1. Executive Summary
The case of the book deals with Google’s potential entry into the Chinese
Market and the problems that occurred in the process. Google ethical beliefs and
actions are in conflict with the communist regime of China, who has a completely
different view and opinion about Google’s actions. On this case, there are two major
concerns/problems between the two sides. From one perspective, Google wishes to
enter China without having external control from the government about the
information that will provide to its Chinese users and without becoming a “spying”
tool for potential political threats of the Chinese government. The Chinese
Government, on the other hand, wants Google to have filtered information on its
search engine, in order to hide information to the public, about unethical actions that
has done over the years, and to have access to personal data of Google’s search engine
users.
Until 2010, many incidents have occurred concerning Google and China, with
Google making an attempt some years ago, to enter directly the Chinese market,
without although remaining on it. Today, Google has fully entered the Chinese
market, and tries to reach an agreement with the Chinese government, in order for
Google to set their ethical values and beliefs within the Chinese cyberspace. Filtering
the search results of its engine, was an issue that Google could not avoid, however,
the internet related company tries to resist in giving personal information to the
Chinese government concerning its current customers and users of its services.
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2. Google Background Information
Google was founded by Larry Page and Sergey Brin in 1995. The founders
were students who met each other in a doctoral program dealing with computer
science at Stanford University. Over the last decade, Google has managed to become
from a search engine service provided to the Stanford community to the leading
company in internet search services and one of the world’s most recognizable firms.
As stated in the case study of the book, Google defines itself as “a global technology
leader focused on improving the ways people connect with information.” The
company’s services offer a plethora of specialized features; Google provides a search
engine aiming at organized information as well as images, videos, maps, news, phone
numbers and an application called “Google Earth” which
shows earth from a satellite. In addition, Google offers its
users the ability to communicate among them with instant
messaging, emails, blogs and the sharing of documents. Recently, the company
launched a web browser named “Google Chrome” aiming at taking market share from
other popular browsers, such as Mozilla and Internet
Explorer. Moreover, as far as Google as a corporation is
concerned, it has more than 4,000 full-time employees and
its revenues are approximately $6.1 billion with respect data collected for the year
2005.
Google’s mission statement is to “organize the world’s information and make
it universally accessible and useful.” The company believes in accurate and unbiased
information, delivered freely in order for all people to have access on it. Moreover,
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3. Google respects its customers and has as its major priority to fulfill all of its
customers’ needs and protecting their interests. Such statements make Google an
ethical company with total respect for their customers.
China and its Internet Censorship
China is one of the most dynamic economies in the modern world. It has
approximately 1.3 billion people and due to this reason is the most populous country
worldwide. It is considered by many individuals as major “player” in today’s
economic scenery as its economy is large and continuously growing. As such, many
global companies aim at investing and conduct their business in China, due to the fact
that such a movement will benefit their financial situation and lead them towards
prosperity. Google, as a global company, faced a dilemma of entering or not directly
to the China’s market in 2005 and what would be the possible advantages as well as
disadvantages of such an action. It is worth mentioning that Google conducted
business in China in 2000 by offering a small portion of its services to the Chinese
people without entering completely in the country.
The problem of such an action was the China’s internet censorship. More
specifically, China had and still has three ways of censoring information coming in
and out the country; the great firewall of China, self censorship by internet service
and content providers as well as self-discipline. The firewall of China is devices
placed at the five main pipelines which connect China’s internet to the outside world
which block information coming in and out the country. In addition, content providers
which monitor users’ data (account numbers, phone numbers, name, IP addresses) and
are used to identify people who express themselves freely however, against what
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4. government considers as an appropriate and not harmful for the country point of view.
Last but not least, the individual discipline
which is based on the individuals’ fear to go
against the government and proceed to
prohibited speech online. For example, in
order for the government to secure such a
condition, in some regions of China, two police officers (cartoon) appeared on the
computer screen to remind users to use the internet appropriately and in a healthy
way.
For all these reasons, Google faced a dilemma of entering or not China as this
action would be inconsistent with its values and its corporate motto “Don’t Do Evil”
which shows the respect Google has for its customers’ rights and interests.
Discussion Questions
1. For Google in 2005, from a business perspective, what are the
arguments for and against entering China?
Back in 2005, China was one of the most dynamic countries in the world, as far as
its economy is concerned. It was characterized as a major player in the global
economic scenery, influencing the individuals’ lives as consumers, employees and
citizens. China’s large and continuously growing economy has already started
creating an impact world widely and within three decades achieved becoming the
world’s second largest economy, after the United States, as far as purchasing power is
concerned. In addition, China is the most populous country in the world, with 1.3
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5. billion people, and as a result a huge market place for international companies to
conduct their businesses.
