Comment on the legal and regulatory environment in China and its implications for the chinese media. In light of the restrictions imposed by the Chinese government of internet access, how do you think the media industry is affected?

On google agreeing to ensure its search content, Reporters without borders commented, “Google’s statement about respecting online privacy are the height of hypocrisy in view of its strategy in China.” However, Google’s Director of Research was of the view, “What’s important to users is access to information, we are giving them that, and we think that’s the most important.” Do you think Google was right in taking this step? Justify your answer.

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Internet censorship

Increasingly, Chinese and Tibetan citizens both inside and outside areas of Chinese Government control are seeking information through the internet and other forms of online media.

The speed and bredth of information access which these mediums allow is a huge threat to the Chinese Government as they attempt to maintain propagandist views of 'sensitive issues' such as human rights, the Tinananmen Square massacre and Tibet.

As such, the Chinese Government goes to great lengths to control the internet and to limit the amount of information its citizens are able to uncover.

On 13 January 2010, Google announced that it would consider pulling out of China after it emerged that hackers had been attempting to access the Gmail accounts of human rights activists. Google instead decided to drop the web filters imposed on Google searches by the Chinese government, leading to content which had previously been censored suddenly being made available to web users in China. Google users in China reported that content such as images of the Tiananmen Square massacre were suddenly available using a Google images search.

In March 2010, Google began redirecting web traffic within China to its uncensored Hong Kong site, with the US government voicing its support of Google's decision by using the news as an opportunity to criticise web censorship in China. Read Google's statement here.

However in July 2010, Google reversed this decision, deciding to return to filtering content as instructed after it became clear that the Chinese government would only renew Google's licence to operate within China if it did so. Free Tibet led a high profile campaign against Google in 2006, when Google and other companies originally agreed to self-censorship in order to operate in the Chinese market. It is hoped that other companies will also challenge the Chinese regime on censorship as Google has done, and that Google will be able to return to providing uncensored content in the future. You can read about the 2006 Google campaign here.

In China and Tibet, websites such as the BBC, Free Tibet, Phayul.com and the Tibetan Government webiste are banned, as are thousands of sites relating to issues such as democracy, Taiwan, the Dalai Lama or human rights. Those reporting or writing on sensitive issues or challenging the state are at enormous risk of dismissal from work, arbitrary detention or imprisonment.
Many Tibet-based websites are regularly closed down – either permanently or temporarily – for material deemed political or critical of the government appearing on their forums. This website, freetibet.org, is censored in China, though it is apparent that some Chinese citizens manage to circumvent these strict controls. The 'Great Firewall' works by filtering site content through a series of remote servers, but sites which frequently switch locations have been known to avoid this problem. Netizens within China and Tibet have also developed their own ways to access banned content, making the authorities all the more determined to bring in new software which uses advanced methods to block sites which are deemed 'harmful'.

In 2005, China introduced new restrictions on internet content, relating to “politics, economics, military affairs, foreign affairs and social and pubic affairs”. China’s new internet regulations launched in September 2005 put even further restrictions on information by preventing the distribution of any uncensored news in both websites and e-mail. In June 2009, the Chinese authorities announced a plan to implement a new piece of software called 'Green Dam-Youth Escort', under the premise that it would protect underage web users from accessing pornographic content. However, experts stated that the software can also be used to block internet sites for political reasons, including any information regarding Tibet or the Tiananmen Square massacre of 1989. The Chinese authorities hope that by continuing to censor internet content, they will be able to keep its people in the dark about the true face of the Chinese Government. China currently employs 30,000 internet police to monitor and crack down on any dissent in people’s e-mails or on websites, and said that it aimed to have all PCs built and used in China equipped with 'Green Dam-Youth Escort' by 1 July 2009.

However, after widespread criticism of the plan, the Chinese Government reportedly backed down over Green Dam's implementation, making the software optional. Opposition to the software was rife on the internet and public opinion in and outside China seems to have had an impact after the 'blacklist' of keyword topics which Green Dam blocks was leaked on the internet. The list included references to Falun Gong and Tiananmen Square, despite government assurances that it was to be used to block pornographic material. The software was designed by Jinhui Computer System Engineering, a military-backed company based in Henan. The leak also referred to the wording of the agreement between Jinhui and the Chinese Ministry of Industry and Information, which stated that it aimed to restrict access to pornography and other "harmful information".

