What's Behind China's Assault on Google

By Jason Simpkins
Managing Editor
Money Morning

The feud between authorities in China and Google Inc. (Nasdaq: GOOG) escalated Wednesday night when Chinese users were blocked from Google’s global Web site for a period of at least two hours.

For weeks China has been chastising Google for disseminating “huge amounts of porn and lewd information.” The company has made a strong effort to accommodate Beijing’s high “moral” standard by launching a separate Chinese Web site, Google.cn, to filter out sensitive information.

Still, China’s war on the search engine has only intensified. That has led some analysts to believe that the communist government is acting on behalf of Baidu Inc. (Nasdaq ADR: BIDU), or perhaps as part of a smear campaign to drum up support for its latest attempt to tighten its grip on Internet content that is becoming harder to control.

Google’s word association feature – a drop-down box that offers suggestions based on the terms typed into the search engine – was disabled last week after a report on China Central Television (CCTV), the state television network, showed how typing the Chinese word for son could solicit terms that have lewd connotations. However, it has since been revealed that a Chinese youth, depicted in the television segment as a university student who had started an anti-Google campaign, was actually an intern at television station.

Coincidentally, the lion’s share of Baidu’s first-quarter advertising budget – about $5.6  million – went to the state-owned CCTV, according to UPI Asia Online.

Searches for foreign Web sites have also been suspended on Google, while domestic competitors like Baidu continue to offer these features – this despite the fact that there is evidence to suggest searches conducted on Baidu offer up just as many pornographic or illicit sites.

Chinese search engines are the obvious beneficiaries of [the criticism of Google] and that suits the authorities fine,” an industry insider speaking on the condition of anonymity told TIME magazine. “They all take care of the political censorship themselves and obviously have to do exactly what the bureaucrats tell them. A foreign company like Google is that much harder to control.”

Baidu has a firm grasp – about 60% -- of the Chinese Internet search market, but Google has amassed about a third of that market since 2005. 

Another reason analysts believe Chinese authorities may have singled out Google is that Beijing wants to divert criticism away from the controversy surrounding its newly unveiled filtering system, Green Dam Youth Escort.

China’s Ministry of Industry and Information Technology (MIIT) last month announced that starting July 1 all computers sold in the country would have to have Green Dam preinstalled.

This not only angered a Chinese public that’s already bemoaning the presence of cyber cops, as well as computer manufactures who argue that the software is an onerous and costly expenditure – no to mention an infringement on civil liberty.

“It doesn’t seem like a coincidence that [the attack on Google] comes amid mounting criticism of Green Dam, whose ostensible purpose is to block porn,” Rebecca MacKinnon, a former Beijing bureau chief for CNN who is writing a book about the Internet in China, told TIME. “Now they’re trying to show what a bad job Google does in protecting China’s children.”

No high-profile computer manufacturers have indicated one way or another whether they will or will not include the software, but several – including Hewlett Packard Co. (NYSE: HPQ) and Taiwan’s Acer Inc. – have said they are asking regulators for details.

With the deadline less than a week away, most companies are no doubt hoping China will cave to international pressure and rescind its mandate. And U.S trade officials, who don’t often intervene directly in matters of Chinese Internet censorship, have demanded that China do just that.

Officials lodged a formal complaint to the World Trade Organization (WTO) that the Green Dam mandate violates free trade rules and Trade Representative Ron Kirk and Commerce Secretary Gary Locke wrote a letter to the Chinese Ministry of Commerce asking that the country drop its requirement.

“China is putting companies in an untenable position by requiring them, with virtually no public notice, to pre-install software that appears to have broad-based censorship implications and network security issues,” said U.S. Commerce Secretary Gary Locke.

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