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Guest Post: Google’s Mysterious Threat To Pull Out Of China - Is A Covert War Brewing Between The U.S. And China?

Tyler Durden's picture


Submitted by the Firecracker Report

In an extremely intriguing
development today Google threatened to close down its China operations
after unearthing a highly sophisticated attack aimed at accessing gmail
accounts of Chinese human-rights activists. According to Google the
attacks originated in China and included accounts of U.S. and E.U.
based activists. Google made the announcement today in its blog-post
titled "A New Approach to China".
In mid-December, we detected a highly sophisticated and targeted attack
on our corporate infrastructure originating from China that resulted in
the theft of intellectual property from Google. This attack was not
just on Google. As part of our investigation we have discovered that at
least twenty other large companies from a wide range of
businesses--including the Internet, finance, technology, media and
chemical sectors--have been similarly targeted. We are currently in the
process of notifying those companies, and we are also working with the
relevant U.S. authorities.
By labeling these
attacks as "highly sophisticated" Google is essentially pointing a
finger at the Chinese government/intelligence agencies. That the cyber
attack has been elevated to a U.S. national security threat level, is
evidenced by the State Department's involvement, and a statement by
Secretary Hillary Clinton in which she asked Beijing to respond to Google's allegations. A report in the Telegraph offered further details:
The State department said that Mrs Clinton had met with executives from Google and Microsoft, as well as with Cisco Systems, which provides much of China's internet infrastructure, to discuss how to stop countries from "stifling" access to information.

Most interestingly, the Telegraph went on to point out that:

Next week the US is to launch a new technology policy to help citizens in other countries to gain access to an uncensored internet.
Returning to Google's announcement, Google's blog outlined the reasons why Google has decided to potentially pull out of China completely:
We have taken the unusual step of sharing information about these attacks with a broad audience not just because of the security and human rights implications of what we have unearthed, but also because this information goes to the heart of a much bigger global debate about freedom of speech.
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. At the time we made clear that "we will carefully monitor conditions in China.
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. 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. We recognize that this may well mean having to shut down, and potentially our offices in China.
We do not doubt the veracity of Google's claims. Cyber
warfare is the covert game nations play, and these attacks are nothing
new. Several U.S. military and scientific institutions such as NASA -
with far more sensitive national security information have been the target of hacking from China. In November 2008, a bipartisan U.S. Commission to analyze economic and national security relationship with China concluded
that, "China has stepped up its capacity to penetrate U.S. computer
networks to extract sensitive government and private information".

However, what we question is the following:

  1. Why is Google threatening to
    close operations at this juncture - i.e. four years after they entered
    China knowing full well that they will have to censor information to
    comply with Chinese government regulations. In 2006, Google seemed to
    completely disregard the human rights and freedom of speech
    considerations arguing that "the benefits of providing increased access
    to information to Chinese citizens outweighed the discomfort of
    censorship". Then why the sudden about face and embracing of altruistic
    values such as "freedom of speech" now?
  2. If the U.S. Government has not stopped doing business with China, despite its Communist status, countless cyber attacks, stealing of state secrets, human rights abuses and lack of freedom of speech and democracy, then why the about face by Google?
  3. The link between the Chinese Government's (implied involvement but not explicitly stated by Google) hacking of gmail servers to extract dissident information and Google closing its entire
    operation in China (search engine and cell phones running on Android)
    is tenuous and illogical at best. While the attacks are no doubt
    serious, we wonder if they are serious "enough" for a company like
    Google to forsake the world's largest internet subscriber market.
  4. So far Google has not had much
    success in China's internet search market having captured only 1/3
    market share. Its chief competitor controls the remaining 2/3. In addition by pulling out of China Google does not stand to lose too much, as pointed out by Bloomberg: "A pullout would deprive Google of an estimated $600 million in annual revenue [out of total revenues of $24 billion, thus a very small percentage] and may help domestic Baidu extend its lead in the world’s largest online market. “There’s no other competitor, so if Google pulls out, Baidu is left by itself,” said Erwin Sanft, an analyst at BNP Paribas SA in Hong Kong". Now Google has to have factored in the scenario that the Chinese government calls its bluff and asks them to "leave".
  5. It is highly unlikely that the Chinese government will acquiesce to allowing Google to operate an unfiltered search engine, especially when Baidu,
    a domestic Chinese player (that the government can control), holds a
    2/3 market share. In the current shaky economic scenario the Chinese
    government will try its level best to keep a lid on citizen's
    dissent. To do this it has unfortunately resorted to severe censorship
    of the Internet banning services such as facebook, twitter and youtube.
    Even so, the Chinese government is not illogical in this endeavor - it
    is well aware of covert campaigns launched by the U.S. government via facebook
    and twitter in Iran to help overthrow the Iranian government. China is
    not about to let the U.S. push the same fate on its own government.
So in our opinion, what all this
posturing boils down to, is the fact that a new and dangerous war-front
has opened up - one between the U.S. and China. Currently the war is
economic, political and covert in nature. The U.S. government knows
that the nations fiscal situation is abysmal and that China holds the
trump card over its fate by being its largest creditor. In addition
faced with rampant joblessness, a weakened U.S. consumer is more
dependent that ever, on cheap goods manufactured in China. While cheap Chinese
imports allow the Fed to keep a lid on domestic inflation, they do
not alleviate rampant U.S. unemployment. Protectionist pressures are
growing on a desperate U.S. government struggling to fix the
unemployment situation. This tussle has led to the imposition of trade
sanctions against Chinese companies on non-strategic sectors like
certain steel and tire imports.
To top this situation neo-con hawks in the U.S. government and military accustomed
to the nation being the world's sole super power, fear the rapid rise
of China. They fear the global domination of a Communist nation and
this in turn has led to naval and airspace incursions into Chinese
territory by the U.S. military, as well as the geo-political
blockages by the U.S. to severe Chinese access to the world's mineral
and oil resources. The current crisis in the Middle East an oil rich
region is a direct result of this strategy.
As the economic situation
deteriorates, these tensions are only going to escalate. While the U.S.
government is not going to start a military excursion with China
anytime soon, strategy hawks know that one way to slow the rise of
China and reduce its grip on America's economic collar is to create a
suitable diversion for the Chinese government. The U.S. intelligence
apparatus, which has several decades of experience staging coups and
overthrowing democratically elected governments across the world, is now staging a similar policy with China.
China's non-democratic set-up and autocratic communist party rule is its Achilles
heel in its rise as the world's leading economy. With China's economy
deeply intertwined with declining U.S. consumption, huge swaths of its
population who are employed in manufacturing and related sectors stand
to lose their jobs. Couple this with the fact that there exists a
complete lack of democracy, freedom and human rights in China. The
Chinese government knows that young unemployed people, especially those
whose rights have been suppressed, always make a deadly cocktail. It
wants to avoid setting off this bomb at any cost. The Chinese
government has unfortunately responded to this threat by clamping down
on information provided via the internet.
And this is the loophole the U.S. government is now trying to exploit
in its pursuit to weaken China. This explains the recent "freedom of
speech" campaign launched by the U.S. to "educate" the Chinese people
to revolt against their own government. Barack Obama fired the first
salvo when he visited China last year where he told a town hall
gathering that he was "a big supporter of non-censorship". He went on
to state that "These freedoms of expression, and worship, of access to
information and political participation - we believe they are universal
rights. They should be available to all people, including ethnic and
religious minorities, whether they are in the United States, China or
any nation." Now the State Department along with Google (whose CEO Eric
Schmidt is a huge supporter of Obama) have joined the "freedom of
speech" chorus, which will only grow louder in the coming days.
We would like to point out to
our reader that we do not support China's autocratic suppression of its
people's freedoms. What we are merely trying to point out here is that
there a deeper strategic (and frankly on some level inherently evil)
rather than altruistic motive behind Google and President Obama's
"freedom of speech and democracy" lecturing. If China is truly to try
to become a global power it needs to willingly unleash democratic
forces within its borders. The Chinese government would be safer doing
this on their own terms rather than have their hand forced by American
propaganda (at which point widespread civil unrest in China is a
given). The Chinese people would do well to pay attention.