Following the leak, the US Commerce Secretary Gary Locke urged China to shelve demands that computer manufacturers pre-install the software, saying "China is putting companies in an untenable position by requiring them, with virtually no public notice, to pre-install software that appears to have broad-based censorship implications and network security issues." Along with US Trade Representative Ron Kirk, Locke wrote to the Chinese authorities expessing their concern. Kirk said that "mandating technically flawed Green Dam software and denying manufacturers and consumers freedom to select filtering software is an unnecessary and unjustified means to achieve that objective, and poses a serious barrier to trade." However, a Chinese Government official stated that "the users have the final say on the installation of the Green Dam-Youth Escort... the Government's role is limited to having the software developed and providing it free."

In August 2009, the Chinese Government officially dropped its plans to introduce Green Dam, calling all former references to citizens being required to install it 'a misunderstanding'. Li Yizhong, China's Industry and Information Technology Minister, said that the Chinese Government "respected the choice of individuals who do not install it". He also made a point of referencing rights groups and individuals who had criticised the plan, saying "those who overstated and politicised the issue, or even attacked China's internet regulation, are irresponsible," The apparent turn-around came after widespread condemnation of the scheme from rights groups, governments and Chinese bloggers, over 1,000 of whom, led by journalist Wen Yuchao, had signed up to a plan to sidestep the software by accessing the internet through 'proxy servers' in different countries, which would have effectively prevented Government control and observation of their internet activities going forward. It is already known that many Chinese netizens use proxy servers to access information which the Government would otherwise be able to block from their view.

Despite dropping the Green Dam system, China brought in new controls on website registration in February 2010, requiring anybody who wishes to set up a website in China to go through a screening process including a meeting with official website regulators.
On 13 January 2010, Google threatened that it would move it's operations out of China unless censorship was relaxed after it emerged that hackers were attempting to access the Gmail accounts of Chinese human rights activists. When questioned whether Google believed the Chinese government was behind these attacks, Google spokespeople replied that they could not evidence such accusations. Google's drive to expand it's Chinese market had been less fruitful than some analysts predicted, in part due to the strict censorship of content, which prevented Google from supplying its customers the service they wishes to offer. Google's Senior Vice President of Corporate Development David Drummond said "These attacks and the surveillance they have uncovered, combined with the attempts over the past year to further limit free speech on the web... have led us to conclude that we should review the feasibility of our business operations in China."

As a result, Google withdrew its censorship of web results on its google.cn service, making previously censored materials available across China. This move meant that Chinese web users would be able to find images of the Tinanamen massacre and of protests in Tibet as well as videos and web sites which the government regards as politically 'sensitive'. However, since the Chinese government controls access to websites themselves, sites with political content are still censored in China. Baidu, Google's main rival in China, was hacked on the same day as Google's announcement, and the entire Chinese firewall was reportedly subject to a crash for two hours the week prior, indicating that China is likely to face more challenges to it's strict controls of information access as the 'cyberwar' continues.

David Drummond went on, "Over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all." Google's announcement met with widespread support on internet blogs and Twitter across the world. US Secretary of State Hillary Clinton responded to Google's statement by saying that their allegations "raise very serious concerns and questions... we look to the Chinese government for an explanation. The ability to operate with confidence in cyberspace is critical in a modern society and economy." David Drummond later elaborated further: "We were always uncomfortable with China having censored our search results. We thought by being there we could be a force of openness. In fact, that has not happened. Things have gotten tighter... We discovered that the activist had been under surveillance. And this just became something that we were not willing to do any more. We want to stay in the Chinese market, we just don't want to filter our search results any more... The thing that is important to recognise is that internet censorship is a real problem, and not just China. It is time for governments to get involved."

Chinese Foreign Ministry spokeswoman Jiang Yu commented in regards to Chinese law by stating "China like other countries administers the internet according to law. China's internet is open, and the Chinese government encourages development of the internet." She added "Chinese law proscribes any form of hacking activity." News agencies with correspondents in China reported that in practice, web censorship is firmly in force in China. Furthermore, US web expertslater reported not only had tthe hacking of human rights advocates' Gmail accounts indeed taken place, but that the hacks had all the hallmarks which pointed to the Chinese state being behind such hacks.

