Chinese Business Carries a Price

Opinion: As American businesses like Microsoft reach for profits in China, cooperating with local government could mean supporting censorship.

Watching the Chinese government try to balance its desire to become a major player in the global networked economy while maintaining an authoritarian governing structure is a bit like watching a clumsy circus performer make his way across a tightrope. Hes probably going to fall off, but when—and why—hell make a wrong step is hard to predict.

Thats the image that came to mind when reports surfaced earlier this week about Microsoft and its Chinese customers. A free-press advocacy group, Reporters Without Borders, condemned the company for installing software that rejected particular words posted on MSN sites in China. And with that, Microsoft joins Yahoo, Cisco and Google on the list of companies that human rights advocates suspect of aiding the Chinese governments censorship efforts.

Reporters Without Borders didnt mince words on Microsoft:

"Reporters Without Borders has been able to check that, as reported by several news agencies, when a Chinese blogger attempts to post a message containing terms such as "democracy", "Dalai Lama", "Falungong", "4 June" (the date of the Tiananmen Square massacre), "China + corruption", or "human rights", a warning displays saying, This message contains a banned expression, please delete this expression.

Generally, "subversive" messages are displayed on Chinese-hosted forums and blogs but the banned words are automatically replaced with blank spaces.

The Chinese version of the MSN portal, along with the blog tool, were launched as a joint venture with a local state-controlled company, Shanghai Alliance Investment Ltd (SAIL)."

A Microsoft spokesperson said via e-mail that no one was available to discuss the matter, and issued this formal statement: "MSN Spaces in China is managed by its China joint venture, the Shanghai MSN Network Communications Technology Company Ltd. As a global business, MSN abides by the laws, regulations and norms of each country in which it operates."

The attitude summed up in that statement, in the eyes of human rights advocates, is precisely the problem.

Many argue that businesses operating in China use the need to obey local laws as an excuse to cave in to demands that let the Chinese government exert tremendous control over what its citizens do online.

"The Chinese government is one of the great negotiators," said Minky Worden, a spokesperson for Human Rights Watch, a New York-based organization that tracks abuses around the world. "The strategy is that they take a very illogical position, hold it to the end and then make a tiny concession."

The pressure is tremendous, and businesses, anxious for more customers—and China has billions!—accede to the governments demands simply to enter the market.

"They really should be making every possible effort to get concessions from the Chinese government on these things," said Worden, who, like many other advocates, would prefer that companies insist on treating all customers the same, regardless of where they live.

/zimages/3/28571.gifReporters Without Borders awards China its "top prize for online oppression." To read more, click here.

Thats a tough case for obvious reasons. American business have been eyeing the Chinese market for generations, salivating—with too much optimism but some reason—over potential sales and revenue. For instance, if MSN could get 10 percent of Chinas roughly 1.3 billion citizens to each open an account (at say, $10 a month) it would make lots and lots of money. The promise of such revenue is simply too great to dismiss. And, as any business person would tell you, their job is to make money.

Furthermore, the standard tech argument—that it is better to have some contact and some information flowing into China via the Internet than none at all—has some merit. The spread of information on networks is very hard to stop, and eventually, most tech folks predict, the governments ability to block information will be seen for what it really is: a thankless and ultimately futile task.

/zimages/3/28571.gifClick here to read David Courseys commentary on what Chinas attitude towards Taiwan implies for business relations with the United States.

A hint of whats to come if punishments or harassment become even more public might already be on offer: Look at how Microsoft employees reacted when the company did an about-face on its support for gay rights in Washington. An online campaign—mostly on the part of Microsofties dismayed by the companys decision not to back gay rights legislation—changed the companys decision.

Clearly, thats what Human Rights Watch and Reporters Without Borders are hoping will happen with China. Will it work?

Perhaps. In the meantime, advocacy groups worry that software—like what MSN and its Chinese partner have installed—also allows government censors to read, track and follow people trying to post forbidden words to arrest, jail and punish them. To put it in the harshest possible terms: Companies that assist with censorship and tracking could, in the eyes of human rights advocates, be sending people to jail—or worse.

And if the political winds in China or the United States shift, whats good business today could be disastrous PR tomorrow.

/zimages/3/28571.gifCheck out eWEEK.coms for the latest news, views and analysis of technologys impact on government and politics.