Bravo to Google. They really live up to their corporate motto: “Don’t do evil”. They have the guts say no to the Chinese government. No one know where history will lead, but Google may very well trigger the fall of the communist party.
By JESSICA E. VASCELLARO, JASON DEAN and SIOBHAN GORMAN, WSJ
Cyber Attack Targeted as Many as 34 Firms, Email of Human-Rights Activists; Investigators Probe Link to Chinese Government
Google Inc. said it may leave China after an investigation found the company had been hit with major cyber attacks it believes originated from the country — a move that would amount to a high-profile rebuke of China by a major U.S. firm.
The attack targeted as many as 34 different companies or other entities, according to two people familiar with the investigation, which has been under way for weeks.
Investigators are probing whether the attack is linked to the Chinese government or intelligence services, one person familiar with the investigation said. The attack has piqued the interest of U.S. intelligence agencies, including the National Security Agency, this person added.
Google said it suffered a “highly sophisticated and targeted attack on our corporate infrastructure originating from China” in mid-December, which it said resulted in “the theft of intellectual property.” The company said it found evidence to suggest that a primary goal of the attackers was accessing the Gmail accounts of Chinese human-rights activists.
A company spokesman declined to identify the other companies affected, saying only that it was in the process of notifying the companies and working with U.S. authorities. A spokeswoman for Adobe Systems Inc. said Tuesday that the software company experienced an attack that appeared to be related to the attacks Google described.
For Google to withdraw from China would be an extremely rare repudiation by a Western company of what is almost universally seen in business circles as one of the world’s most important markets. The country has 338 million Internet users as of June, more than any other country. Even the public suggestion that it is considering such a move is likely to infuriate Chinese authorities. Google’s statement could complicate matters for other tech companies sensitive to being seen as accomplices of the Chinese government.
Google said it will be talking with Beijing in coming weeks about how it might operate in China without censorship, long a thorn in the side of Western Web companies operating there. “We have decided we are no longer willing to continue censoring our results” on Google’s China Web site, Google.cn, the company’s chief legal officer, David Drummond, said in the post.
“We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China,” he wrote.
Chinese officials couldn’t immediately be reached for comment. The government in the past has repeatedly defended its handling of the Internet, and has rejected accusations that China is responsible for cyber attacks against foreign entities.
Google’s statement was hotly debated within the senior ranks of the company, according to two people familiar with the matter. Google Chief Executive Eric Schmidt was concerned about the potential backlash, but operating in China has been a concern of Google co-founder Sergey Brin in particular, these people said.
Google launched its Chinese-language google.cn search engine in 2006, agreeing to censor some of its results, a move that drew fire from human-rights groups and Web-industry officials who are critical of any restrictions on the Internet. Tensions between Google and the Chinese government began soon, escalating in 2009 when China reprimanded Google and accused it of having pornography on its sites. Google’s video-sharing site, YouTube, has also been largely inaccessible within China since around March.
Google’s move comes as it has been in negotiations with Chinese officials over various Google services in China. Last year, to placate Chinese officials, Google agreed to remove some links on its China homepage.
The company said only two Gmail accounts appeared to have been accessed. A spokesman said none of Google’s services experienced significant disruptions.
“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,” Mr. Drummond wrote.
If Google decides to stay, it runs the risk that its threat to withdraw will worsen its already rocky relationship with Chinese authorities, who wield ultimate power over all Internet companies doing business there and could, ultimately, force Google’s departure anyway. Google’s business in China goes beyond its search service — Chinese wireless carriers, for example, have been planning to sell mobile phones using the U.S. company’s Android operating system.
Human-rights advocates praised Google. The company’s decision “spotlights the importance of freedom of expression and privacy online,” Human Rights Watch said in a statement.
The attacks appear to have been launched from at least six Internet addresses located in Taiwan, which is a common strategy used by Chinese hackers to mask their origin, said James Mulvenon, director of the Center for Intelligence Research and Analysis at Defense Group Inc. a national-security firm.
They also hijacked the Internet address of a San Antonio-based firm, Rackspace, which is one of the largest Internet-hosting companies in the U.S. They siphoned off the stolen data from Google and other companies to the San Antonio site before sending it overseas, Mr. Mulvenon said. A Rackspace official said, “A server at Rackspace was compromised, disabled, and we actively assisted in the investigation of the cyber attack, fully cooperating with all affected parties.”
The attackers used at least seven different types of attack code in their effort to identify and steal data from Google, said Rafal Rohozinski, a principal at the SecDev Group, a Canadian security consulting firm that discovered a major Chinese spying operation on the Dalai Lama last year.
The attack on Google is similar to an earlier one that affected computers belonging to the office of the Dalai Lama and many foreign embassies, people familiar with the episode say. In that incident, dubbed GhostNet by the researchers who detected it, victims were sent emails that appeared to come from someone they knew, but were really sent by a hacker. When the recipient opened an attached document, a piece of computer code installed itself on the victim’s computer allowing the hacker to take control of the computer.
In a statement, Secretary of State Hillary Clinton said, “We have been briefed by Google on these allegations, which raise very serious concerns and questions. We look to the Chinese government for an explanation. The ability to operate with confidence in cyber space is critical in a modern society and economy.” An administration official said there were no reports of federal systems being affected by the attack.
Google’s revenue in China is relatively small, with analysts estimating only a few percentage points of Google’s nearly $22 billion in 2008 revenue came from the nation. But the country’s massive number of Internet users has made it strategically important for Google, as it tried to extend its dominance in search and search advertising around the globe.
Search market in China reached revenue of two billion yuan ($293 million) in the third quarter of 2009, 28% higher than a year earlier. As of that quarter, Google had 31.3% market share, compared with Baidu’s 63.9%. Their competitors now all have less than 1% market share, according to Analysys International.
Google suffered another setback in September when Kai-Fu Lee, the high-profile former Microsoft Corp. executive it had hired in 2005 to lead its China operation, left for his own Chinese Internet-investment venture.
Google may go the way of other Internet companies, such as eBay Inc. and Yahoo Inc., which abandoned expansion plans in China in recent years — although none of them in the publicly critical way that Google is suggesting. Both transferred their China businesses to local players in exchange for equity stakes.
Foreign Internet companies have all struggled in China both against tough commercial competition and also government regulation and censorship. The common assumption, however, is that no matter how onerous the limitations and challenges faced by foreign companies in China, the market is too big to walk away from.
Google would be the most high-profile Western company in recent years to draw a line under the kind of compromises it is prepared to make. A number of foreign companies exited China after the Chinese army crushed protesters around Tiananmen Square in 1989. But they mostly came back in the following years.