Google and China: business ethics, or ethics as business?

Posted on January 13, 2010 by jjn1

Google’s threat to close its operations in China has been treated as big news in the mainstream media. (As a technology columnist I’ve grown accustomed to the fact that Google is one of the triggers of senior editorial interest in technology!) Here’s how the NYT, for example, reported it:

BEIJING — Google said Tuesday that it would stop cooperating with Chinese Internet censorship and consider shutting down its operations in the country altogether, citing assaults from hackers on its computer systems and China’s attempts to “limit free speech on the Web.”

The move, if followed through, would be a highly unusual rebuke of China by one of the largest and most admired technology companies, which had for years coveted China’s 300 million Web users.

The more I think about it, though, the more puzzled I become. First of all, it only makes sense if Google knows that the cyberattack that is one of the alleged grounds for its threat was actually orchestrated or conducted by the Chinese government. But the company spokesman on Radio 4 this morning declined to comment on that. Secondly, it’s puzzling because Google must have known what it was getting into four years ago when it agreed to the Chinese regime’s conditions for operating in that country: that was the moment when we saw the transition from Google-the-religion to Google-the-corporation. I wasn’t particularly surprised when the company agreed to bend the knee to the Chinese. Corporations obey the law, and are as ethical or unethical as they can get away with. Expecting a shareholder-owned entity to do more than obey the law is a bit like expecting my cats to obey my injunctions to be kind towards birds and small rodents. It goes against their natures.

Thirdly (and following on from that), there’s the business angle. If I were a shareholder in Google, would I be pleased to see the company turning its back on the most important emerging market in the world? (Well, I might: but I’m not running a pension fund.) Looked at through the prism of pure corporate strategy, it seems like an unwise step.

And then, finally, there’s a whiff of hubris about it. Google is big and powerful, but it’s a flea compared to the authoritarian regime that runs the world’s next superpower. I’m reminded of the story about Stalin’s alleged retort to news that the Pope was opposed to something he was planning: “And how many divisions has the Pope?”

So what is one to make of it? One interpretation is that it’s a business decision dressed up in ethical garb.

The company has been constantly losing market share against its rival Baidu in the last few months and is currently left with only about 17% of the Chinese search market.

In other words, Google has decided that the Chinese search market is a lost cause and has made a strategic decision to cut its losses and pull out.

Another slant on it concerns the way the company has gone about this. Here’s a Chinese perspective on it:

With its bold statement towards the Chinese government, Google basically closed their doors in China. Business tactics that may work in countries like the US do not work in China. In China there is a strong feeling about building relationships. There is a strong feeling about “saving face”. There is a strong culture and history that the people are very proud of.

Sure there are problems. And yes there are problems that need to be fixed. But the question that arises is what is the best way to go about it.

I wrote a blog post about how to do business in Asia. In this post I summarized the lessons that could be learned from President Bill Clinton’s visit to North Korea to release the US reporters. Bill did not prove that he was right and North Korea was wrong. Instead, he approached the government with respect and he approached them in a way that was aligned with their culture. Bill gave them a path to change their position without losing face. By doing this, Bill achieved a result that many thought was impossible. North Korea released the US reporters to the US.

Unfortunately, Google did just the opposite today. They brought US tactics to the Chinese government. Not any US tactics, but US tactics that are against the grain of Chinese culture. They did not show respect. They did not allow a path for “saving face”. They did not build the relationship.

Funnily enough, even thought I disapproved of Google’s 2006 decision to filter search results, I thought that the company was approaching it sensibly by arguing that it was at least letting Chinese searchers know when they’d been banned from seeing something. And that was better than nothing.

Anyway, we’re left with an enigma. There’s more to this than meets the eye. Wish I knew what.

LATER: One answer might be that it’s a move that resonates with official thinking within the Obama Administration. For example, this source reports that:

Google’s decision Tuesday to risk walking away from the world’s largest Internet market may have come as a shock, but security experts see it as the most public admission of a top IT problem for U.S. companies: ongoing corporate espionage originating from China.
It’s a problem that the U.S. lawmakers have complained about loudly. In the corporate world, online attacks that appear to come from China have been an ongoing problem for years, but big companies haven’t said much about this, eager to remain in the good graces of the world’s powerhouse economy.

