Google to pull out of China?

After coming under a sophisticated attack by Chinese hackers who managed to steal Google Intellectual Property late last year, Google has announced that it will stop filtering web results in China. They will enter into negogiations with the Chinese government to see whether or not they can legally continue to offer a service in the country. It appears the primary target of the hacking attempt was Chinese dissidents using Google services.

Will this move pressure the Chinese government to reign in hackers within the country (Google have stopped short of blaming the government themselves, although it’s clear their enemies were the target) and perhaps even loosen internet restrictions? Or, will this amount to Google waving a white flag and surrendering the Chinese market to Baidu? Over at AlleyInsider / Business Insider Henry Blodget feels the former

Google matters in China now. The announcement that Google was threatening to pull out spawned public support for the company in China. It got Secretary of State Hillary Clinton into the act. It forced the Chinese government to respond with a statement. It has grabbed the attention of investors, as well as the hundreds of other companies that do business in China and are forced to play by Chinese rules. It will focus more public attention on the reality of China’s censorship policies than any boycott ever could have.

Below the fold excerpts from David Drummond’s blog on the subject – he reveals up to 20 large corporations were attacked and they are liaising with the US authorities..
David Drummond, Google’s Chief Legal Officer blogs ..

In mid-December, we detected a highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property from Google. However, it soon became clear that what at first appeared to be solely a security incident–albeit a significant one–was something quite different.

First, this attack was not just on Google. As part of our investigation we have discovered that at least twenty other large companies from a wide range of businesses–including the Internet, finance, technology, media and chemical sectors–have been similarly targeted. We are currently in the process of notifying those companies, and we are also working with the relevant U.S. authorities.

Second, we have evidence to suggest that a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists. Based on our investigation to date we believe their attack did not achieve that objective. Only two Gmail accounts appear to have been accessed, and that activity was limited to account information (such as the date the account was created) and subject line, rather than the content of emails themselves.

and ..

These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

No bio, some books worth reading – The Rational Optimist: How Prosperity Evolves – Matt Ridley .

Crisis Economics: A Crash Course in the Future of Finance -Nouriel Roubini, Stephen Mihm

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