Google Takes On China

Google shocked the world this week by announcing that it would rather shut down its China operations than comply with China’s censorship laws. The announcement was applauded by human rights organizations around the world, with bouquets of flowers being laid across Google’s sign at the entrance to its large Beijing headquarters. Meanwhile Google investors are stunned speechless by the prospect of Google snubbing the country with the 2nd largest, and most rapidly growing economy.

Google’s decision was prompted by a cyber attack on Google servers last month that originated in China. Google’s investigation of the attack shows that it was not the only target. Twenty other large businesses and government agencies were also hacked. In each case, the attackers were seeking information related to human rights activists with a history of attacking China and its practices. While it is not possible to prove the attack was government sponsored, investigators believe that the level of sophistication involved point to government sources.

China has responded to the allegation by downplaying the incident and reiterating that all businesses in Chine are bound to uphold China laws. As it appears China will not budge on its censorship requirements for Internet companies, everyone is waiting to see if Google will stay true to its word and close its China operations. Meanwhile the US government intends to make a formal demand of China to investigate the incident and report back its findings.

Yahoo!, who has previously found its own Chinese operations caught between China’s censorship and human rights groups, was also a target in the recent attack. Yahoo! released a statement supporting Google’s stance against China. The statement stirred up contempt from Yahoo’s China partner, Alibaba, who called Yahoo’s response reckless. Yahoo owns a 40 percent share of the giant Chinese online company that runs Yahoo! China. Meanwhile, Microsoft, who was also hacked, is downplaying the incident stating that it has no plans to change its business strategy in China. Microsoft has partnered with the Chinese government to crack down on software pirating in China. To criticize China might destroy the progress Microsoft has made in its efforts.

The hackers were able to infiltrate the corporate networks utilizing a security hole in Internet Explorer. The method of the attack was recently made public and is already being used by hackers in more recent attacks. Security experts are cautioning INternet users from using Internet Explorer, although Microsoft says that Vista and Windows 7 users should be safe if they run IE in Safe Mode. Microsoft is scrambling to create a patch for the vulnerability. Meanwhile Google announced that it is adding HTTPS encryption to all gmail services to help protect user’s privacy.

So, like a soap opera on a global scale, we will have to wait to see how this story plays out…

  • Will Google really pull out of China?
  • Will other companies follow Google’s lead?
  • How will China respond to U.S. demands for an investigation?
  • Will Yahoo and Alibaba kiss and make up?
  • Will Microsoft patch Internet Explorer before many others are hacked?

Tune in next week to find out!

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