Google, by implying that Beijing had sponsored the attack, has placed itself in the center of an international controversy, exposing what appears to be a state-sponsored corporate espionage campaign that compromised more than 30 technology, financial and media companies, most of them global Fortune 500 enterprises.

The U.S. government is taking the attack seriously. Late Tuesday, U.S. Secretary of State Hillary Clinton released a statement asking the Chinese government to explain itself, saying that Google’s allegations “raise very serious concerns and questions.”

“The ability to operate with confidence in cyberspace is critical in a modern society and economy,” she said.

STILL LATER: Tech Review has a piece about the attack which allegedly triggered Google’s announcement:

Though Google has not disclosed the exact nature of the attacks, [David] Drummond [Google’s chief legal officer] wrote: “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.” He added that the company has gathered evidence that 20 other large Internet, finance, technology, media, and chemical companies were also attacked.

In Google’s case, the attackers tried to get into Gmail accounts belonging to Chinese human-rights activists, Drummond said. The company believes that the efforts were not successful, but that hackers have been targeting human-rights activists based in other parts of the world through a range of hacking techniques.

Amichai Shulman, CTO of Imperva, a data-security company based in Redwood Shores, CA, says Google probably called the attack “highly sophisticated” because the hackers got into the heart of its database and password list. “The intellect and resources required to pull off such a surgical attack are staggering considering the defenses Google has put in place to protect digital assets,” he says.

Why it’s called hard-ware

Posted on January 13, 2010 by jjn1

When a company becomes as dominant and successful as Google (or Microsoft, for that matter), there’s a tendency in the mass media (and indeed in the investment community) to assume that when it decides to throw its weight behind a product or service then it’s bound to succeed. Sadly, it ain’t true — as Microsoft has discovered with media players, home media centres and mobile phones. Now it’s Google’s turn to discover that getting into a business where you have no previous experience is a tough proposition — as this dispatch from Good Morning Silicon Valley suggests.

The Nexus One may be made by HTC and its primary carrier may be T-Mobile, but Google’s name is on the phone and Google’s site is the point of purchase, so Google is getting a heaping helping of the customer questions and complaints. But mobile phone users are used to turning to a carrier’s call center for round-the-clock assistance (albeit of varying quality), and Google doesn’t have one of those. Instead, the company’s support services rely on FAQs, forums and e-mail. And that process, it seems, is not straightforward or timely enough for some Nexus One buyers. First came a wave of questions about service plans, upgrade eligibility, shipping, network compatibility and the like — normal for any new phone, and certainly one sold in this unfamiliar style. There were also tech questions, particularly regarding an issue with flaky 3G connections that HTC, Google and T-Mobile are all now trying to figure out. Again, not unusual for a new phone. But the next wave of forum posts started to bring other complaints — about slow responses to questions; vague or partial answers; advice that sent users ping-ponging among maker, vendor and carrier; and accusations that Google was unprepared to offer proper customer care, or worse, that it was trying to make minimally assisted self-help the new normal.

And this morning, there’s another headache brewing — some folks are just discovering that when Google said calling-plan customers who got the $180 discounted price on the phone and then canceled within 120 days would have to pay the $350 balance of the unsubsidized price, that would be in addition to the carrier’s own early termination fee. You do have the option of returning the phone.

LATER: More in the same vein from the New York Times.

Nexus vs iPhone is a skirmish, not the real war

Posted on January 10, 2010 by jjn1

This morning’s Observer column.

Despite their tender years, the boys who run Google have consistently shown a good grasp of military strategy, the first law of which is always to decline combat on territory dominated by your enemy and fight only on ground where you have the advantage. That’s why for years Google avoided getting into the PC operating system market – Microsoft’s fiefdom – and concentrated instead on search and networked services, where it was overwhelmingly dominant.

This also explains its mobile phone strategy. They recognise that the functional elegance of the iPhone comes from having total control of both the hardware and its software. This kind of integrated mastery, which is Apple’s stock-in-trade, would be difficult to acquire quickly, even for a company as smart as Google…

LATER: I was pondering writing a post expanding the claim in my column about why the iPhone is currently the superior, but I find that Dave Winer has done a much better job than I could. As usual.

iPhotography

Posted on January 6, 2010 by jjn1

Well, if David Hockney can use his iPhone to produce serious art (along with the guys who do the covers for the ‘New Yorker’), why shouldn’t photographers do the same? That’s the basis for the iPhone Photo Project, an interesting experiment just launched by one of my sons.