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Wed, 01/13/2010 - 20:25 | 193123 MeTarzanUjane
MeTarzanUjane's picture

Another China investment pays off big!

Baidu Wins on Google Exit (BIDU)

Baidu. Inc. (NASDAQ:BIDU) is soaring this morning after yesterday’s announcement that Google Inc. (NASDAQ: GOOG) is pulling out of China. This would effectively leave Baidu with more than just the lion share of online web search and advertising revenues in China. Baidu closed at $386.49 yesterday, but shares are up 14.6% at $443.00 on over 300,000 shares as of 8:07 AM EST. The stocks 52-week range is $105.00 to $443.25. Average volume is 1.8+ million shares, but that should be blown through rather quick. The open interest is not 10,000 in any strikes fr JAN10 CALLS yet, but the open interest is over 1,000 in each strike from $390 to $500…. Stay tuned.

"The Chinese people would do well to pay attention."

Yes Mr. Durden. A nation that is only a few hundred years old needs to skool a nation that is thousands of years old... They better listen or else.

Wed, 01/13/2010 - 20:35 | 193138 Stevm30
Stevm30's picture

Sorry bud - the Chinese "nation" is only 60 years old.  Hence "listen up youngster"

Wed, 01/13/2010 - 21:05 | 193167 MeTarzanUjane
MeTarzanUjane's picture

PRC, a power structure, borrows heavily from 5000 years of lessons learned. In you effort to dispute you have overlooked the obvious youngsters.

Wed, 01/13/2010 - 21:50 | 193206 Anonymous
Anonymous's picture

Both China and the USA are net importers of energy. Neither can sustain "super-power," by definition, too long.

Wed, 01/13/2010 - 21:55 | 193210 Anonymous
Anonymous's picture

HAHAHA. Hilarious. The wise Asiatic mind, cool and calculating, capable of prioritizing long term victory over the fickle, decadent, independent minded western degenerates.

Fri, 01/29/2010 - 10:49 | 210817 Anonymous
Anonymous's picture

Actually the Chinese Communist Party during the cultural revolution destroyed and nearly wiped out all 5000 years of history as the evil regime wanted to suppress traditional culture which is based on morals and harmony between heaven and earth. The CCP is strongly atheist and has murdered 80million people in 60 years and the count is still rising. We are taught Hitler was bad yet with figures like these I think you have over looked the obvious. Go to this website and it is all documented plus more.

Wed, 01/13/2010 - 20:51 | 193151 spekulatn
spekulatn's picture

Yes Mr. Durden. A nation that is only a few hundred years old needs to skool a nation that is thousands of years old... They better listen or else.

What part of "gues post" didn't you understand? 


Wed, 01/13/2010 - 20:57 | 193160 MeTarzanUjane
MeTarzanUjane's picture

"We're all Tyler Durden".


Wed, 01/13/2010 - 21:33 | 193184 WaterWings
WaterWings's picture

Except for HAWK! Tinfoil alert! Guess what they're trying to sneak through...

Read carefully Section -2 Functions,  of this Executive Order and you will clearly see how inclusive these functions can be....... especially Item e which has language sufficiently broad and loose that a Tank Battalion could be driven through it.


(e) other matters of mutual interest pertaining to National Guard, homeland defense, and civil support activities.

They should just summarize and say General Welfare like the Federalists.

Wed, 01/13/2010 - 22:34 | 193259 Miles Kendig
Miles Kendig's picture

Don't forget interstate commerce.  Back on topic.  

