Google Says Whew! and Pulls the China Gun Away from Its Head

Last Updated Jul 9, 2010 11:51 AM EDT

China has finally renewed Google's (GOOG) Internet license to do business in the country. That's got to take a lot of pressure off the company's executive team, and it also shows that Google's threat to leave China really was nothing more than a negotiation ploy, not an embodiment of Don't Be Evil. The company made a big gamble and lost.

Google has gone from the principled company that challenged China's censorship policy to a puppy that tucked its tail between its legs and ultimately did exactly what political leaders wanted -- deliver information to servers in the country so Chinese automated censorship mechanisms could continue to exercise control. Will Google actually censor results itself? No. Does it know that China will censor the results? Absolutely. It's a face-saving move driven by a love of money.

The whole sad saga started last year when Google realized that someone in China had hacked into some Gmail accounts. The company's response was to "rethink" its China strategy and to float the idea that it might completely leave the country.

I noted at the time that the human rights positioning was largely hooey, and Google immediately starting flip-flopping on exactly what it meant. And yet, Google maintained its position of striving for freedom, to the point of someone identifying herself as a Google PR rep calling me to pressure me over my opinions.

I think some forces within the company -- namely, co-founder Sergey Brin -- were interested in the ethical or moral questions, but Google is a big company with complex interests, not an issue-oriented non-profit. Some research showed that Google seemed to be comfortable with various degrees of censorship and "cooperation" in other countries.

China was simply a high profile case for Google and the company wanted to get as much mileage as possible: continuing business and a boost to its public image. But looking at the future of potential expansion in China (even as a minor search player in the country, it still makes about $500 million in annual revenue), Google could not afford to sacrifice business for image.

That's why Google tried redirecting its Chinese search pages to its Hong Kong servers, which had greater freedom. It wasn't enough for China, which demanded that Google stop the redirect. And so, Google capitulated.

It was clear all along that it would. China is far more important to Google than Google is to China, which puts a premium on complete control of information. There was no way that Google would walk away from China out of principle. And so, it didn't. China wanted to prove that while it will filter results from outside the country, it won't allow someone to deliver information through a China-based service that doesn't self-censor. Because Google's site now has an explicit jump to the Hong Kong-based servers, the company is doing exactly that.

As a result, Google has diminished itself. China -- and the world -- knows that in a game of hardball, Google will blink. Users know that lofty statements will always make way for business reality. Google lost in both business and consumer positioning.


Gun image: Flickr user badjonni, CC 2.0. Photo editing: Erik Sherman.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.