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China is a country that does not admit easy generalizations. The controversy over Google is a case in point. Let's begin with Google's stated reason for ceasing to comply with Chinese Internet regulations, that is, attacks on Gmail accounts. These complaints bear more than a passing resemblance to the classic line, "I'm shocked" delivered by Claude Raines after seeing people gambling in Rick's Caf in one of Hollywood's best creations, Casablanca.
Evgeny Morozov, a blogger who works on the political effects of the Internet, has injected a welcome dose of East European cynicism in the matter in a Jan 16 post on his "Foreign Policy" tech blog. He says: "Cyber criminals in virtually every country wage cyber attacks on Gmail and other Google users".
I have been living in China for more than four years and know that practically all Chinese, even those critical of the government, are passionate about maintaining the country's territorial integrity. There are thus lots of people who need little encouragement from the government to hack into Gmail accounts of Tibetan and Xinjiang separatists.
It would certainly be better if the Internet was not hacked. The fact is it is. This happens in Russia, too, where organized gangs routinely attack Gmail account holders but that has not caused Google to shut down shop in that country.
One is entitled to feel rather cynical about how Google's decision is being spun by much of the Western media. But as Sarah Lacey writes in her "Tech Crunch" blog, "Does anyone really think Google would be doing this if it had top market share in the country?"
While Google.cn made $300 million last year, this sum is trivial compared to the $5.5 billion in overall revenue Google earned in the first quarter of 2009 alone. To put it bluntly, over a short term at least, Google has faced a dismal business prospect in China. Its share of the Chinese search engine market recently fell to between 14 and 17 percent, leaving it to trail Baidu, the homegrown and main search engine, further behind. Baidu, incidentally, holds two-thirds of the market.
So who are the losers in this episode? We can start with Google.cn's Chinese staff, who include hundreds of highly paid software engineers left twisting in the wind. The New York Times has said in a commentary that the Chinese are the "biggest losers" in this affair because they would no longer have access to all the information Google provides. This is an exaggeration.
To start with, all websites operate in China under the same regulations, though they don't have many of Google's sophisticated features. In fact, Chinese friends tell me that Baidu is actually much better in some aspects. This and its homegrown status are important reasons for its bigger market share.
Moreover, even if Google.cn disappears, Chinese netizens with relatively good English and technological skills, and access to proxy servers and/or virtual private networks (VPNs) can, like most expatriates here, use Google.com for Web searches. Indeed, like many other things in China, Internet use is being increasingly stratified by income: Chinese netizens are wealthier than their ordinary counterparts.
The VPNs and proxy servers won't be shut down because all major businesses in China use them to operate.
In the short run, however, this move provides a convenient way out of the problems Google has created for itself in maintaining its corporate image after succumbing to the lure of the Chinese market. And not coincidentally does it come at a time when the company is being attacked in Europe for ignoring copyright regulations in its book digitalization efforts (this was also a bone of contention in China).
But in the long run, Internet use in China still has enormous growth potential.
Thus Google's scorched earth policy is most likely to further strengthen Baidu and other Chinese internet companies as they continue to provide a wider and improved range of services. These firms are already flush with cash, and Lacey argues that over the next decade, their resources will make them likely buyers of Silicon Valley startups.
The author is an American corporate trainer and English language teacher in Beijing.