed Google.cn and rerouted traffic to an uncensored site in Hong Kong.
Google intends to retain some business operations in mainland China, including research and development staff and a sales team, but the government could make conditions tough.
For example, China might not let Google renew its Internet license, which news media reports have said expires in a month.
Bobby Chao, a managing director at the China-focused venture capital firm DFJ DragonFund China, said Google’s public confrontation with China had created a negative brand image among many Chinese that could jeopardize the company’s other business prospects in the country.
“I anticipate to see more and more major market players disassociate themselves with Google,” said Mr. Chao, noting that handset manufacturers, for instance, might shun Google’s Android operating system because of the anti-Chinese image increasingly associated with Google.
U.S. companies have on occasion collectively pushed back against Chinese policies they saw as discriminatory or protectionist.
But trade experts say they pick their fights carefully.
“If China takes a broad action” then “all the trade associations sign a joint letter and complain about it,” said Alan Wolff, a former U.S. trade official who now works as a trade lawyer with Dewey & LeBoeuf.
“If it’s an action against one company,” he said, “the reactions are more private.”

(from internet)