The "right" thing usually must find a commercial conveyance..... Plus the current powers that be need to rebuild their "Human Rights" creds.  Tibet will continue to get flushed for the big bucks, but Google can make the splash over "net neutrality".  Looks like the administration is hoping that at least some of the walk n knock army returns....

Wed, 01/13/2010 - 22:16 | 193236 order6102
order6102's picture

What age has to do with it? If you apply your logic we all should listen to coalacanth - world oldest fish! 

Thu, 01/14/2010 - 01:31 | 193418 caconhma
caconhma's picture

China is a communist country with Asian mentality. It is very foolish to underestimate their survival capabilities.

All these discussions about a possible civil unrest in China are just wishful thinking on part of the western media and politicians. They have passed their last survival test with flying colors.

Just look at their neighbour North Korea.

As for Iran, it is a totally different story. Their leaders are just incompetent religious zealots incapable of running a modern country.

Thu, 01/14/2010 - 08:24 | 193540 Ned Zeppelin
Ned Zeppelin's picture

Is it me or is Baidu just Dubai spelled sort of inside out?

Having stolen all the source code they need and generally making Google feel unwelcome, the Chinese government issued a statement today: " Please do not let door hit you on the  a** as you leave."  Do they care? Not a whit. Puh-leze.  


Wed, 01/13/2010 - 20:46 | 193146 Anonymous
Anonymous's picture

"The Chinese people would do well to pay attention. "

That supposed to be ironic or something?

Wed, 01/13/2010 - 20:47 | 193148 pros
pros's picture

I regret to say I see no other ways out of the present situation:

massive terror attack...all-out war..."we're not paying these (foreign) bad guys, and we're nationalizing your 401K's, pension funds because of national emergency"

forget inflation

Wed, 01/13/2010 - 21:08 | 193152 wang
Wed, 01/13/2010 - 22:12 | 193225 Anonymous
Anonymous's picture

"Give us the Tang pronto, or we'll nuke Toronto."

Wed, 01/13/2010 - 20:52 | 193153 Rainman
Rainman's picture

The smoke the Chinese smell is from the fire of populist pleas for American economic protectionist policies.

Unlike the USA, they study history. So they get nervous.

Not to worry, though. Nobody is biting the lender's hand.....until/unless he one day says no. 

Wed, 01/13/2010 - 20:55 | 193158 Doc
Doc's picture

Let me get this story straight:

Google and some other big American companies get hacked, Google threatens to pull out of China, thus the US government is trying to foment a coup d'etat in China through the CIA?

Am I the only one scratching my head on this one?

Wed, 01/13/2010 - 21:09 | 193178 MeTarzanUjane
MeTarzanUjane's picture

The claim is a sophisticated hack ORIGINATED in China.

This means it came from Israel.

Are we suppose to believe the organization in charge of the "sophisticated hack" left a trail right back to the origin? Come on...

Fri, 01/15/2010 - 07:34 | 194705 APC
APC's picture

The attack comes from china, so it can't be the chinese.  Hell, it came from china.  So it must be the Israelis.


Bit of a stretch, no?

Wed, 01/13/2010 - 22:01 | 193215 order6102
order6102's picture


Wed, 01/13/2010 - 20:59 | 193163 deadhead
deadhead's picture

Just yet another reason to be bearish long term.

Wed, 01/13/2010 - 21:07 | 193171 Anonymous
Anonymous's picture

There is more to that. Liberty/ democracy/ no censorship / do no evil etc. is only one part of the issue. Google has become an super efficient aggregate human and society profiler, the data it mines is priceless for anybody with at least some brains. China does not want Google to know everything about Chinese society, people, economy etc. As simple as that. Therefore, the fate of Yahoo in China is also pretty obvious.

Wed, 01/13/2010 - 21:15 | 193180 wang
wang's picture

So are you saying that Google's  threatened withdrawal from China for reasons of solidarity with those whom China oppresses is disingenuous? But I thought their motto is "do no evil".  Is censorship evil?

Wed, 01/13/2010 - 22:14 | 193231 Anonymous
Anonymous's picture


Wed, 01/13/2010 - 21:27 | 193185 Anonymous
Anonymous's picture

This is a funny story, we invented the internet ad all of our truly sensitive information is already on Darpanet 2.0. A cyber security friend told me thatthese intrusions are akin to someone looking in the store window wth no ability to steal the goods.

We steal far more stuff from these guys than anyone else steals from us.

This is our economic Haiphong Harbour incident. Obama must check China's development and raise our employment at home. What better way than to start to close the door on the Chicoms.

What are they going to do,demand their money back. The Fed has already monetized that much currency in one year. We will let them choke on our dollars, cut off their export markets, and watch 200 million Chinese go jobless. We get some inflation with full employment and the Chinese get a revolution.

We did this in a milder form to Japan 20 years ago, and they are still spinning.

This is a win win for us. Check mate.

Thu, 01/14/2010 - 02:27 | 193451 faustian bargain
faustian bargain's picture

riiight. that is a funny story.

Wed, 01/13/2010 - 21:34 | 193193 Anonymous
Anonymous's picture

Pot-Kettle-Black. The NSA reads and monitors (as in hacks) everything. The US media self-censors all the time. Numerous topics are taboo. Info apparatchiks in the US of A censor blogs all the time.

I just had a post deleted from my local newspaper's site. Why? Because I posted links - to Bloomberg and business week about the potential for the gov to grab the 401k's and IRAs

Thu, 01/14/2010 - 11:19 | 193650 MsCreant
MsCreant's picture

Wow. I'd keep reposting. Maybe I'll try it with my paper and see what happens.