After news of the hacks became known, a Yahoo spokeswoman said that Yahoo was 'aligned' to Google on this issue, and spoke of the 'deeply disturbing' attacks as a violation of the privacy of web users. It went on "Yahoo condemns all cyber attacks regardless of origin or purpose. We are committed to protecting user security and privacy and we take appropriate action in the event of any kind of breach." Yahoo's Chinese partner company Alibaba reacted by stating that Yahoo "was reckless given the lack of facts in evidence," and that "Alibaba doesn't share this view." Web security company Mcafee also offered it's expertise on the issue, saying that this was 'a watershed moment in cyber security' and that the complexity of the hacks suggested that a large organisation or nation state was responsible. Haim Mendelson, a professor of electronic business at Stanford, said "If Google leaves China, I think the impact of that is China gets a black eye. It's going to make it a little more difficult for China to attract other foreign companies. People will remember what happened to Google."

Google decided to redirect web traffic within China to its uncensored Hong Kong site, but later reversed this decision when in July 2010 it transpired that the company would not be able to obtain a renewal of its licence to operate within China unless it once again conformed to the Chinese government's directions regarding censorship. Free Tibet hopes that other companies will follow Google in publicly challenging web censorship in China, and that Google will be in a position to operate uncensored searches in China in the future.

The Dalai Lama addressed the importance of the censorship issue in February 2010, when he said "censorship ... is the source of the problem... The Chinese people have no opportunity to know our issue. Once China becomes an open society; freedom of speech, freedom of press, freedom of information; all this unnecessary fear and doubt will reduce."

After Google's challenge to Chinese censorship, another company, Go Daddy, stopped resistering domain names in China, saying "we made a decision we didn’t want to act as an agent for the Chinese government." The example set by companies like Google and Go Daddy proves that it is possible for large companies to challenge Chinese government censorship were governments often fail, while exposing Chinese citizens to content which the Chinese government wishes to keep secret. Such actions could have far reaching consequences for information access in China and Tibet.

After unrest in Xinjiang on 5th July 2009, China blocked internet access to prevent news and discussion being spread. Government reports stated that local Uighurs had been behind riots in the region, and that many Han Chinese civilians had been killed. Other sources suggested that Chinese police had reacted violently to peaceful protests, and tensions had risen on both sides from there. Reuters reported that pictures of badly mutilated dead bodies were removed from the internet shortly after being posted, and that Twitter was also blocked in Beijing and Shanghai, with references to terms such as 'Uighur', 'Xinjiang' and 'Urumqi', the region's capital, showing no results. It was also reported that Shanghai site pchome.net had carried postings by Chinese netizens regarding the unrest, but that these had been removed a few hours later, apparently in an attempt to prevent discussion of the issues raised by the events in Xingjiang. The original protests in Xinjiang seem to have been organised, often using online communication such as Twitter and social network sites, after a video was shared on YouTube showing Uighurs in Southern China being chased by a mob and reportedly killed. Use of these technologies on both sides demonstrate how information can be spread despite China's iron grip, and how determined the Chinese government is to curb access to such information, fearing that the Chinese people will also use these facilities to demand greater freedoms.

