Global Biz

Google's exit threat felt beyond Internet

(China Daily)
Updated: 2010-01-15 07:14
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The threat by Internet search giant Google to withdraw its Chinese operations could stoke tensions between China and the United States, analysts and major international media organizations said.

On Wednesday, White House spokesman Robert Gibbs confirmed that the Obama administration had already held talks with Google, without elaborating.

Similarly, US Secretary of State Hillary Clinton called on China for "an explanation" of Google's allegations.

Google claims that China-based hackers breached its security - and that of many other foreign companies in a variety of sectors including finance, technology, media and chemicals. Google said it was contacting the companies involved.

Google said it may shut its Chinese-language website and offices in China after accusations of cyber-attacks originating from the country.

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The search engine's threat comes amid US and European officials efforts to gauge China's willingness to cooperate on a range of issues in coming months, especially the West's push to secure United Nations Security Council backing for new economic sanctions on Iran aimed at curbing Teheran's nuclear program, The Wall Street Journal reported.

Microsoft Corp, which also offers search and e-mail services, said it was not targeted in the attacks cited by Google. But Steve Ballmer, its chief executive, questioned during a briefing whether they were unique.

"It's unclear what's going on there," Ballmer said of Google's disclosures.

"Every large company is subject to various attacks, from pros to hackers, and around the globe every day. Certainly we are."

Dozens of companies such as Morgan Stanley, Apple Inc and Marriott International Inc, which do business in China, declined to comment on how the Google move may affect their strategies. Others, including Boeing Inc, McDonald's Corp and General Electric Co, said the situation will not change their dealings with China.

"The cyber-attacks are not an issue and they are not on our priority list," said General Motors Corp China Group President Kevin Wale. "We understand the rules of China. We make a lot of effort to try and understand the rules so we may get along with the government more easily than others."

Google's move also puts pressure on large multinationals, at a time when many are feeling their own tensions in China.

Google said its internal investigation showed at least 20 other companies were affected. People familiar with the attack say at least 34 companies in the Internet, finance, technology, media and chemical sectors were hit by the cyber -attacks, The Wall Street Journal reported.

Only Adobe Systems Inc has publicly verified an incident so far. Another company, Rackspace Hosting Inc, says it was victimized as part of the attack on Google.

"All of these tensions are taking place at a time during which China is rethinking what constitutes its national interests and how to secure them," the journal quoted David Finkelstein, a China specialist at the Center for Naval Analyses in Virginia, as saying. "I see these things playing out against this larger context."

On Wednesday, Google's rival Yahoo Inc said it is "aligned with Google", issuing a statement that condemned the attack while declining to comment on whether it was targeted.

Broadpoint.AmTech analyst Benjamin Schachter is worried Google's stock will suffer if the company leaves China. "The obvious concern is that China's growth has been solid and its market potential is enormous," Reuters quoted him as saying in a Wednesday research report.

Google shares held up fairly well Wednesday, dipping just $3.39, or less than 1 percent, to close at $587.09. That is nearly seven times higher than Google's IPO price of $85 in 2004, a performance reflecting the company's evolution into one of the world's most powerful entities.

Reuters-AFP-The Wall Street Journal-Washington Post-AP