Thu, 01/14/2010 - 12:25 | 193754 Gwynplaine (not verified)
Gwynplaine's picture

You may have something there.  I noticed yesterday that CBS Marketwatch posted a new comments policy.  The initial cover story was that readers were getting off topic, so new regulations had to be imposed.  Then, when you read a little further, they also are going to regulate comments that push a certain political agenda.  What does that mean?  Will goldbugs' comments now be removed on the basis of extremism?

Still, I'm a little skeptical of the claim that the CIA is conducting a covert campaign against Beijing.  We need their money to fund our deficit this year.  Also, how did the author come by this information?  Did the counterintelligence branch of the CIA actually admit to this off-the-record?  I doubt it. 

Something underhanded is going on, but I don't think anyone knows exactly what.

Wed, 01/13/2010 - 21:51 | 193208 Instant Karma
Instant Karma's picture

This cyber warfare stuff is scary. Makes one wonder whether one's digital money will be secure. Or electricity. Back in a to get more silver, guns, and a generator.

Wed, 01/13/2010 - 22:41 | 193272 delacroix
delacroix's picture

small 900 watt generator (chinese) $99 5hours on 1.1 gallons, get 1 while they're cheap. 9mm hi-point semi-auto pistol $160

Wed, 01/13/2010 - 22:49 | 193282 delacroix
delacroix's picture

small 900 watt generator (chinese) $99 5hours on 1.1 gallons, get 1 while they're cheap. 9mm hi-point semi-auto pistol $160

Wed, 01/13/2010 - 21:51 | 193209 Gordon_Gekko
Gordon_Gekko's picture

"to discuss how to stop countries from "stifling" access to information."

Well, I'm sure the US does no such thing.

Wed, 01/13/2010 - 22:13 | 193226 order6102
order6102's picture

it does, except you don't get put in jail for writing this, unlike in China where you can get killed just for putting line like this on internet!

Thu, 01/14/2010 - 00:54 | 193394 Anonymous
Anonymous's picture

you obviously cannot read Chinese

Thu, 01/14/2010 - 12:19 | 193726 order6102
order6102's picture

cao ni made

Wed, 01/13/2010 - 22:07 | 193220 ShiftCTRL
ShiftCTRL's picture

Random thoughts/questions:

Was Google tipped off to get the $%*! out?

Is the U.S. planing a war against China to kill the debt, or is China planing a war against U.S. because it knows it isn't getting paid back?

"Next week the US is to launch a new technology policy to help citizens in other countries to gain access to an uncensored internet." -- What does this mean for Bidu? Doesn't sound too good.

Wed, 01/13/2010 - 22:08 | 193222 order6102
order6102's picture

thats got to be one of the most crappy article on ZH... let me get it right Google is part of the US Govt? China doesn't kill 2M tibetans? War between China and Free World is unavoidable. One way or another. Over-polluted, over-crowded - China doesn't have any choice, but to grow. They took over Tibet, they took over Inner-mongolia, they took over Uighuria. If it was not for India - they wanted to take over Ladkh and Sikim, if it was not for US - they wanted to take over Taiwan. Its beast, and it has to be killed. Free Tibet!

Thu, 01/14/2010 - 02:15 | 193446 Anonymous
Anonymous's picture

Man, you are so brain washed. One day you may die in middle east desert searching for WMD. Good luck.

Thu, 01/14/2010 - 03:38 | 193481 Lungimaster
Lungimaster's picture


US companies have large stakes in Chinese internet infrastructure. Google benefits from the launch of new technology without having presence in China. Hence US gov shows interest. It does NOT mean Google is part of US govt.

However, you take the argument too far (-1 on that). Every nation/company/individual is ambitious for growth to some extent. China is probably being too blatant at it. Doesn't imply that it needs to be killed. [Disclosure: I am from India and IMO Tibet should be free, and China should be democratic.]

Wed, 01/13/2010 - 22:13 | 193227 Jay
Jay's picture

Thanks for the story. I have the same thoughts regarding point 1. Pulling out of China certainly won't make them less vulnerable to attacks. It seems like they're mixing two problems here. They should have made two separate blogs to avoid confusion.


I would like to know how Google found out that certain gmail customers are human rights activists. The fact that Google knows or could find that out makes me uncomfortable. Even going after that type of information seems like a privacy violation.

Wed, 01/13/2010 - 22:26 | 193246 Instant Karma
Instant Karma's picture

Maybe its all deception....fake enemies and fake wars and fake markets.

Make love not war.

All we are saying is give peace a chance.


GOOG is over-priced. Look at the chart, the swing trade is over.

Wed, 01/13/2010 - 22:26 | 193248 Anonymous
Anonymous's picture

"it was not for US - they wanted to take over Taiwan". Silly me,and I thought Taiwan is part of China. Do they speak Tagalo,or Russian in Taiwan?

Thu, 01/14/2010 - 06:42 | 193514 order6102
order6102's picture

Dude.. you need to go read a bit more. Taiwan is independent county... at least as of today... If you follow your logic US and Australia should be same country, as they speak some form of English? Or even better, Mexico and Spain? Why not... 

Wed, 01/13/2010 - 22:32 | 193258 carbonmutant
carbonmutant's picture


The Chinese are reading the same thing ahmadinejad did. As the Germans so succinctly put it, "there's an empty suit in the White House".
My guess is that Hu Jintao was not impressed by what he saw in November. Obama's attempts to lecture to the Chinese on monetary policy would have been viewed as an insult if they thought he knew what he was talking about. As it was they just laughed at Geithner.
But Copenhagen told the whole story. Hu Jintao refused to sit in the same room with him during the negotiations.
The US is only useful to the Chinese as long as we are buying Chinese products. If we aren't buying they have no reason to listen to our Bulls**t.
And at this point it appears as though the US is being viewed as a chicken to be plucked. Unfortunately for the current administration the prior administration was better equipped to deal with issues of this magnitude.

