By Steven Mufson
Washington Post Staff Writer
Thursday, January 14, 2010; A14
BEIJING -- Google's threat to shut down its Chinese Web site and offices over cyberattacks and censorship puts the government here in the awkward position of having to choose between relaxing restrictions and raising the ire of the roughly 80 million Chinese people who use the search engine.
Few political and Internet analysts appear to doubt that China will stick to its tough stance and reject Google's proposal to stop censoring search results on its Chinese sites. But Google's audience of Chinese "netizens," a few of whom placed flowers outside the company's Beijing offices Wednesday, is large enough to make such a reaction risky.
"This would adversely affect a lot of people, not just the technorati elite that is Western-oriented anyway," said Kaiser Kuo, an independent technology consultant. "The government could face a serious backlash this time."
On Wednesday, the Google story was the top trending topic on a Twitter-like microblog on the Chinese site Sina.com, with about 60,000 people weighing in before the conversation was taken down. Most commenters expressed dismay at the prospect of losing Google's China-based service; some lashed out at the government, while others begged Google to stay. A substantial minority wished the company good riddance.
"This will make the extent of Chinese censorship a lot clearer, even to ordinary Chinese people who are not aware of it," said Jeremy Goldkorn, a China Internet specialist who posts on Sina's blog site and runs a Web site called Danwei, which has been blocked since July.
"Many people think Google should negotiate with the Chinese government," said Zhou Shuguang, a blogger who has done investigative reporting across the country. He added, though, that its withdrawal would lead more Chinese to discover that China lacks freedom on the Internet. "There are no benefits to people at all if Google continues to make concessions with Chinese authorities," he said.
The government has backed down once in the face of outcries on the Internet. Last year, it attempted to require the makers of personal computers sold here to install Green Dam, a filtering software. But it reversed itself after widespread online protests that the software slowed down and damaged computers.
Still, businesspeople in Beijing were pessimistic Wednesday about the prospect of a crack in what is known as the Great Firewall of China. "China can't lose face over this, and it's not going to let anybody run an open search engine," said an industry source close to Google.
The government has shut down or blocked thousands of Web sites. Twitter, YouTube and Facebook are all blocked. Just this week, the General Administration of Press and Publication boasted of taking down 136,000 non-registered Web sites and more than 1.5 million pieces of "bad information." It also said it had shut down 15,000 pornographic Web sites.
For now, the government has said only that it will seek more information from Google. Virtually the only official comment came in the form of a signed opinion article on the People's Daily Web site, lacking the weight of an officially vetted unsigned editorial. The article likened Google to a "spoiled child" and said that even if it stormed out of China, it would be back because of the importance of the Chinese market.
Other pro-government online comments said that Google, which lags far behind the Chinese-based search engine Baidu, was simply dressing up a business decision in moral clothing. Baidu has about two-thirds of the market. Some independent analysts have estimated a 30 percent market share for Google, but well-placed industry sources put the number closer to 20 percent.
Dan Brody, who set up Google's China office and now runs the Koolanoo Group, a Beijing-based Internet media investment firm, estimates that Google has annual revenue of $300 million to $400 million in China -- an amount that he said pales next to the revenue it earns elsewhere.
Moreover, he said, if Google loses even a small percentage of its users in Europe or the United States because it is seen as compromising too much with China, it could lose more than it earns in the country. "From a business and moral perspective, user trust in the West is so important to them," he said.
The company has clashed with the Chinese government since it set up google.cn in 2005. Google agreed to remove information that China's leadership might find too sensitive but differed with officials over what should fall into that category.
Last summer, state-run media denounced the firm for providing access to "pornography." Another industry source close to Google said that in addition to well-publicized incidents, Chinese officials were demanding weekly that items be removed. When cyberattacks were discovered, he said, "it was the last straw." The industry sources spoke on the condition of anonymity.
If Google closes down its Chinese site, or if the Chinese government closes it down, Chinese users could still try to use the U.S.-based site. But the U.S. site works more slowly, and access to many pages is blocked.
Where would that leave the Chinese market?
The closing of Google's China site would boost Baidu and Sina and hurt Google, industry analysts said.
Despite expensive campaigns in universities and schools, Google has had trouble catching up to its domestic competitors. Analysts say Chinese Internet users prefer the crowded, busy sites of Baidu and Sina to the no-nonsense sparseness of Google's home page. Unlike Google, Baidu and Sina also feature bulletin boards and music-downloading services. And surveys have shown that most Chinese people have trouble spelling Google or don't know its Chinese name, Guge, which means "valley song."
Google China has also suffered from high turnover and was recently forced to replace some of its locally hired, Mandarin-speaking staff with managers from its California headquarters. The head of Google China, Kai-Fu Lee, who was recruited from Microsoft, quit in September.
Ironically, however, the possible departure of Google is no guarantee of harmony on the Chinese Internet. This week, Baidu's site was attacked by hackers who said they were from Iran.
"This is a lose-lose solution for both Google and China," said Hu Yong of Beijing University's School of Journalism and Communication.
"For Google, China is a huge market with very big business potential," Hu said. "For Chinese netizens, it's a bad result as well. A search engine is very important for the free transportation of information online. And we need competition," he added, or "the number of information sources will decrease."
Staff researchers Zhang Jie and Wang Juan contributed to this report.