Having these information in mind, Google was missing a great opportunity for not
entering the Chinese market. However, taking such a significant step was something
that Google’s Board of Directors had to think twice, due to the fact that it would not
be consistent with the company’s values. More specifically, China has established a
sophisticated censorship system via which information and freedom of expression is
filtered and controlled by the government. Such a situation contradicts Google’s
values as a company and its informal corporate motto “Don’t Be Evil.” Thus, for
Google to enter China was a controversial issue with arguments for and against it.
From a business perspective, Google should enter the Chinese market as; such an
action will positively impact its
financial well being and will lead
the organization towards
profitability and therefore
prosperity. To begin with, China
is the most populous country in
the world. As stated above,
China has approximately 1.3
billion people creating a
considerably big market for
businesses to conduct their operations. At the same time, the number of Chinese users
of the internet is estimated to be as high as 134 million individuals, right after the
United States of America, which has almost 154 million users. As it is mentioned in
the case study of the book, Chinese people spend almost fourteen hours a week over
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6. the internet and they go online four out of seven days of the week. Moreover, more
than half of the internet users of the country have a high speed connection and sixty-
nine percent have access at home while thirty-eight at work. Such information,
illustrate the number of people in China that use internet in order to inform
themselves, chat and exchange emails as well as entertain themselves by downloading
music or playing online games. This means that a considerable amount of Chinese
people have the means to access internet and even more, internet has become part of
their everyday life as they use it on an almost everyday basis. Considering this
information, Google misses a chance to provide its services to a country in which the
internet users represent eleven percent of all internet users worldwide and thus, there
is a high demand for searching software, like Google, which will give the opportunity
to Chinese internet users to search and find information concerning the subject they
are interested.
In addition, Google, by entering China, will raise its profitability due to the online
advertising. As internet has become part of the individuals’ everyday life and the
majority of them use internet for a plethora of reasons, such as for entertainment,
information, education, communication purposes, companies and multinational
organizations use internet as a mean to advertise themselves. During the last decade,
companies invest their money in online advertising and as a result, in several
websites, blogs or vlogs and different communication software (facebook, myspace,
emails etc.) advertisements appear in relation to the users’ website visits as well as to
the words in the search of the query. More specifically, Google uses two ways of
online advertising, which are the main source of its revenue; adwords and adsense. As
far as the former is concerned, it deals with ads appearing on the right side of the
google search which are relevant to words in the search of the google’s query. As
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7. such, in the beginning (2000), Google used to be paid based on the number of times
the ads were displayed while nowadays based on the number of clicks an online
advertisement has. As far as adsense is concerned, it was introduced by Google in
2005 and deals with advertisements of firms placed on several websites where Google
and the website operator share the revenue. It is worth highlighting that ninety-nine
percent of Google’s revenues in a six month period in 2009 were generated by the
online advertising ways described above. As mentioned before, China is a
considerably big market place and most of multinational companies aim at entering
that market – if they have not already done so - in order to sell their products. For
companies already existing in China and do their transactions, advertising is essential
and due to the often use of the internet by Chinese citizens, online advertising can be
a successful way to promote their products. Hence, it is easily noticed that Google
misses potential revenue by not taking the decision to directly enter the Chinese
market and conduct its business.
On the other side of the spectrum, there are arguments stating that Google should
not enter directly China as such an action will not benefit the company and even
worse, it might have a negative impact on it. To begin with, there are firms like Sina,
Sohu, Yahoo! and its Chinese partner
Alibaba as well as Baidu, which provide
Chinese internet users with their own
search engines with the latter firm to be
the main competitor for Google. Baidu
has a close relationship with the Chinese
government and applies a more strict
censorship system in order to give the
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8. government information of its interest. Furthermore, Baidu, unlike Google, offers the
Chinese users a full package of services, such as entertainment, messaging and
emails. This is the reason why it continuously gains market share and more people
(youth, educated people, and students) prefer it instead of choosing Google. Due to
these facts, Google is loosing market share and as a result companies will prefer to
advertise their products in Baidu, which is more popular that the google engine.
Considering this in mind, Google will not have anything important to loose if not
entering China as the biggest portion of the market share is taken by its major
competitor.
