Google in China: Ex-Microsoft VP Kai-Fu Lee’s Past Report Might Point to What Went Wrong

In the fascinating maelstrom that is Google in China, one thing is clear: this affects all of us. It’s not about whether Google’s decision to draw a line in the sand is based on ideals versus profits. It’s not about whether the Chinese government will open up its Internet policies and play ball with the rest of the world. It’s about the future of every company on the Web—including Microsoft, Amazon, RealNetworks, and all the smaller companies out there.

In case you haven’t been following every twist and turn, earlier this week Google said it might pull out of China following its investigation of a cyber attack that it says originated in China, targeting at least 20 large companies (including Google). One apparent goal of the attacks was to access the Gmail accounts of Chinese human rights activists. Google said it is “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.”

Google’s statement is very carefully worded. It doesn’t explicitly accuse Chinese officials of any wrongdoing. But the reactions of a lot of people, from the media to tech-business leaders to U.S. Secretary of State Hillary Clinton, have helped portray the situation as a cut and dried “Google (and freedom of information) vs. China (and censorship)” issue.

I want to tackle one piece of this sprawling puzzle. And that is the huge, ongoing cultural challenge that Google, Microsoft, and other western companies face in setting up business operations in China. No, this is not a new issue. But one part of the Google announcement was particularly telling: “We want to make clear that this move was driven by our executives in the United States, without the knowledge or involvement of our employees in China who have worked incredibly hard to make the success it is today.”

Google has now been up and running in China for four years. That is not a lot of time to build deep relationships. And it certainly doesn’t help that Google’s biggest competitor in China, Baidu, is backed by the Chinese government.

Heading up Google’s China effort until recently was Kai-Fu Lee, the controversial ex-Microsoft vice president who founded Microsoft Research Asia in Beijing in 1998. Lee, a Chinese high-tech celebrity and education leader, was head of Google China from 2006 until last September, when he left the company to create an incubator in Beijing for Chinese high-tech startups.

In my view, it may not be a coincidence that the current situation has come about so soon after Lee’s departure. Frankly, I’m surprised this all didn’t come to a head much sooner for Google. But perhaps it was through Lee’s efforts that it didn’t—or maybe, conversely, it’s part of why Lee left Google. (I’ve pinged him for comment, but haven’t heard back on this topic.)

Which brings me to some analysis. Back in 2003, while he was at Microsoft, … Next Page »

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