This blog is an experiment – to see if I can create artistically worthwhile photographs every day on my iPhone. The idea was inspired by Chase Jarvis’s ‘The Best Camera’ project, which champions the use of the cameras we carry with us all the time as opposed to the ones we don’t. The best camera is the one you have with you, stupid. That strikes me as a powerful and democratising idea and has caused me to ask myself the question “what can I produce on my iPhone?”

It’s a neat idea. I don’t have an iPhone, but I always carry a camera — in my case a Canon IXUS which is actually quite a serious piece of kit. It’s technically much better than the iPhone camera, but of course it doesn’t have any onboard communications (or editing facilities, come to that). So it’s not much use for photoblogging.

And then there are the implications of the new Omnivision image sensor. As the New York Times puts it:

OmniVision, a company specializing in the image sensors for mobile phones, cameras and laptops, announced a new image sensor chip capable of recording 14.6 megapixel single images or full 60 frames per second 1080p high definition video. This is the same quality, or better, than most high-end cameras on the market today. The new chip also captures much higher light levels, creating a clearer picture and increasing image stabilization while shooting HD video.

If you’ve purchased a modern cell phone in the past three years, chances are you’re already walking around with a three to five megapixel camera built into your phone. But due to amount of light these sensors need to capture, the images can be very poor. If consumers want to take higher quality images, or video, you need to carry a separate dedicated camera.

It won’t be long before the images on mobile phones become equal quality to handheld cameras, said Devang Patel, senior marketing manager at OmniVision. He said, “Obviously the hand-held camera will have extra features, like better zoom, but you’ll start to see similar performance between cameras and camera-phones.”

Next stage in the Celtic Tiger’s downhill spiral: sovereign default?

Posted on January 4, 2010 by jjn1

Professor Morgan Kelly of University College Dublin has written a terrific analysis of the banking crisis which still threatens the economic viability of my homeland. His conclusion:

By pushing itself close to, and quite possibly beyond, the limits of its ﬁscal capacity,the Irish state has succeeded in rescuing Irish banks from their losses on developer loans. Despite this, these banks remain as zombies entirely reliant on continued Irish government guarantees and ECB forbearance, and committed solely to reducing their own debts. While bank capital levels are, probably, adequate for the markedly smaller scale of their future lending, … even fairly modest losses on their mortgage portfolios will be sufficient to wipe out most or all of that capital. Having exhausted its resources in rescuing the Irish banks from the ﬁrst wave of developer losses, the Irish state can do nothing but watch as the second wave of mortgage defaults sweeps in and drowns them.

In other words, it is starting to appear that the Irish banking system is too big to save. As mortgage losses crystallise, the Irish government’s ill conceived project of insulating bank bond-holders from any losses on their investments is sliding beyond the means of its taxpayers. The mounting losses of its banking system are facing the Irish state with a stark choice. It can attempt a NAMA II for mortgage losses that will end in a bond market strike or a sovereign default. Or it can, probably with the assistance of the IMF and EU, organise a resolution that shares property losses with bank creditors through a partial debt for equity swap.

Thanks to Gavin Sheridan and the unmissable The Story for the link.

An antidote to Kindlemania

Posted on January 3, 2010 by jjn1

This morning’s Observer column.

A strange thing happened at Christmas. Well, two really. Amazon.com reported that its Kindle eReader had become the “most gifted” product in its vast inventory; and on Christmas Day sales of eBooks on its site exceeded those of physical books. The phenomena are, of course correlated: all those recipients of Kindles needed to buy something they could actually read on the devices. But the combination of the two ‘facts’ has further ratcheted up speculation that 2010 will be the Year of the Kindle and the end is nigh for the printed codex.

If you detect a whiff of what philosophers call ‘technological determinism’ in this, you’re in good company. I have on my shelves a (printed) copy of The Myth of the Paperless Office by Abigail Sellen and Richard Harper, a wonderful antidote to the irrational exuberance of Kindlemania. The authors conducted an ethnographic study of how people actually use paper in order to reach an understanding of which of those uses might conceivably be eliminated by electronics, and which might not. It should be required reading for anyone showing the early symptoms of Kindlemania…

Obama’s West Point speech

Posted on January 2, 2010 by jjn1

If you found Obama’s speech setting out his Afghan strategy as unsatisfactory as I did, then you’ll enjoy this dispatch from Gabor Steingart of Der Spiegel. It reads, in part:

“Never before has a speech by President Barack Obama felt as false as his Tuesday address announcing America’s new strategy for Afghanistan. It seemed like a campaign speech combined with Bush rhetoric — and left both dreamers and realists feeling distraught.

