Many questions have been raised about Google’s motives in threatening to pull out of China (for example, see Sarah Lacy’s analysis on TechCrunch.) But regardless of whether Google’s motives are pure or pecuniary, the search giant’s action has huge implications for both government and business relations with China.
In brief, Google’s move puts tremendous pressure on other tech companies to re-examine their business-as-usual attitude toward China. The situation for the government is more complex, both because of strategic considerations and the fact that China holds vast quantities of U.S. government debt. But Google does put pressure on the government’s tendencies to overlook China’s bad behavior.
Google’s position, laid out in a blog post by chief Legal Office David Drummond, is important because it undercuts two pillars of U.S. companies’ approach to China.
- China’s human rights violations are unfortunate, but business is business. But, as Drummond writes, China’s efforts to crack down on human rights advocates in and out of the People’s Republic led to “a highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property from Google.” In other words, the Chinese government’s insistence on putting its top priority on maintaining political control became a clear and present danger to Google’s businesses. This makes it much harder for other companies to ignore the threat.
- The main justification for business-as-usual in China was the belief that as China engaged with the world economy, its politics would also normalize. This is a convenient belief for business, but it is also deeply rooted in the Western liberal (in the classical sense) philosophy that capitalism is a necessary and sufficient condition for political freedom. But this political liberalization manifestly is not happening and, if anything, China’s behavior is getting worse.
Google, which has struggled to gain traction in China, may have little to lose if it makes good on its threat and pulls out of China. It may be that this manifestation of “don’t be evil” come easily because the stakes are low. But the fact is that Google’s prominence and the highly public manner in which it is addressing the Chinese situation, will make it very difficult for companies with a much bigger investment in the Chinese market (Microsoft comes first to mind) to act as though nothing has happened.