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Although the Chinese government views the Internet as a key engine of economic growth and an important platform for social and public services, it also sees the need to control the Internet to protect its domestic interests. With the largest number of Internet users in the world, the expanding scope of online content presents a major challenge for the Chinese government, which is intent on maintaining social order and stability in a context of rapid development and social transformation. Increasing contradictions arise out of these processes. 150 State authorities resist international criticism by pointing to China ’ s developing country status and vulnerability to potential disorder.
The Chinese government maintains a strict and extensive approach to controlling the flow of information through a robust legal system that delegates filtering and monitoring responsibilities to domestic online service providers. Its content-control regulations impose self-censorship on users, which is reinforced by information campaigns and just-in-time filtering during sensitive moments. The mix of rapid development and a growing online population will remain persistent challenges to China’s efforts at information control, and the state will continue to react with new measures for denying and shaping the flow of information in the country.
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Many people have criticized Google’s (GOOG) management for losing market share in China to local firm Baidu (BIDU) after initially taking a commanding share in the browser market. In surveys my firm conducted with Chinese youth in Shanghai between the ages of 18 and 24, over 80% said that they used Baidu as their primary search engine with Google a far second at just under 20%. Google’s poor faring over the last year has caused a lot of analysts to lump them with eBay (EBAY) and other internet failures in China, with many arguing that foreign internet companies can never do well here.
Could Google collapse in China much as eBay did, even after huge initial leads over local Chinese players? Will Google’s stock price be affected like eBay’s because it has been unable to capitalize on China’s booming internet culture, in which nearly 140 million Chinese connect to the net? What will happen with Rupert Murdoch’s Myspace (NWS) foray into China?
Most American critics have argued that Google has stalled in China because they censored their Chinese language searches. In Davos, Google Co-Founder Sergey Brin stated "On a business level, that decision to censor... was a net negative."
However, in our surveys and interviews, censorship was not one of the top 10 reasons that respondents said contributed to a preference for Baidu over Google. In fact, most Chinese did not even realize that there was a censorship difference between Google’s English and Chinese versions. It seems that Google’s censorship decision has been more of a hot topic for foreign critics than by Chinese end users themselves.
I am going to buck the trend of most analysts and argue that Google has a huge opportunity in China to retake market share from Baidu if it can get the right management team in place, delegate authority to them, and localize services. I have also argued previously that Baidu is spending too much time distracted with the international markets than shoring up its domestic positions. If Google does not delegate enough to a local management team and develop China-specific services, and if Baidu continues to focus on the wrong revenue generating opportunities, then Google will fail as eBay did in China.
Google’s Micromanagement and Oddball Hiring Practices
Google’s problems in China result more from their bizarre hiring practices for a large MNC than in their censorship. In interviews we recently conducted with senior Google managers in China, we found that they believe that Google’s slow hiring practices (where Google co-Founder Page personally has to write off on every job offer) hindered Google China in bringing enough talent on board early on. Without the team on the ground, Google floundered while Baidu was able to keep up with fast-changing shifts in the marketplace. But the team is starting to get settled – and it is a very bright and talented group based on what I have found in discussions.
My first suggestion for Google – it is absurd a company Google’s size to have every job offer be personally approved by such senior management in the US. Google’s senior management needs to learn how to delegate authority more. As Google expands in China, it will have to continue to bring the right talent on board. It will not be able to do so unless they change their hiring practices that are way too slow. I know very talented people who either decided not to try to join Google after initial interviews or refused to even go into the interview process because of what they felt was a drawn out and absurd process.
Being able to recruit and retain top talent anywhere but especially in China is one of the most important, if not the most important, items an MNC needs to focus on in China.

Access Speeds
One of the reason’s respondents to our surveys said they switched from Google to Baidu was because there was a time around Baidu’s IPO when Google suddenly became slow or difficult to connect to, while Baidu never had those problems. This happened to me too and was quite frustrating.
But in the aftermath of the Taiwan earthquake, where Google ran the whole time, we have seen that Google is now one of the more stable American portals. For my personal email, I have stopped using Yahoo (YHOO) and Hotmail (MSFT) and switched to Gmail, not because it is a more powerful system (which it is) but simply because the access speeds are much faster. Half the time I still cannot get onto Hotmail and Yahoo goes in and out.
I am not sure how these portals structure their servers and the such, but it seems that Google has figured out the hardware structure necessary to be able to compete from a speed level with Chinese portals like a Sina (SINA) or Sohu (SOHU).
Stickiness Factors
The main thing we learned through our surveys is that the service and product offerings are paramount to Chinese internet users.
20% of survey respondents said that they used Baidu because of the MP3 search function and other stickiness factors – such as virtual currency – that keep people coming to the portal. While Google has some awesome services for the English speaking market, their Chinese services pale in comparison to Baidu’s. This is something that Google needs to remedy and which Yahoo did by teaming up with Alibaba where the management team under Jack Ma is close to the consumers.
Foreign internet companies need to understand that China’s nearly 140 million internet users who actively engage in e-commerce are in itself a total market. Internet companies need to develop services, products and processes that target Chinese netizens directly rather than just bring what worked in the US to China. The market is too big here to consider China an auxiliary market as smaller countries are. New systems need to be put in place to compete with the top Chinese internet firms. Although they have no ADRs, for instance, I believe QQ is hands down one of the best run Chinese firms.
Conclusion
Many critics have said that Google has failed in China. I agree with this but not for the reasons that most critics highlight – censorship. While that is a sexy topic amongst many Americans, Google has failed for much more prosaic reasons. They should learn from eBay’s failure or Yahoo’s experience where too little management control was ceded to the team on the ground.
If Google can change some of its outdated practices, it will do very well in China and expect its stock to continue to rise. If it does not and if Baidu can focus better, then Baidu just might give Google a run for its money.