Moreover, Google’s reputation in the market would be negatively affected by a
direct entrance in the Chinese market. General public is an important stakeholder to
all businesses. The term general public refers to all groups of individuals in the
society that affect and are affected by a company’s operations. Google is an
international company and as such affects and is affected by the majority of people
worldwide as it operates in most of developed and developing countries. Its reputation
and public image is closely related with its actions and operations as a corporation and
thus, all of its actions must be consistent with the company’s values. Google’s
informal motto is “Don’t Be Evil” which means do not harm other parties, be fair with
all business relationships and generally speaking be ethical. Google’s direct entrance
in China would automatically mean that the company is not consistent with its values
and its informal motto. This is because China requires all computer and internet
related companies to obey the country’s laws and as a matter of fact to establish
censorship systems via which the government will be able to collect all information
needed and is interested in. Furthermore, the Chinese government requires the
blocking of information dealing with sensitive subjects, such as articles or research
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9. papers related with communism and anti-communism as well as incidents occurred in
the world which Chinese people must not be aware of. As a result Google, by fully
entering China, would appear in the public as an unreliable company which does not
respect its own values and all of its actions aim towards revenues and profit. Such a
perception will damage Google’s public image and this will also result in loosing
market share and as a matter of fact less income for the company.
2. From an ethical perspective, what are the arguments for and against
entering China?
Although, in 2005 a great amount of Chinese citizens were able to access the
internet and as a matter of fact use it in order to entertain and educate themselves as
well as to communicate with each other, their access to information and their freedom
of expression were restricted by certain laws of the Chinese constitution. More
accurately, the Chinese government had established a sophisticated censorship system
via which all information was filtered. This system was divided into three
interdependent parts; the firewall, the self-censorship by internet service and content
providers, and the individual self-discipline. These levels censored the information
going inside and outside China, collected information concerning people expressing
anti-state views or opinions and monitored postings of illegal content. As a result,
Chinese individuals did not go against the laws of the government and thus the
majority of them had a fear to express their own views due to the fact that they might
be prosecuted.
As such, all internet service providers are obliged to provide the government
with customer’s account numbers, phone numbers and IP addresses, if they had to
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10. take the step and enter directly the Chinese market. As it is understood, Google faces
an economic as well as a moral dilemma for entering or not directly in China.
Arguments for and against such a decision do exist and the internet service company
has to thoroughly examine the consequences before its board of directors take their
final decision.
From an ethical perspective, Google should enter China as this would be
beneficial for the citizens of the country and the company itself. To begin with,
Google’s mission is “to organize the world’s information and make it universally
accessible and useful”, as stated on its website. So, in order to provide their service to
people in accessing information, Google had to enter China. More specifically, China
represents on fifth of the population on earth and as a result, Google, by not providing
its services to Chinese people, will fail its mission. For Google, filtering information
compromises its mission however failing to deliver Google search to such a large
portion of the world’s population, is a much more important issue for the company.
In addition, the services offered by Google to the Chinese citizens at the
moment are of low quality, a situation which Google is not proud of. For example, in
2000 Google established a Chinese language version of its search engine for people
outside China. In addition, when an individual wanted to access the Google.com from
inside China, results were translated from English to Chinese language. However, this
service was slow, sometimes the results – when clicked – stalled out the user’s
browser, the Google Images were not always accessible and the Google News were
never available. Such a situation, forced Google to think of entering China as this
would be the only way to deliver high quality services to Chinese people, which have
the right for organized information and high quality services concerning messaging
and entertainment.
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11. Furthermore, Google is a global firm and as such, it must have a citizenship
profile which matches the local laws and regulations of the country in which operates.
As discussed above, Google has to enter China in order to be consistent with its
primary and most important mission; organized information available to the greatest
number of people. However, by doing so, the company must adhere to the laws and
regulations existing in the country, China. Therefore, Google has to remove certain
sensitive information from its search results so as for the company to be legal and no
conflicts of interest to occur between it and the Chinese state. In other words, the
organization has to adjust its operations and values to the laws and the general moral
existing in the specific country.
Moreover, as mentioned by one of the founders of Google “people can make
better decisions with better information.” This phrase shows the attitude of Google
towards its presence in China, highlighting that the people of the Republic of China
need to have the opportunity for accessibility to organized information in order to
broaden their horizons, even if in the beginning such information will be filtered and a
high percentage of them blocked.
Last but not least, Google’s high level managers believe that establishing local
presence is the best and perhaps the only solution to bring the benefits of universal
information in China and its people. In other words, this is the first step that needs to
be taken in order for Chinese citizens to have partial access to information and
gradually, with continuous negotiation and exchange of views with the government,
full access to all information available on a global basis.
On the other hand, there are critics arguing that Google’s local presence in
China is unethical and inconsistent with its corporate culture.
