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Google Is Worried About Privacy, Not Politics, in China Dispute [Updated]

(UPDATED: See below.) Google's announcement last week that it was going to stop censoring search results in China was a brilliant piece of misdirection. By framing the move in the context of politics and principles, Google (GOOG) earned itself high praise and avoided the real issue at hand, security. Many in the blogosphere took the bait, painting Google as a defender of internet freedom. Even Hillary Clinton got in on the act.

But the company has shown for years that it was willing to compromise with the Chinese government on issues of censorship, even if it tarnished Google's "do no evil" reputation. It was a small price to pay in exchange for a piece of the fastest growing Internet market in the world. Hacking, however, imperils something Google is not willing to risk, customer trust.

Google went out of its way to issue a separate blog post stating that this was not an assault on cloud computing. Of course it was. Regardless of exactly how the hackers got there, they obtained information about user's Gmail accounts. A decade ago I would have kept most of my emails offline, because storing them on the web was expensive. Now I keep them in the cloud. And if someone got access to my Gmail password, they would have access to my documents and photos as well, since I enjoy the convenience of keeping all my data under a single password with Google.

This invasion of user privacy is especially awkward, coming as it does on the heels of the company's announcement last week that it would offer one gigabyte of free storage to users of Google Apps. If people have to worry about the safety of the data they store with Google they might choose to use a different company for their email, browser, phone calls, or endless list of other functions that are moving off your hard drive and into the cloud. "The hacking attacks call that all into question more than anything I can think of before," says Danny O'Brien over at SearchEngineland. Google is a big target, and China showed that it wasn't afraid to go after it.

Nicholas Carr took this a step further, suggesting that Google cares not just about the safety of its products, but of the Internet as a whole:

If our trust in the Web is undermined in any way, we'll retreat from the network and seek out different ways to communicate, compute, and otherwise store and process data. The consequences for Google's business would be devastating.
I think that's a bit much, especially as notions of privacy grow looser with each subsequent generation. But if doing business in China means living with state sponsored espionage, Google might be the just the first of many companies deciding that the risks outweigh the rewards.

UPDATE (4/22/10): The New York Times is reporting that the attack managed to snare a crucial component of Google's cloud system. The breach gave the hackers access to Gaia, a password system that controls access to almost all of the company's Web services, including e-mail and business applications. This explains Google's strong response to the attack. The company is pushing hard to promote its cloud services, and a security breach of this level makes it harder to convince companies that their data is safe with Google.

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