Tech under attack
Companies accused of aiding Chinese oppression need to come up with some answers fast.
By Marc Gunther, FORTUNE senior writer

NEW YORK (FORTUNE) - Microsoft, Google, Yahoo! and Cisco came under sharp attack from leaders of Congress and human rights advocates for aiding China's efforts to censor the Internet and punish dissidents.

And the giant technology companies literally had nothing to say.

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U.S. Rep. Tom Lantos, a California Democrat and the founding chairman of the Congressional Human Rights Caucus, said the companies declined to attend a briefing, held Wednesday, to analyze the role of U.S. business in Chinese Internet censorship.

Lantos said the U.S. firms have joined in "China's efforts to restrict the flow of information and to punish people who have the courage and determination" to fight for democracy and freedom.

"They caved in to Beijing's demands for the sake of profits," Lantos said. "These massively successful high tech companies...should be ashamed."

Other members of Congress, along with advocates from human rights groups Amnesty International, Human Rights Watch and Reporters Without Borders, also delivered scathing critiques of the tech firms.

U.S. Rep. Tim Ryan, an Ohio Democrat, said: "American citizens have every right to demand that companies use this technology to advance freedom rather than support oppression."

The debate over how U.S. tech companies deal with repression in China has been unfolding for years but it's now gathering steam. Google's recent announcement that it will launch a search engine based in China, complying with the government's extensive censorship laws, generated a new storm of criticism, in part because of the firm's now-famous motto, "Don't be evil."

But all the tech companies have cooperated with China, which has 30,000 people monitoring how its citizens use the Internet, experts say. "Most authoritarian regimes try to control what their citizens read and do online, but China is far and away the world champion," says Lucie Morillon, Washington director of Reporters Without Borders.

This week, Microsoft (Research) released new company guidelines explaining how it will deal with censorship of blogs in China and elsewhere. The firm came under fire for eliminating the writings of a Chinese blogger named Zhao Jing, who works as a researcher in the Beijing bureau of The New York Times. For its part, Yahoo! (Research) helped the police trace a private e-mail account of a Chinese journalist who was then imprisoned for revealing state secrets.

The issue is a complicated one, if only because, even in the U.S., tech companies cooperate with law enforcement agencies and sell equipment that enables schools, libraries and corporations to restrict what users see. With about 100 million Internet users, second only to the U.S., China is a high-growth market for tech. None of the companies want to leave but, so long as they stay, they have little choice but to play by China's rules.

So far, the tech firms have done a poor job of explaining their stance. Google (Research) executives have said, in essence, that giving China access to most of the Internet is better than giving them none at all. Others have said their policy is to obey local laws -- an approach which would mean they countenance the oppression of women and gays in some countries of the world.

One way out -- hinted at by Microsoft's code about blogs -- would be for the Internet industry, as a group, to develop a set of global standards for dealing with censorship. They could, at a minimum, work together and with the U.S. government to lobby China to open up. That way, no one company could gain an advantage by cooperating with the Chinese. "If companies put up a united front and are supported by the U.S. government, they'd be in a strong position," said Tom Malinowski of Human Rights Watch.

There's precedent for this. Oil and mining companies have set up principles for dealing with corruption, electronics companies have a recycling code, and the toy industry has standards for labor conditions in the developing world.

One thing's for sure: The issue's not going away. A congressional committee, this one with subpoena power, is planning a hearing in two weeks. Shareholder groups are filing resolutions. And just last week, about a dozen supporters of a free Tibet picketed Google's Mountain View, Calif., headquarters. (Microsoft, Yahoo!, Google and Cisco (Research) have all said they plan to attend the Feb. 15 congressional hearing.)

The tech companies had better come up with some answers fast, or this high-growth controversy is doing to do them some serious damage. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.