“As the economic situation deteriorates, these tensions are only going to escalate.”


Wed, 01/13/2010 - 22:41 | 193271 Miles Kendig
Miles Kendig's picture

"there's an empty suit in the White House".

ROFLMAO. There hasn't been a self directed President of the United States for years.  Many years.  The only difference between this administration and the previous one is how the crumbs are directed.  Look at pictures of Hank Paulson after his visits to China back in '07 & '08 and you'll realize he got laughed out of the room as well.  Hank was just smart enough not to make the meeting exposed to public eyes.

Wed, 01/13/2010 - 22:39 | 193268 Anonymous
Anonymous's picture

>>by order6102. You remind of GMAT test whereby they give you an essay,and then ask you questions about it. And from what you are inferring from the article,it shows that your reading comprehension are lacking. I am surprised that you are even registered in this sight. The article has nothing to do with the Chinese policy,or killing or human rights. Simply put,the article questions the sincerity of Google's claim. And you know what?the same questions I had this morning,and whether this is poltically motivated knowing how Google came to the political front in the latest election. I can't recall any other company that was so much highlited during an election year,as Google . And please remind me of one if I am mistaken...

Thu, 01/14/2010 - 06:38 | 193515 order6102
order6102's picture

 I am surprised that you are even registered in this sight. 


Clearly you have to post as "Anonymous", so you can't. But i understand, memory of GMAT test and un-ability to register without parents/guardian sign off.. You will grow, and it will be fine. Don't worry, my friend :) 

Wed, 01/13/2010 - 22:44 | 193278 CONners
CONners's picture

How about some uncensored access to a "free" market instead of the Peoples Republic of Wall Street market?

Wed, 01/13/2010 - 22:44 | 193279 Anonymous
Anonymous's picture

Fuck china. Google stands for integrity.

Wed, 01/13/2010 - 23:00 | 193294 seabiscuit
seabiscuit's picture

GG is absolutely correct. The US does no such thing.

Wed, 01/13/2010 - 23:06 | 193301 Anonymous
Anonymous's picture

Google realized that they can't do business in china without "surveillance" of every byte of their traffic and wholesale theft of their "intellectual property". It's all right there in the memo and it is business as usual in china. What company in their right mind would put any sensitive data within 1000 kilometers of china? Expensive lesson, as you can see from baidus market share.

Wed, 01/13/2010 - 23:21 | 193312 MarkD
MarkD's picture

Will other countries launch a new technology policy to help US citizens gain access to uncensored media.............please.

Somebody help us.

Thu, 01/14/2010 - 00:47 | 193385 Anonymous
Anonymous's picture

Can you drive on the roads without a driver's license or your car being registered? No.

Can you directly connect to "the internet"? No. If you have an outragious amount of money you can get a direct connect, but sort of that you need an ISP. And no, placing a server into a colocation facility still places that facility "between" you and the internet.

So the US government is basically controlling the ISPs, who we individually depend on for our internet connections, in order to censor us.

On the positive side the internet allows individuals access to encryption methods and other features that create endless problems with censoring. Thus Google willingly censors itself to gain access, and China would not let them in it they did not since the Chinese goverment could ever completely censor Google.

Where this starts to change is "IPV6", which is sometimes called "Internet 2" along with other technologies being called Internet 2. Basically IPV6 addresses issues of unambigiously identifying internet connection "end points", in theory making it impossible to hide on the internet. When IPV6 really gets deployed, the US government has been trying to do this for a very long time, then censorship will become a little easier.

However IPV6 will also make it easier to tell when "the man" tries to access your PC, and thus yourself prove they were trying. So it goes both ways.

Wed, 01/13/2010 - 23:28 | 193318 gridlocked
gridlocked's picture

Covert war? Chinese hackers backed by the government have been probing and attacking our IT infrastructure and stealing secrets for a long time. This is nothing new although maybe a public escalation is in the works.

Wed, 01/13/2010 - 23:38 | 193322 heatbarrier
heatbarrier's picture

JANUARY 14, 2010 -WSJ

Web Is New Front Among Cold War

Foes Attacks Against Multinational Corporations Would Represent a Significant Expansion of Targets Beyond the Military

WASHINGTON—Alleged attacks on Google Inc. from China redraw the battle lines between the U.S. and its former Cold War adversaries, who are now squaring off on a new front: cyberspace.

The purported attack on Google would represent a significant broadening of Chinese ambitions beyond military targets to include companies that reflect U.S. power on a global scale.

The ambitions of China's military, the People's Liberation Army, in cyberspace have been growing and now include a wide swath of citizen cyber militias that mount attacks via the Internet on behalf of the government, according to recent U.S. government reports.

Chinese cyber spies steal intellectual property from U.S. organizations valued at an estimated $40 billion to $50 billion each year, according to U.S. intelligence agency estimates provided by a person familiar with them.

Thu, 01/14/2010 - 00:19 | 193363 Anonymous
Anonymous's picture

Nuke them now while you can still win. POE

Thu, 01/14/2010 - 00:35 | 193374 Anonymous
Anonymous's picture

>1) Why

Because you leave out US government “attacks” on Chinese servers. Google may well be fed up with being in the middle, and with people waking up, does not want to be sacrificed by the US government for the role it may be playing - Or is now being asked to pay and thus needs and excuse to extract itself from China. Here is a recently revealed example of Yahoo’s (a Google peer) behavior regarding US citizens:

I see no reason to believe that the US is forcing Google to “compromise” itself, this is a way out of that situation.

>2) Why?

If China knows you are involved then you KNOW they can take out your ENTIRE infrastructure and destroy your company, and you’ll never be able to defend yourself. If you leave their country, they will understand you are trying to avoid being pawned and likely leave you alone.

>3) Link

Your logic makes some very big assumptions.

