TCS Daily


Judging Google

By Glenn Harlan Reynolds - January 31, 2006 12:00 AM

So Google is cooperating with the Chinese, and there's been a firestorm of criticism. The Times of London observes:

"Until now, Chinese net users who were blocked from accessing a site knew that the information was there and was being kept from them by their own government. From now on it is Google which will be keeping data from them, in direct contradiction of its own declared mission 'to organise the world's information and make it universally accessible and useful'.

"The reaction to Google's move has been highly critical. The watchdog organisation Reporters Without Borders called it 'a black day for freedom of expression in China', adding that 'Google's statements about respecting online privacy are the height of hypocrisy in view of its strategy in China'. It seemed that the company's real motto was something more along the lines of 'don't be evil unless the Chinese government asks you to and there's serious money in it.'"

In taking this approach, Google doesn't distinguish itself much from other big American companies -- Microsoft, Cisco, Yahoo!, etc. -- that have cooperated with the Chinese. (Arguably, its behavior here is somewhat "less evil.") It's a big market, offering over a billion customers, and the Chinese government itself is a big purchaser. Why make them mad? How many people, besides a few human-rights types, will care that according to the Chinese Google, that Tiananmen Square never happened? And how much money do they spend on IT?

There's also a not-entirely-bogus counterargument, that Chinese citizens with access to a censored Google are still more powerful, relative to their government, than Chinese citizens with no Google at all. Though this claim seems a bit, er, convenient, it may still have a grain of truth to it. The experience of empowerment that the Internet provides seems to affect people in ways that go beyond specific issues, and make them less tolerant of bossiness elsewhere; the more Chinese surf the Web, the more will have that experience. Maybe. It's possible. After all, plenty of people made similar arguments in favor of "constructive engagement" with the Apartheid regime in South Africa, and against sanctions designed to force an end to its racist policies.

But it's kind of odd to find Google in the position of making those sorts of arguments. There was always the sense -- despite its ruffling a lot of feathers over what sources were included in Google News, or various complaints about the limited privacy afforded by Gmail -- that Google was something different: Not just another big corporation.

Unfortunately, Google is another big corporation, and it's one that, despite its occasional assertion of "privacy" in settings where doing so was fairly costless, has amassed huge amounts of information on its users, their email, their search habits, and contacts. People didn't mind so much, because they felt that Google was special: More trustworthy than, say, Microsoft, WalMart, or other big companies.

I suspect that a lot of people are rethinking their attitude toward Google now. And that attitude goes beyond the moral, to the financial -- as the Times article reports, it's showing up in stock prices: "The company is now worth $20 billion less than it was a month ago."

Some small users are boycotting Google's ad program, and I imagine that this may prove a boon to Google's competitors. But the longer-term damage will come as Google is seen as being bigger than Halliburton, and no more trustworthy. Google has enjoyed a very high "return on moral capital" in recent years, but that return (and the capital) is likely to be much smaller in the future, with costs that, though diffuse, will be substantial. That perhaps offers a lesson for companies in the field.

The lesson for the rest of us is that Google's dominant position in several fields is probably a bad thing. We don't generally trust companies to possess the kind of multi-market dominance that Google has enjoyed for several years; trust in Google based on the notion that it was "different" seems to have been misplaced. Many people will no doubt start looking for other companies to provide things they want, hoping that competition will provide a degree of discipline that conscience has not. In my experience, that's usually a more reliable constraint.

Editor's note: For another view on this topic, see James DeLong's piece on TCS today here.

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Apartheid lessons forgotten
Multinational Corporations in Apartheid-era South Africa: The Issue of Reparations
Harvard Business Review, August 26, 2003

Considers the LAWSUITS FILED ON BEHALF OF VICTIMS OF APARTHEID AGAINST MULTINATIONALS who operated in South Africa prior to 1994. Reviews the debates about divestment from and sanctions against South Africa from the 1950s. Includes case studies of companies that divested -- Eastman Kodak and IBM -- and stayed -- Royal Dutch/Shell and Johnson & Johnson. Concludes with evidence on the use of the ALIEN TORT CLAIMS ACT against corporations in other international contexts.

http://harvardbusinessonline.hbsp.harvard.edu/b02/en/common/item_detail.jhtml?id=804027

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