One can hardly blame the West Point leadership. The academy commanders did their best to ensure that Commander-in-Chief Barack Obama’s speech would be well-received.

Just minutes before the president took the stage inside Eisenhower Hall, the gathered cadets were asked to respond “enthusiastically” to the speech. But it didn’t help: The soldiers’ reception was cool.

One didn’t have to be a cadet on Tuesday to feel a bit of nausea upon hearing Obama’s speech. It was the least truthful address that he has ever held. He spoke of responsibility, but almost every sentence smelled of party tactics. He demanded sacrifice, but he was unable to say what it was for exactly.

An additional 30,000 US soldiers are to march into Afghanistan — and then they will march right back out again. America is going to war — and from there it will continue ahead to peace. It was the speech of a Nobel War Prize laureate.”

The decade with no name

Posted on January 1, 2010 by jjn1

The New Yorker has a lovely essay by Rebecca Mead about the decade that ended last night. In almost every way one looks at it, the ‘noughties’ look like a wasted decade.

The events of and reaction to September 11th seem to be the decade’s defining catastrophe, although it could be argued that it was in the voting booths of Florida, with their flawed and faulty machines, that the crucial historical turn took place. (In the alternate decade of fantasy, President Gore, forever slim and with hairline intact, not only reads those intelligence memos in the summer of 2001 but acts upon them; he also ratifies the Kyoto Protocol and invents something even better than the Internet.) And if September 11th marked the beginning of this unnameable decade, its end was signalled by President Obama’s Nobel acceptance speech, in which he spoke of what he called the “difficult questions about the relationship between war and peace, and our effort to replace one with the other,” and painstakingly outlined the absence of any good answers to the questions in question.

In between those two poles, the decade saw the unimaginable unfolding: the depravities of Abu Ghraib, and, even more shocking, their apparent lack of impact on voters in the 2004 Presidential election; the horrors of Hurricane Katrina and the flight of twenty-five thousand of the country’s poorest people to the only slightly less hostile environs of the Superdome; the grotesque inflation and catastrophic popping of a housing bubble, exposing an economy built not even on sand but on fairy dust; the astonishing near-collapse of the world financial system, and the discovery that the assumed ironclad laws of the marketplace were only about as reliable as superstition. And, after all this, the still more remarkable: the election of a certified intellectual as President, not to mention an African-American one.

Chelsea-on-Sea

Posted on December 30, 2009 by jjn1

To Burnham Market, the poshest small town in England, for lunch. It’s still the lovely place I remember from when we used to go there two decades ago, but has gone spectacularly up-market — to the point where it now resembles nothing so much as Chelsea-on-Sea. Streets choc-a-bloc with Porsche Cayman and ~~Toucan~~ Touareg SUVs, boutiques selling trinkets that cost more than the Gross National Product of Ecuador, cheery gels with names like Camilla and Eugenie and Amanda wearing green wellies — you can imagine the scene. But still, unaccountably, charming. I was reminded of the time, years ago, when a good friend of mine dreamed of buying a little house in Burnham Market and settling down to a career writing scandalous novels. (She never managed it, and became an academic instead. But today I imagined her casting an ironic eye on the visiting Yuppies, and using them as characters in a comic novel.)

Our plan was to lunch in the Hoste Arms, but given that (a) we arrived at 1pm, (b) it was wet and cold (and (c) the middle of the holiday season to boot) we should have known better: it was heaving with lunchers. So we found a small cafe and had lovely pea soup and sandwiches instead.

And then we stumbled on the loveliest little secondhand bookshop which had the best collection of biographies I’ve seen in a while — including Chester Anderson’s short illustrated biography of Joyce and the fascinating biography that John Wyse Jackson and Peter Costello wrote of John Joyce, James’s reprobate of a father. I walked out clutching both, and only £11 poorer. Bliss.

How to hold onto your staff