China controls their citizen’s access by “pinching off” access points to a minimum of IPs or “borders”. This is why so many have had such a hard time implementing Pay Per Click monetization since so many inside China appear to “share” IPs.

IT would take me pages to explain the details, suffice it to say most people in the industry would not come to the conclusions you have based on the stated information.

>4) Google’s Success “in China’s internet search market”

That’s the problem, and EVERYBODY makes it. Google is NOT a search engine!

Google is a system that more effectively than any other form of advertising, brings buyers and sellers together the moment the buyer wants to buy. Search is nothing more that the method used to bring those buyers to the site the moment they want to buy.

Google is also “pay for performance” versus all other forms of advertising. All advertising on the Google network is FREE until someone actually clicks on the presented link, thus it’s “pay for performance” no traffic your site then you pay nothing.

Google’s success is therefor based on it’s ability to bring buyers and selling together, it has nothing to do with their “search” algorithms.

As a financial site, ask yourselves a simple question:

How do you make money having one of the largest sites on the internet and providing a free search engine service?

Answer is simple: You don’t make any money doing that. You sell that feature to people advertising products and services base on the fact that you can IDENTIFY their potential customers the moment they want to buy. Now name me one other advertising industry outside the internet that can do that on the scale that can be done on the internet. There is none. This is what Google is and how it makes money. This is what drives and motivates Google.

5) Unlikely

Agreed, Google leaving gives makes their life easier. Google decided to leave. Thus Google helps China surround the Chinese citizens and control their access. The Chinese government loses nothing, and gains a lot. Especially if Google is being used as a tool, which I’m sure it is.

>Currently the war is economic, political and covert in nature.

Agreed, but different way of coming to that conclusion.

Many years ago the US government demanded many large companies provide the US government a full week of access logs for a “random” one week period. To these day it is my understanding that Google was the only company that said no and never provided logs.

Since that time Google’s knowledge (logs!) of it’s individual users has grown a lot, they have a lot more detail of far more time and about far more things and behaviors.

Do not underestimate user’s knowledge of Google’s information about them. Say a cheating husband using a GMail account to talk to their girlfriend, etc. The moment that trust is compromised it’s game over for Google.

People use Google for it’s great search results, and thus efficiency connecting buyers and sellers at the moment the buyer wants to buy, and because they TRUST Google. The moment is gets out that Google is compromised, either by and attacker or selling it’s soul to the US government, Google’s life is over. Competing with Google is hard because everybody it using it now, have them run away because of lack of trust and someone else can then quickly replace them. For example Pay Per Click affiliate companies, that have direct contracted access to Google’s backend “insertion orders”, have the knowledge of search they just don’t have access to advertisers at Google’s enormous scale but distrust of Google could instantly change that.

Thu, 01/14/2010 - 00:53 | 193393 Anonymous
Anonymous's picture

In Canada, a CBC financial anaylst speculated that the real reason behind Google's withdrawl had to do with attempts to hack access to Google search engine code.

In any other nation, legal writs could hail down on the culprits (aka China's government), but not in China.

This, he speculates, is the real reason behind Google's threat to withdraw.

Thu, 01/14/2010 - 00:59 | 193400 Anonymous
Anonymous's picture

Russians, the Chinese and the Saudi's are playing us/obama-biden-clinton like a skin flute...The problem is when you don't believe in anything, you fall for anything. This Admin does not fully believe or support the US Consitution, so they can't negotiate from a position of strength,they lose, we become weaker, its a disaster....the humorous part is the MSM puts a hperactive positve spin how great the conference went....Lunatic Fringe

Thu, 01/14/2010 - 01:20 | 193408 CombustibleAssets
CombustibleAssets's picture

There is obviously a much larger backstory here.

Chinese Internet activists applaud Google, see no backdown


Thu, 01/14/2010 - 01:25 | 193410 Anonymous
Anonymous's picture

Sorry, but the logic here is shallow. If we wanted to keep China down, we would NOT press them to change their major weakness: their communist government. In fact, we'd probably provide as much under the table support for them to maintain that repressive regime.

If they ever became a free society, that's the day they would have a real chance at usurpring the U.S. as the number one power in the world. Till then they're just a counterfeit goverment/culture and will never been a true threat.

Thu, 01/14/2010 - 02:07 | 193438 Tethys
Tethys's picture


To top this situation neo-con hawks in the U.S. government and military accustomed to the nation being the world's sole super power, fear the rapid rise of China. They fear the global domination of a Communist nation
Followed by:
Couple this with the fact that there exists a complete lack of democracy, freedom and human rights in China.
Is it really only neo-con hawks that fear the global domination of a Communist nation?   Also:
As part of our investigation we have discovered that at least twenty other large companies from a wide range of businesses--including the Internet, finance, technology, media and chemical sectors--have been similarly targeted. 
Kinda makes one wonder if all of these 'fat fingers' and exchange shut-downs lately have been the result of a few strategically placed root kits... events like today's ESHO fun have somewhat of a 'probing for weakness' feel to them.


Thu, 01/14/2010 - 03:03 | 193468 Anonymous
Anonymous's picture

How about this for an explanation of Google's action. Google is at a competitive disadvantage against Baidu because, in addition to conforming to Chinese laws on content-filtering, Google has the additional burden of conforming to U.S. laws regarding intellectual property rights. One reason for Baidu's success in China is the fact that it can be used to search for pirated MP3s. Google cannot do this without risk of a lawsuit from the RIAA.

Furthermore, not all businesses compete on a level playing field in China. It goes without saying that, where possible, China will do whatever is necessary to ensure that market share leaders in China are Chinese companies.

Faced with these handicaps (and the rampant IP theft), China is really not that an attractive market for Google. By uncensoring itself, Google actually accomplishes a few key things. Firstly, it relieves itself of the cost and effort of maintaining the personnel and infrastructure for censorship. Secondly, lack of information censorship in China is a product differentiator for Google. This could give Google a competitive advantage over Baidu since it can be assumed that Baidu must continue to censor its results since it has not substantial revenue from other markets.

