Google in China: Should Corporate Ethics Trump Profits?
Google's game of chicken with the Chinese government highlights a quintessential question: should companies put ethics ahead of profits? Can they exist side-by-side, or will a Google-China situation innevitably crop up, forcing a showdown between the two?
Make no mistake, Google's open defiance of Chinese law pits the company's famous "you can make money without doing evil" philosophy against what is by far its largest long-term revenue growth opportunity, China. What's more, Google's management is by no means in lock step on this issue. According to the Wall Street Journal, a pro-ethics faction led by co-founder Sergey Brin (pictured) won out over CEO Eric Schmidt, who wanted to stay the course and continue doing business in China.
Both sides of the argument have powerful merit:
The Pro Ethics Argument
- Beijing's Web censorship laws are an affront to human rights, plain and simple. We need not belabor the point.
- Washington supports Google's efforts. According to the AP, "Google's decision is a strong step in favor of freedom of expression and information," Sen. Byron Dorgan, chairman of the Congressional-Executive Commission on China. "It is also a powerful indictment of the Chinese government's insistence on censorship of the Internet."
- The highly sophisticated cyberattack on Google's servers that was, according to Brin, the "straw that broke the camel's back," appears to have targeted email accounts of Chinese activists.
- China represents the second largest market in the world and by far the largest growth opportunity for Google's search advertising business. Google's executives made a commitment when, according to its official blog, "We launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results." Four years later, it's essentially abandoning that market.
- The threat of pulling out of China and open defiance of Beijing may have already crippled Google's reputation in China and rendered its ability to someday return a tremendous uphill climb. According to the AP, analysts say that Google will "face a tough road to rehabilitation in the China market." "They are certainly going to suffer and they are going to be spending years rebuilding their reputation," said David Wolf, president of Wolf Group Asia in Beijing.
- Numerous business deals with internet portals like Tianya.cn and Sina.com and telecom companies like China Mobile and China Unicom are being reevaluated and/or scrapped entirely. And according to a joint letter signed by 27 Google partners in China, they now face bankruptcy while tens of thousands of employees may lose their jobs.
Frankly, I'm with CEO Eric Schmidt on this one. Google is effectively abandoning its customers and partners in China and harming its American stakeholders in the process. To me, that's poor business ethics. To me, that's doing evil ... business evil. Once they made the commitment, I think they were bound to stay the course. But that's just me. What do you think?
Image of Sergey Brin: Jurvetson CC 2.0