The term corporate culture refers to all ideas, values and
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12. practices that define the behavior of all employees in a company. Google’s corporate
motto is “do not do evil”; highlighting the importance of building fair relationships
with all stakeholders and generally speaking do not negatively affect the other parties.
Therefore, Google’s presence in China contradicts with its corporate culture, as the
company must comply with the laws of the Chinese institution. As a result, Google is
forced by the government to adopt the policy of internet censorship and filter certain
sensitive information as well as provide the government with the identity of those
individuals who express a view opposite to that of the state. As Chinese governors
characteristically mention, the use of the internet must be controlled in order for
China to be protected from people who “harm national security.” Thus, Google’s gap
between its actions and values can be characterized as unethical and Google Company
shows that its only motive is profitability and higher markets share.
In addition, Google states that it is better to provide information to China than
not at all. However, the question is for which party. Would it be better for Chinese
people or for Google itself? The answer of many people is that Chinese citizens would
not full access to international information and they would also not be able to express
their opinion freely. Therefore, most probably it would be better for the internet
service company since China is a huge market and Google would benefit a lot from
online advertising.
Furthermore, history gives a variety of examples concerning incidents
happened in the past which are likely to occur again in the future but with slight
differences. In order to be more specific, there is a characteristic example of an
individual who gave certain information about an event which took place in China by
sending an email via his personal Yahoo! Email account to an American website,
Democracy Forum. Shi Tao, as his name was, was sentenced to ten years in prison
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13. with the claim that he revealed “state secrets” to another country. His name and
identity were given to the Chinese government by Yahoo! Company, as the
messaging system used by Shi Tao was its service. The company, in order to justify
its action claimed that it had to enforce the Chinese law and provide the government
with the information required. Generally speaking, US companies have faced a
particular dilemma; obey the rules of China or quit their operations from that specific
country. So, such a condition applies for Google, as well. Google is an American
company who thinks of directly entering China. In order to conduct business in this
country however, it has to comply with its rules and regulations established which
deal with the censorship of information and providing the government with names,
phone numbers, and IP addresses of Goggles’ Chinese customers. Hence, in a similar
situation of that of Shi Tao, Google is obliged to deliver all information asked by the
government. However, such an action is completely unethical for Google, as its
values and corporate culture is against harming an individual. Thus, sending a person
in prison – indirectly by providing information to the government concerning his/her
identity – is inconsistent with its motto and an unethical action to be done by a
company having its origins in a capitalist society (capitalism highlights the freedom of
choice and speech without government intervention).
Last but not least, Google’s potential direct entrance in China can be
characterized as unethical, due to the fact that Google’s representatives and high level
managers state that the company aims at such an action in order to provide with
organized information the Chinese citizens. However, Google presents this case of
China as if no other companies exist in the specific country for the same purpose. The
reader has to keep in mind that Yahoo! as well as other Chinese companies operate in
China, providing its people with the same services as Google offers. The impression
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14. which Google gives to people is that, without Google China remains without a search
engine for the internet and no organized information are available for Chinese
individuals. However, such a situation does not really exist - Google presenting itself
as an altruistic company – since Google’s motives end up to be profitability and high
revenues, so as to secure its prosperity.
3. If Google decides to enter China, how can it do so while mitigating
adverse ethical impacts? In answering this question, please formulate
possible options and evaluate their strengths and weaknesses.
To begin with, it is worth mentioning that Google nowadays operates in
China. Google, since June 2010, has reached an agreement with the Chinese
government in order to enter directly in the market, but still problems occur in the
relationship of the two parties. For instance, the censorship of Google’s search engine
results – which deal with unethical acts by the Chinese government - like the war in
Tibet which occurred last year. In addition, a huge hacking incident that took place
some months ago, through which the Chinese government used Google as a “spy”, in
order to hack into human activists’ personal data. That incident was the main reason
why Google stopped operating in China last January, and started operating through
Hong-Kong, where Chinese laws are ineffective.
Now, in order for Google to have as much ethical action as possible in China,
the background of the two sides must be illustrated. China is one of the last
communistic countries in the world, with one of the most uprising economies, which
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15. has restricted freedom and rights for its people, and in which is still hard for an
individual to express their opinion freely. On the other side, Google, an American
company, fully capitalistic, offers, throughout the world, a huge variety of
information on the web via its search engine and helps on the transmission of
information. As a result, it is clearly understood that there are two exactly opposite
sides, which try to find a way to cooperate. However, is clear that Google has a harder
task, in order to achieve that, since it is too difficult for such a company, to act on its
own way, in such a restrictive country.