If China does not allow Google to allow uncensored searches, then Google takes its ball and goes home. Not a huge loss since they're playing a game where the rules are heavily stacked against them and it's highly doubtful they'll be allowed to be successful.

Thu, 01/14/2010 - 03:36 | 193480 Anonymous
Anonymous's picture

"Next week the US is to launch a new technology policy to help citizens in other countries to gain access to an uncensored internet."

What? The US Navy already invented and provided TOR (The Onion Router) for quite a long time. TOR already has been widely used in Iran and China to gain access to uncensored Internet.

Thu, 01/14/2010 - 04:08 | 193489 Anonymous
Anonymous's picture

This could be a World Wide Wrestling show don't you know, Or some real heat to come.

If google is allowed to stay, they will be seen by the chinese people as the clear go to for the best in information, a trojan horse....
they hand over ip address and url lists to China, we may never know the details or scope of China's ability to obtain this information.
China starts back up with the quiet elimination of all opposition inside its borders.

If google leaves then things are worse than we know as far as cyberwar goes.

Thu, 01/14/2010 - 05:55 | 193505 Anonymous
Anonymous's picture

First company to realize that a "transfer" of intellectual property and capital to its business partner might be detrimental to its existence in the long-run?

Thu, 01/14/2010 - 06:08 | 193510 JacksWastedLife
JacksWastedLife's picture

Who cares in China? What it actually is - a brilliant PR action from Google. Rising such a big question, being contradicted with such big and powerful country! Lot of buzz.

Thu, 01/14/2010 - 07:52 | 193532 Anonymous
Anonymous's picture

The companies and countries that currently buy sell and trade the Great Chinese Wal Mart standard are already marked as the devouring beast. They have given up the URL addresses that lead the Chinese dragon to capture the principle and principals representing The Constitution. Life, freedom, liberty and justice for all is not sold, traded or bought off the Great Wal Mart of China shelf, prison and death is.
Google, Cisco, Microsoft etc... all are enemies of freedom. The government stooges, that they paid for on the Hill, have sustained the slaughter. TO HELL WITH China's Commie Bastards AND YAHOO, GOOGLE etc... AND EVERY FOOL ON THE HILL. Time for their judgment to come upon them is at hand. You better get ready now, for that coming reality.

Thu, 01/14/2010 - 08:20 | 193539 Anonymous
Anonymous's picture

My boss used to say - "Too much analysis leads to paralysis"
Very apt here. You people at times nalaye just for the heck for it so that you have a constant flow of articles and that causes a dip in quality. But i guess to sustain a successful financial site/blog you have to succumb to such kind of pressure. So good luck.

Thu, 01/14/2010 - 09:40 | 193550 wang
wang's picture
Thursday, January 14, 2010

Google dead in China?


Wednesday, January 13, 2010

What's up with Google and China?
Thu, 01/14/2010 - 10:13 | 193587 JohnKing
JohnKing's picture

Google=NSA. This horseshit about google pulling out is just pre-emptive in case China decides to block google, then the "do no evil" company can claim they took the high road. The bottom line is that google cannot crack the Chinese market, they have in fact failed at every product roll out they have attempted, a one trick pony who who is wholly dependent on ad words.

Google shopping=FAIL

Google search boxes for enterprise=FAIL

Google Radio ads=FAIL

Google Finance=FAIL

Even Youtube is financial failure, it is a money losing operation.


All google fails are subsidized by adwords which is ripe with click fraud, which is a topic unto itself, rightly shave off 20-30% of total google "revenue" and properly put it into worthless clicks column and you have not so much. Google is the biggest fraud/PR created privacy stealing, government backed surveillance operation on the planet. Do no evil?! hahaha.. The really BIG lie. Just another "smartest guys in the room" PR love fest.

Look, you want to do business in a jurisdiction, you play by that jurisdictions rules, that includes doing business in China. The "smart" boys at google know that and can't win in China, they are getting thier butt kicked by BIDU but hey they will spin it as a good thing when they shut it down, "we took the high road" bullshit and Jimmy Cramer will bring on Eric Schmidt to pump the stock so the cubicle monkeys in Mountain View don't go under water on their stock option plans.


Thu, 01/14/2010 - 11:26 | 193658 MsCreant
MsCreant's picture

So Google is the next new tentacle in the United Sachs of America. Goldman, Google, Gansta, we likes our Gs.

Too bad capitalism is dead.

Guess this happens when you are at war.

When a nation comes together during a time of crisis, I didn't realize it meant "comes together" like what happens during a good intercoursing. Ah, live and learn.

Thu, 01/14/2010 - 12:01 | 193696 bugs_
bugs_'s picture

Yes Google will be a case study for
economics students.  It is a template
for ANY other non-Chinese company
that wants to do business in China.

Google failed to read "Wealth of
Nations" and tried to do business
with a mercantilist.  Google bent
over, sold principles, did evil,
hired legions of H1B, and liquidated
their self respect.

All for the "sure thing" of doing
business in China.  Of course they
were abused, their technology was
stolen, their infrastructure was
attacked, and spammers ran wild.

Ultimately Google gets nothing
what a surprise.  Now they will cry
like spoiled little babies.

Thu, 01/14/2010 - 12:43 | 193800 jmc8888
jmc8888's picture

Yes and no.  We're not in a position to talk.  We're broke. Who will listen to us?  Not many anymore.


I wonder how much of this is about China's decision to bury the Queen of England's malthusian genocidal Copenhagen agreement.  That too, was mid december, around the time of 'break-ins'.


