Tags: China, Google, Hotspot Shield, Keith Fitz-Gerald, Technology/Internet, VPN

China Can Stonewall Google, but Its "Great Firewall" is Really a False Front

By , Money Morning •

China has been eager to portray itself as the winner in the recent global dustup with Internet-search giant Google Inc. (Nasdaq: GOOG). At the very least, however, China wants it made clear that it wasn't the loser.

Experts quoted in such state-run media outlets as Xinhua and The People's Daily have derided Google for abandoning the largest and fastest-growing online community in the world, and forfeiting $400 million and $600 million in annual revenue.

And while China's top officials have mostly avoided the topic, government spokesmen have defended the country's censorship practices as "consistent with international conventions."

"China has tried creating a favorable environment for the Internet ... China, like other countries, administers the Internet according to law," spokesperson Jiang Yu said at a regular briefing last week.

What China hasn't done is to acknowledge what the real stakes are here. This is more than just a squabble between an Asian country and a Western company: It's a realization by China that it may no longer be able to repel an overwhelming tide of free - and unfiltered - information.

China's "Great Firewall" is more of a proverbial dike, and Mountain View, CA-based Google is a hole that needs plugging.

In the digital age, Google's mission "to organize the world's information and make it universally accessible and useful" is more than just feasible.

It's unavoidable.

Globally, more information is reaching more people at a faster rate than ever before. Innovations like broadband networks, wireless access and smartphones will intensify that trend. As emerging markets gain muscle, as wages grow, and as the world shrinks, a growing population will demand Internet access - and the unfettered and unfiltered information that goes with it.

So while China can stonewall Google in the near term, it will have to concede defeat in its war on information - and probably sooner than it realizes.

More than a million people in China, including human rights activists and dissidents, are using subversive software applications to circumvent China's stringent security system - already casting doubt on whether or not China can really maintain control of its nearly 400 million Internet users.

In fact, a growing number of companies like WiTopia Inc., Open Terrace Ltd., and AnchorFree Inc. are taking advantage of this growing market by providing virtual provider networks (VPNs) for as little as $10 a month.

VPNs give Web surfers a secure way to log on and safely access the Internet in such public places as hotels and coffee shops by letting users "tunnel" through to a server in a country that doesn't have China's Internet restrictions. Then the network encrypts information under an anonymous computer address to prevent monitoring.

Bill Bullock, chief executive officer of WiTopia, a Virginia-based company that sells a VPN popular among expatriates in China for $60 a year, told The New York Times that annual sales have doubled since the product was introduced in 2005.

"People want their Facebook and Twitter and they're not going to tolerate a watered-down Internet," he said. "They're far from home, and this is their connection to family and friends. They'll do anything to make sure it works."

The number of people that use AnchorFree's Hotspot Shield has increased five-fold from a year and a half ago to 7.5 million users worldwide, AnchorFree founder David Gorodyansky told The (NY) Times. About 1 million of those users are located in China.

Part of the reason for the huge surge in the number of VPN users is a greater sophistication and awareness about how these networks operate. But another catalyst for this growing interest is the fact that Internet censorship is on the rise. Some 60 countries currently censor the Internet, up from 37 in 2008, according to Reporters Without Borders.

Consider Iran, which last year began blocking the popular social networking site Twitter in the aftermath of its controversial presidential election. China last year expanded its censorship effort to block Twitter, Facebook, and YouTube - forcing droves of angry citizens to look for a way to "fanqiang," or scale the wall.

"I really didn't like it" when the government blocked social networking sites last year,
Zhang Shan, an art gallery clerk in Beijing, told The Los Angeles Times. "But a friend of mine gave me a program where I can log in and I can visit all those Web sites again. Many of my friends are also using the same program."

Indeed, the more zealous Beijing becomes about censoring the Internet, the more it risks turning the public against it.

"The best censorship is the censorship you don't know about. But with all the recent troubles, it's becoming more public," Xiao Qiang, director of the China Internet Project at UC Berkeley, told The LA Times. "That undermines the goal of censorship itself. It's converting more and more people."

In that sense, this very public conflict with Google is one of the worst things China's central government could ask for.

Gmail, Gtalk and Picasa are very popular in China and many users rely on Google Docs to save useful information and contacts. More than 80 million Chinese citizens log on to Google at least once a week, and roughly half of those are frequent users, according to China IntelliConsulting Corp.

China's Google "users are all very active users of the Internet," Lu Bowang, managing partner with the China IntelliConsulting Corp., told The Wall Street Journal. "They have high demand for the stability of Gmail, and also rely on it a lot in their daily lives."

By making an enemy of Google, the government runs the risk of driving more Chinese Web surfers into the waiting arms of VPN providers. And some analysts have even suggested that Google itself will take the lead in poking even more holes in the Great Firewall.

"My hope, and expectation, is that Google engineers who might have been a bit halfhearted about implementing censorship mandates in Google.cn could be full-throttle in coming up with ways for Google to be viewed despite any network interruptions between site and user," Jonathan Zittrain, a director of the Berkman Center for Internet and Society at Harvard University, wrote on his blog, The Future of the Internet and How to Stop It.

But even if Google backs quietly away - choosing instead to focus on such key domestic rivals as Apple Inc. (Nasdaq: AAPL) - the problem of maintaining strict censorship practices in China will continue to spread.

That means if China is going to be a major international player, it's going to have to think about waving the white flag in its war on the Internet.

"I think what is going to come about from this is that if Google does stick it to China, which is exactly what it's doing, it's going to make Beijing see it has to play ball by the rules the rest of the world agreed on," says Keith Fitz-Gerald, the chief investment strategist for Money Morning who is an internationally known expert on China. "This more than any other issue to date, proves to Beijing that it doesn't understand what the rest of the world values, which is the free flow of information."

Concludes Fitz-Gerald: "You can control what you give people, but you can't control what people look for."

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