Google Threatens to Leave China After Cyber Attack

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Google (GOOG) threatened to cease operations in China, home to the world's largest Internet user base, after disclosing details of a massive cyber attack that "resulted in the theft of intellectual property from Google." The Web giant also vowed to end its Chinese language search censorship, in a defiant rebuke aimed at China's communist regime.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% Google said it would stop censoring its Chinese language search engine in light of "attempts over the past year to further limit free speech on the Web" -- a stunning turnaround for a company that has defended China's censored search results against a barrage of criticism, even as it made the Middle Kingdom a key strategic beachhead.

Google's statement represents one of the most public challenges any American company has directed toward China's communist government since the country embarked on its meteoric growth path two decades ago. But Google's decision also reflects the search giant's increasing frustration as it has sought to make inroads into the Chinese market.

"Highly Sophisticated and Targeted Attack"

In a blog post Tuesday, Google's Chief Legal Officer David Drummond said the company had discovered a "highly sophisticated and targeted attack on our corporate infrastructure originating from China."

But what the company found next was even more shocking: Google discovered that "a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists," a humiliating development for a company that prides itself on its "Don't be evil" credo.

Google said at least 20 other large companies, "including the Internet, finance, technology, media and chemical sectors," were also the victims of the cyber attacks, which were apparently coordinated. "We are currently in the process of notifying those companies, and we are also working with the relevant U.S. authorities," Drummond wrote.

Late Tuesday, software giant Adobe said that it, too, had been struck during the assault. "Adobe became aware on Jan. 2, 2010 of a computer security incident involving a sophisticated, coordinated attack against corporate network systems managed by Adobe and other companies," Adobe said. "At this time, we have no evidence to indicate that any sensitive information -- including customer, financial, employee or any other sensitive data -- has been compromised."

China Is a Central Focus for Multinationals

In response, Google said it will "review the feasibility of our business operations in China," which is obviously a massive potential market for the company. But while Google dominates search in the U.S., in China it remains a distant second to, which handles 62% of Web searches, versus 29% for Google, according to data from Analysys International.

Google's revenue from its Chinese operations is still a tiny part of its annual $22 billion revenue haul. But given the country's huge population -- not to mention 338 million Internet users -- and rapid growth, China is a central focus of virtually every major global corporation, making Google's decision all the more striking.

"Cyberwarfare has basically gone to the next level," James Mulvenon, an expert on Chinese cyber-crime, told The New York Times. "For Google to pull up stakes and basically pull out China, the attack must have been large in scope and very penetrating," Mulvenon said.

Incrementalism Fails

After four years of advocating an incremental path toward free speech in China, and adhering to China's Web censorship policy, which prohibits images of Tiananmen Square and other government-banned information, Google seems to have drawn a line in the sand, even at the expense of the company's own potentially lucrative business in that country.

"We launched in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results," Drummond, Google's top policy lawyer, wrote. "At the time we made clear that 'we will not hesitate to reconsider our approach to China.'"

Drummond said the search giant simply can't continue working in China under the present circumstances.

"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," Drummond wrote.

Google This: Free Speech

The search giant did not accuse the Chinese government of participating in the attacks. But in a statement received by SearchEngineLand, Google said "the environment in which we are operating in terms of an open Internet is not improving in China. That, combined with these attacks and the surveillance they have uncovered, mean that we're no longer comfortable self-censoring our search in China."

Perhaps the most remarkable part of the announcement was Google decision to stop censoring its Chinese language search engine,

"We have decided we are no longer willing to continue censoring our results on, and so 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," Drummond wrote. "We recognize that this may well mean having to shut down, and potentially our offices in China."
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