The sad fact is, the communist gov't of China, and whatever you want to label Russia as, and India were the only ones keeping us back from the genocide that was the Copenhagen plan.  Thank god, and you should too - because your investments might have become moot had this agreement passed.  Even if you had 1000 oz of gold, if you have no electricity, no running water, no heat, no food...then what good is 1000 oz of gold?


Free speech is great, but only when they are speaking the truth.  Perhaps if we'd all be democracies, we'd be only a stone's throw from a new dark age.  I say let them be what they want to be.  The trend is obvious, more engagment with the world, and more rights for it's people.  U.S. doesn't need to push anything, the trend for China is already clear.  BUT China will not be subject to imperialism, at least not on it's OWN terms. 


The people that control America, see Queen of England, is quite pissed that China derailed the Copenhagen agreement.  Only in a free-speech democracy can they spout their bs, get half the population to beleive their bs, and buy off their politicians who will use 'democracy' to further the Queen's motives.


Democracy is very good, but has some strong weaknesses.  We've only just begun to see the drawbacks to democracy.  (which is not a reason to abandon it as it IS the best way).  However if every country can be gamed (and just about all democracies were with Copenhagen), then one must realize that democracy itself might NEED other forms of gov't around the world, in order to 'check' us.  The fact remains the ones that saved us from a new dark age (and economically we still may get there), was China.


If we lose that, if we force them into the perils of lobbying, we just might be sealing democracies fate. 


Thank China, because without it, your life was over. 


I just wonder how much spin is out there.  Because one must remember, that the opium wars, never really ended, China knows this, us stupid Americans, don't...which is a travesty seeing how we beat the british to end imperialism here, only to have it return and be what we live under now and think it's the best thing since sliced bread. Except it's what killed our economy, again stupid us. 


What happened against google was a crime, but I wonder what the motive was behind it, and whether or not we'll ever get the real story.  We still haven't gotten the correct story about any of the major issues of the past decade 2000-2009.  Everything major, was spun.  Y2k, 9/11, Iraq, Af/Pak,The Greatest Depression, Copenhagen/Global Warming.


This thing reeks of bigger implications, but what are they?  I guess we'll find out within the next couple of years, for some, decades for people who wait until the media actually report something.  We still haven't gotten the truth on any of those above factors.  But hey we get to learn (through wall to wall coverage) about some poor woman being killed by her husband every other month.  Sad, but in the grand scheme, not important.


Thu, 01/14/2010 - 22:00 | 194484 lexalexander
lexalexander's picture

More on this from <a href="">Macworld</a>:

"First, this attack was not just on Google. As part of our investigation we have discovered that at least twenty other large companies from a wide range of businesses - including the Internet, finance, technology, media and chemical sectors - have been similarly targeted," wrote Google Chief Legal Officer David Drummond in a Tuesday blog posting.

"Second, we have evidence to suggest that a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists."

Drummond said that the hackers never got into Gmail accounts via the Google hack, but they did manage to get some "account information (such as the date the account was created) and subject line."

That's because they apparently were able to access a system used to help Google comply with search warrants by providing data on Google users, said a source familiar with the situation, who spoke on condition of anonymity because he was not authorized to speak with the press.

"Right before Christmas, it was, 'Holy s***, this malware is accessing the internal intercept [systems],'" he said.

To which bmaz at Emptywheel <a href="">comments</a>:

Uh, “account information”, “subject line”, “search warrants” and “intercept systems”. That ring a bell? This appears to indicate that the state-sponsored Chinese hackers have hacked into the portion of the Google infrastructure that deals with government warrants, intercepts, national security letters and other modalities pertinent to the Terrorist Surveillance Program. That, if true, could be very problematic, one would think.

Now, this is based upon information and belief, but it is my understanding that Google doesn’t store any gmail data in China, which means that this search warrant/intercept machine was located in the US, likely in Mountain View California

That is, if Google’s Mountain View HQ search warrant search interface/computer was hacked, we are probably talking about the same computer used by the Google Legal Department to perform queries in response to DOJ warrants, subpoenas, national security letters, and FISA orders.

Yeah, if that is the case it could be a problem.

Troubling, if accurate. 

Thu, 01/14/2010 - 22:01 | 194485 Anonymous
Anonymous's picture

Tinfoil hat... China employing cyber espionage and hacking to gain industrial secrets is really old news. And it's not really a secret that the Chinese government adopts favorable policies for domestic companies and discriminatory ones against foreign companies. Even World of Warcraft got hit with a lot of nonsense. In the West, you call this "protectionism", in China, we call it "progress".

Fri, 01/15/2010 - 12:17 | 194904 SABTrader
SABTrader's picture

Actually i have it on good authority that Obama has ordered Google out of China.

The last thing Obama wants is for the chinese slaves to get access to an uncensored internet. If they did they might not want to continue trading with the US. At the moment US consumers buy Chinese products. The chinese get all the jobs but don't get to keep any of the stuff they produce. Isn't that what a slave is?

Obviously someone high up in the chinese system is being kept happy with a big pile of US toilet paper.

Fri, 01/29/2010 - 10:53 | 210826 Anonymous
Anonymous's picture

Actually the Chinese Communist Party during the cultural revolution destroyed and nearly wiped out all 5000 years of history as the evil regime wanted to suppress traditional culture which is based on morals and harmony between heaven and earth. The CCP is strongly atheist and has murdered 80million people in 60 years and the count is still rising. We are taught Hitler was bad yet with figures like these I think you have over looked the obvious. Go to this website and it is all documented plus more.
FREE INTERNET END CENSORSHIP NOW. I take my hat off to google for having balls and integrity to stand up to the CCP the more multinational companies that do this the better.

Sat, 02/06/2010 - 08:26 | 220311 Anonymous
Anonymous's picture

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Such techniques, slowly but surely brings success. And with it comes a potential for much higher rewards

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isolinx's picture

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