First of all, both parties must negotiate on equal terms, meaning that both will
lose and both will win, out of these negotiations. Google wants to enter the Chinese
market, in order to have profits, but also to keep its ethical status quo and not has its
reputation attainted. China also wants new companies in its fast-growing economy,
especially from the West. But it also aims at having its people under certain
boundaries. So, which are the options that exist, in order for both parties to reach a
fair, ethical – in a way- and positive agreement?
As a first option, Google and People’s Republic of China government could
reach an agreement on how to use the search engine of Google on the web. From an
ethical point of view, Google could filter its search engine results in a way that will
provide all the information available for the Chinese users, but without providing
information that could harm the government. Of course that is not completely ethical,
but at least, people will have an idea of what is going on around the world and what
might their government does, especially when it comes to foreign affairs ( Tibet for
example).
In addition, another negotiable term/option between the two sides could be
about spying. If Google’s entrance in the Chinese economy is necessary of its
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16. economic well being, but at the same time keeping its ethical reputation clear, should
request from the Chinese government not to use its software, for spying people around
the country. If Google wishes to remain as much ethical as possible in this case, it
should at least maintain a balance between its economical profits and the personal
data of its users. Thus, it will – at least on the long run – raise its reputation
throughout the world for its ethical values and will have a bigger economical benefit
for it, as an international enterprise.
Last but not least, Google could accept workers from the Chinese government,
in order to “soft” the tension between the two sides, but use them in any way they
believe will be useful and not as the government wishes (spying and/or stealing data
from Google we guess are two main tasks that the Chinese government might ask
from its workers). In that way, Google opens new positions in the market, for Chinese
people, and allows the government to have at least an idea of what is going on, inside
the company.
As it becomes clear, Google has a very hard task to fulfill within China, if it
requires as a company to maintain an ethical status alongside with economical profits.
As mentioned above, the political environment in which Google wishes to operate is
not the easiest one and in order for both sides to reach an agreement and work under a
safe and trusted environment, sacrifices must be made by both.
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17. 4. What do you think Google should do, and why?
Google, as a global internet related corporation, must invest and conduct its
business in many countries, so as for people to get informed and find easily all
information needed. This goal has been achieved since Google operates in almost all
countries over the world.
A challenging however beneficial option for Google is to conduct its business
in such a big country as China is, with a huge population (1.3 billion people). Such an
investment, could make big profits for the company, and raise its market share
throughout the world. Of course, this kind of partnership is not so easy to been
achieved, especially in a country ruled by communist regime. Google’s shareholders
and representatives tried hard to make a deal with the Chinese government but the
negotiations fell, due to the fact that the company’s policy was totally different from
the Chinese’s laws and regulations. It is familiar that the laws of China are really
strict, especially those for networking and internet related. Many web pages are being
blocked, information is censored and the users of the internet are consistently
monitored as far as their internet activities are concerned. For instance, their personal
data are recorded and if asked ought to be given to the government, when coming to
use internet and the services provided by the organizations (sign in a messenger and
have an instant chat, or stating their opinion in any kind of forum or blog). People of
Google are opposed to these kind of actions, that’s why when they established their
corporation, decided to give any information for free and easy to approach without
giving any personal details.
This is the reason why Google must not cooperate with a political party that
forces people to not have free will and prohibit any information that is not matching
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18. with their beliefs. However, such a decision would cost millions of dollars and would
not be appropriate, from a business perspective point of view. For these reason and
due to the fact that Google is not an altruistic company, Google’s high level managers
consider or entering directly into China. But if Google decides to do so, it has to
negotiate with the government and try to find a win-win solution which will benefit
both parties. First of all, Google must resist to the demands of the Chinese
government for the publishing of user’s personal information. Google should not give
data required from the government concerning its customers as such an action is
unethical and contra to the firm’s values and mission statement. As far as the filtering
of information is concerned, the two sides can find a solution which serves both
interests. As a result, Google has to filter its search information (it cannot do
otherwise) and provide the Chinese people only certain information. However, due to
this reason, the company must inform its visitors that the information they are
searching are censored and not all information are available to the. In addition, if
these demands are not just government’s desires aiming at the limitation of Chinese
freedom but are specified by rules and regulations of the Chinese constitution, then
Google must comply with the appropriate laws, as a socially responsible firm would
do. Last but not least Google has to publish all specific cases in which the firm was
forced to give personal data to the state in order for all people to be aware for such
actions. In concluding, it is worth highlighting that Google and Chinese government
are cooperating over the last year under the rules of the government for information
and web site filtering. Even though Google still resists in giving personal details of its
users (identity, IP addresses, phone numbers), the government insists on such
behavior and therefore Google plans to quit its operations in China, due to that gap
existing between the two parties.
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