Late last fall, the Carnegie Endowment's Albert Keidel published a widely-noted paper which forecast that China would become the "pre-eminent world commercial influence" by the year 2035 - the year he predicts it will overtake the United States economy. Until now, there was little doubt that American technology companies would play a big role helping China realize that future. But what if politics forced Silicon Valley to the side?
That's no longer a hypothetical.
In a bolt-from-the-blue announcement, Google said late Tuesday that it no longer would censor search results in China. At the same time, the company warned that it would consider packing up and leaving if the government refused to modify its policies.
This qualifies as one of those rare hold-the-presses moments. China's brand of authoritarian capitalism has been wildly successful and American tech stars like Google have steamed the Pacific to get in on the Asian gold rush. But before hanging out a shingle, they agreed to pay the price of admission -in this case it meant going along with the regime's guidelines for doing business in China. So it was that Google self-censored search results on its local service. Google justified its decision by arguing that there was a larger good being served. Co-founders Larry Page and Sergey Brin - they of "Do No Evil Fame" - knew they were not entirely on the side of the angels, but they could still claim to be doing more good than harm by virtue of the fact that Google was spreading access to information for the average Chinese.
This wasn't the first time the tech industry has had to weigh its principles against its commercial self-interest. During the apartheid struggle in the 1980s most computer companies pulled out of South Africa in concert with many other American businesses. The notable exception was IBM, which said it could do more for local black workers by maintaining its presence. Like IBM, Google agreed to compromise on one of its tenets in the hope that Beijing eventually would adopt the norms of a more open society.
That turned out to be a pipedream. After the disclosure that unidentified hackers had targeted the Gmail accounts of Chinese human rights activists late last year, Google concluded that it was time to end the charade. (So far Google has not officially blamed the Chinese government, though the regime is a likely suspect.)
The focus now shifts to Yahoo and Microsoft, which also operate in China. Assuming Google doesn't reach a last-minute deal with the Chinese government, I suppose Yahoo and Microsoft could try and fill the vacuum left behind. But as News.com's Ina Fried correctly notes, that would invite sharp criticism at home and I'm quite sure neither company has the belly for a another congressional grilling about its business practices. Meanwhile, shares of Chinese search company Baidu were up on the Google news. After all, business is business.