Business or personal? Google feels China fallout (News Feature)

By Andy Goldberg Mar 26, 2010, 3:20 GMT

San Francisco - Google's co-founder Sergei Brin revealed Thursday that his company's decision to pull its search service from China was based largely on personal reasons rather than fundamental business decisions.

Investors have so far largely shrugged off the implications of the world's largest internet company ceding its place in the world's most important market. In fact, the stock was trading higher Thursday than it did before Google announced its move Monday, even though many business commentators argue that the decision could come back to hurt Google in the future.

Brin said that the pullout was partly motivated by his own memories of repression in the Soviet Union, where he lived till the age of six.

China has 'made great strides against poverty and whatnot,' Brin told the Wall Street Journal. 'But nevertheless, in some aspects of their policy, particularly with respect to censorship, with respect to surveillance of dissidents, I see the same earmarks of totalitarianism, and I find that personally quite troubling.'

But some company watchers are troubled by what they see as a lack of financial foresight on Google's part when it decided to pull out of China rather than abide with the government's technology rules.

'Within the space of just a few weeks, Google helicoptered itself out of the country; forsaking decades of future growth prospects in a rapidly maturing and massive economy, and a half decade spent building up its operational and business presence,' noted commentator Paul Smalera on CNN Money.

Even though one of Google's mottos is 'don't be evil,' other investors pronounced themselves surprised when the company decided on a move that effectively excludes them from the Chinese market.

'I would have loved to have been in that boardroom to hear that discussion: How they decided to walk away from the largest single growth market in the world,' one money manager told Investor's Business Daily.

It hasn't taken long at all for Google to experience the fallout from the pullout. According to Information Week, the company's telecom partners behind the Great Firewall are already severing their connections with the web search giant, with companies like China Telecom and Unicom yanking Google search from their phones.

The government also quickly slapped filters on politically sensitive searches made to Google's Chinese language servers in Hong Kong, and according to one online report issued a strict list of instructions on how local media should cover the story of Google's pullout.

The censorship instructions were leaked to China Digital Times, a website run by graduate students at the University of California, Berkeley, and purportedly came from the Internet Affairs Bureau, which the site said is referred to by Chinese bloggers as The Ministry of Truth.

'All websites please clean up text, images and sound and videos which support Google, dedicate flowers to Google, ask Google to stay, cheer for Google and others have a different tune from government policy,' said the reported directive, which had more than a dozen 'content requirements' for stories on Google.

It appeared, however, that Google was well braced to take the consequences, even if it meant lower profits in the future.

'I'm very disappointed for them,' said Brin, of Google competitors like Yahoo and Microsoft, which continue to abide by Chinese censorship requirements.

'I would hope that larger companies would not put profit ahead of all else. Generally, companies should pay attention to how and where their products are used.'