Google, China Edge Closer To Face-Off

The odds of Google keeping its Chinese search operation running are starting to seem quite small.  The Chinese government has started advising Google's partners to prepare contingency plans, and one anonymous person who's supposed to be close to Google even said the company is 99.9 percent likely to shut things down.

The "99.9 percent" comment, which we first mentioned over the weekend, comes courtesy of two Financial Times reporters.  One of them, Kathrin Hille, is even located in Beijing.  These details lend credence to its authenticity, even though it would of course be nicer to have a quote attributed to some executive or authority.

As for the information related to Google's partners, the situation's similar.  Sharon LaFraniere spoke to an "industry expert . . . . who did not want to be identified for fear of retaliation by the government."

Then LaFraniere reported for the New York Times, "The Chinese government information authorities warned some of Google's biggest Web partners . . . that they should prepare backup plans in case Google ceases censoring the results of searches on its local Chinese-language search engine . . ."

The only thing that might prevent a showdown at this point is Google's concern for its employees in China, perhaps along with the company's desire to keep its advertising and mobile operations alive.

Possible Scenarios for Google in China @ SXSW

After a long morning of travel and SXSW preperation, WebProNews popped in on an interesting talk from writer and tech watcher, Kaiser Kuo (here's his bio) about what might happen with the whole Google/China situation, which has essentially remained at a stand-still for the past two months, since Google made its famous announcement about a "new approach to China."

Kuo said right out that he doesn't have the "inside dope" about what's happening within Google, but he did give a fascinating history of Google's efforts in China, as well as a look at some possible scenarios that could play out. Some he listed specifically, include:

Worst Case Scenarios

- Blow up: Google decamps in atmosphere of acrimony
- Google.com blocked, possibly even Gmail, Gtalk, Google Docs, Buzz, etc.
- All google products exit from China (partnerships with mobile companies end)

Moderate (and according to Kuo, most likely) Scenarios

- Google.cn shuttered
- Google.com, Gmail, Google Docs, etc. unblocked
- Google research and development and sales continue to operate in China
- Google continues mobile partnerships

Best Case (and not very likely, but not entirely far-fetched) Scenario

- Google.cn stops censoring and still stays in china
- Pigs fly over a frozen hell scape

The session was not without a sense of humor, but that's not to say Kuo doesn't take the situation very seriously. In fact, he appears to be putting much more time into looking at the big picture than anyone I've seen (at least those outside of Google itself and the Chinese government).

Perhaps the most interesting part of Kuo's talk was about how  the wetern media's attention focuses more on one of two kinds of censorship going on - the "Great Firewall" censorship, where many sites are blocked at the ISP level. He says it's fairly simple for Chinese Internet users to "hop" the Great Firewall through proxies and VPNs. The other kind of censorship going on in China, according to Kuo, is the kind that really matters. This is "self discipline", which is carried out by Internet companies themselves.

If companies don't follow through with this kind of censorship, they face the risk of being shut down, having servers seized, etc. Some have been shut down permanently in the past, and others have been shut down long enough that they lost most of their users anway.

"Sad story indeed," Kuo calls it.

As far as the Google situation, "Google is going to have to shit or get off the pot," says Kuo. "The ball is very much in Google's court right now." Bejing realizes it has nothing to gain by pushing Google on the issue or being openly hostile towards the company, he says.

This week, Chinese Minister of Industry and Information Technology Li Yizhong reportedly had this to say: "I hope that Google will abide and respect the Chinese government's laws and regulations. But, if you betray Chinese laws and regulations, it means that you are unfriendly, irresponsible, and you will have to pay the consequences." He also said, "What needs to be shut down will be shut down, what needs to be blocked will be blocked."

Kuo says this is just more of the same stuff we've been hearing from China for the last 2 months.

Google CEO Eric Schmidt recently said, "Something will happen soon." Days ago, Google gave a congressional testimony saying they still intend to stop censoring results, but as Kuo notes, shutting down Google.cn would be a very involved process with large logistical challenges.

Update: The Financial Times is reporting:

Google has drawn up detailed plans for the closure of its Chinese search engine and is now “99.9 per cent” certain to go ahead as talks over censorship with the Chinese authorities have reached an apparent impasse, according to a person familiar with the company’s thinking.

Stay tuned to WebProNews.com for more SXSW Interactive coverage as the event continues into next week. Watch for live streaming interviews with industry professionals at live.webpronews.com.

Chinese Minister Hints At Consequences For Google

Despite weeks of talks that have supposedly taken place behind closed doors, the Chinese government still seems unwilling to compromise with respect to Google and censorship.  Indeed, it may be growing hostile, as a minister talked about "consequences" today.

The BBC reported that Minister of Industry and Information Technology Li Yizhong adopted a tough stance during a legislation session.  "I hope that Google will abide and respect the Chinese government's laws and regulations," he said.  "But, if you betray Chinese laws and regulations . . . it means that you are unfriendly, irresponsible, and you will have to pay the consequences."

As for what those consequences might be, it almost sounds as if China's ready to force Google out of the country whether it wants to leave or not.  The Chinese official stated at one point, "[W]hat needs to be shut down will be shut down, what needs to be blocked will be blocked."

This is less than good news for anyone who was hoping Google would be able to keep operating in China.  Considering that Eric Schmidt recently said "something will happen soon," it may even represent the end of the road, rather than just another outburst of rhetoric.

Or not.  Investors on both sides have failed to flinch, with Google's and Baidu's stocks up about equal amounts so far today.

Schmidt On China: “Something Will Happen Soon”

Two Google executives have again assured onlookers that the company is dealing with the situation in China.  While in Abu Dhabi, Eric Schmidt indicated today that something will happen sooner rather than later, and Nicole Wong told politicians in D.C. that leaving China is still an option.

Unfortunately, not a lot of other details and/or promises were forthcoming.  Eric Schmidt's exact words, according to Jerry Dicolo, were "something will happen soon," and whether that's "soon" as a five-year-old would perceive it or in terms of continental drift is hard to say.

We should note: it's already been almost two months since Google stated in an official blog post, "[O]ver 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."

As for what Nicole Wong, Vice President and Deputy General Counsel at the company, had to say, there was less wiggle room.  The AFP reports that she maintained, "We are not going to change our decision on not censoring results anymore."  Also, with respect to abandoning the country, Wong added, "We are prepared to do that."

Google and Baidu investors are sure to remain on pins and needles until the situation is resolved.

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