British scribe Paul Carr is not one to mince words. For him, Google’s newfound morality around censorship and China is too little, too late. Four years too late, to be precise. And I agree with him — up to a point. Morality has to be absolute; it cannot be used as a tool of convenience. That said, and despite being a born cynic, I’m actually unable to view Google’s decision through the same lens.
I mean, if as a society we’re all too ready to forgive steroid-enhanced baseball players when they come clean, how is that we can’t give a company a second chance when it finally decides to do the right thing? Moreover, the company is risking a lot of money by adopting what Carr describes as “scorched earth diplomacy” — especially when it comes to Android.
J.P. Morgan estimates that Google’s move is going to cost it some $600 million in 2010 revenues. UBS puts the sales loss forecast in the $400-$500 million range. Others estimate that it could be even lower — between 1 and 1.5 percent of 2010 revenues. Citibank, meanwhile, believes that nearly 1 percent of Google’s profits are at risk.
The wide variance in the loss estimates makes clear that no one really knows how big a financial gamble this decision is. And that alone makes it a brave move.
But while many argue that it isn’t logical for a publicly traded company to take a stance that’s going to hamper its ability to capture the opportunities offered by such a fast-growing Internet market — China currently has 298 million Internet users (and 99.4 million connections) representing just 22 percent of its population — as far as I’m concerned, the biggest impact of Google’s decision will be on its mobile efforts. With more than 638 million wireless users (according to Telegeography), China has already emerged as the world’s largest mobile market. Sales of mobile phones in the country are expected to grow 21 percent this year alone.
The bottom line is that Google’s decision to take on the Chinese political establishment means that it no longer controls Android’s destiny in China. In theory, Android is open source and as such, handled by the Open Handset Alliance. But in reality, it is closely associated with Google. For starters, the banning of Google.cn would close a marketing channel for Google’s Nexus One device, if and when it was launched in China.
The country was well on its way to helping Google grow Android. Chinese handset makers such as Huawei and ZTE have been some of the earliest supporters of the upstart OS. China Mobile already sells its own version of an Android-based phone system called OPhone. Motorola is making a big push into the Chinese market with smartphones based on the Android OS. And China-based Lenovo has developed numerous Android-based products, including the LePhone. Any undue pressure from the establishment would mean that most of these companies would have to abandon Android in favor of other mobile operating environments.
Google’s willingness to risk not only its present (search) but also its future (mobile), shows that as a company it’s willing to go where no Western company has gone before: in China’s face. The next few months will determine whether Carr is being too harsh or I am being too generous in our respective judgments. For now, at least on this one decision, I am on the side of Larry & Sergey.
Morality in an agnostic society is fluid. It changes according to the society’s mood. Take gay marriage for example. 50 years ago we would not even bring up the discussion in polite company, much less the Supreme Court.
When it comes to China and good corporate citizenship, Google was one of thousands of companies that followed hundreds of others into that market over the past two decades, everyone with their eyes on making big bucks. Google’s entry into the market was not so much a lapse in corporate morality as an acceptance of societal morality. Everyone else was jumping into the pool, why not them?
What is happening now is Google and several other influential companies are questioning whether the cost of IP theft and repressive government is worth the eventual payout. This has more to do with good business sense then morals.
I agree with you. We can have high moral standards and still acknowledge the efforts of companies (and people) when they fail but try to make amends (these things aren’t inimical). Positions like Carr’s (too little too late) basically say to Google that there’s no rational incentive to correcting itself. I think that’s exactly the wrong message to send if we take ethics seriously. That doesn’t mean that we can’t also ask Google to make further changes, just that we should acknowledge the changes that the company has made. Better to nurture virtue in the hopes that it will flourish than to punish vice in the hopes that it will wither.
Or we could be tougher on cheating ball-players.
Nicely put Om! One thing you can be sure of this is about A LOT more than the issues bandied about in the public domain. and I also think that contrary to China’s feigned unconcern, you do NOT snub a behemoth like Google and then realistically expect to lure any significant foreign innovators to your suppressed thieving communist regime! It explains the concerted effort to steal from the West! Hell, I imagine they were hacking Google because they already knew they F’ed up long before this became public debate.
Google already has lost control of Android’s destiny in China. The biggest carrier, China Mobile, uses their own version of Android, called OMS. They do not have to use any Google services on their devices to use the Android stack. China Mobile and Borqs (their developer) have hundreds of developers working on Android and OMS. Now, remember that while on the surface the phone companies look independent and competitive they are in reality all run by the government. The government can have China Mobile “license” its version of Android to the other suppliers and the Chinese are on their own branch and development path, free to pull Google improvements, but not dictated to or dependent on Google. Handset suppliers will put whatever OS the carriers want on the device but more interesting is the fact that Chinese manufacturers are building a LOT of Android devices.
In the end, China gets what ti wants: independence form US companies, a software base licensed through China and a market where the handset suppliers all are Chinese or all the devices are built in China. Pretty clever way to close the market without violating WTO rules.
The morality isues a relative comment suggestion, if china is in business of horror te world ill find the emotional stability to conquer teirany. the reflection upon umanity is divided by the moral governing monetary escape rout. in this episode e are not forced by logic or humanity, these are willing participants social gathering monetary factions. http://menofvalor.blogspot.com
Hi Om this is the first time i am commenting though i have read your columns for a long time and have always enjoyed the perspective you bring to the many topics i am interested in.
What perplexes me about Google’s decision is it’s timing not the 4 years too late argument but the why wake up to only after you have been attacked and the quality and reputation of your product compromised?Was this a case of breach of trust by a partner in a business agreement in this case between google and the chinese government.
In any case how does a company choose between it’s own standards and following the law of the land it operates in? I guess google is definitely breaking new ground here. Will it lead to better search results i don’t know :-).
This comes down to one groups willingness to commit massive acts a cyber terrorism against it’s business partners. Everything else is fluff for the witless media and masses to feel better about them selves with.
I hope Google does decide to pull out of China, and I hope the rest of the world, including our sad little Government, opens their eyes to what is going on over there and chooses to speak with their willingness to pull all operations out of China.
At this point China only loans the US enough money for our consumers to purchase “Made In China” garbage so China can keep those crap producing factories open. They loan us money so we can buy their crap and have that loan money flow right back into China + they collect massive interest on the loans.
It is a moronic cycle, and it is high time we stop consuming so much pointless consumer-centric / life-irrelevant crap.
Bring the manufacturing home!
Google has decided to stop censoring in China only because the Chinese govt-sponsored hackers attacked Google’s infrastructure. If it was a purely moral stand for freedom of speech, Google should stop censoring in other countries also. Google has announced nothing of the sort for other countries where it censors.