Analysis: Yahoo's China problem
Ahead of a Congressional hearing, the Chinese Web portal has been blamed for the jailing of a second Chinese dissident.
By Erick Schonfeld, Business 2.0 editor-at-large

San Francisco (Business 2.0) - How many Chinese citizens are now in jail because of information Yahoo provided to the Chinese government? That is the question the not-for-profit Reporters Without Borders is asking. And it's a question which suggests the damage to Yahoo's reputation will be ongoing.

Yahoo (Research) suffered a wave of bad publicity last September for providing information that led to a ten-year jail sentence for Chinese journalist Shi Tao. Now, Reporters Without Borders has learned that a second "cyber-dissident," Li Zhi, a 35-year-old ex-civil servant, was sentenced to eight years in prison in December, 2003 "based on electronic records provided by Yahoo," it reported in a press release Wednesday.

The release stated that the charge was "inciting subversion." According to a Reporters Without Borders spokesperson, the electronic records in question came from an online discussion group where Li Zhi criticized local officials in his home province of Dazhou of corruption.

"We are unaware of this case," said Yahoo spokeswoman Mary Osako says. "We can't comment on the accuracy of the report."

Regarding the Shi Tao case, Osako adds that Yahoo was "rigorous in our procedures and we only responded with what we were legally compelled to provide and nothing more." (Yahoo China, which was a division of Yahoo at the time of the alleged Li Zhi incident, is now operated by Alibaba, a Chinese Web company in which Yahoo owns a minority stake.)

Osako added: "The facts surrounding the Shi Tao case are distressing to Yahoo. We pride ourselves on helping citizens around the world search and access information. The choice is not whether to comply with law enforcement demands for information. The choice is whether to remain in the country. We believe that the Internet is a positive force in China."

Proof is in the pudding

That may very well be so. But where are the proof points of "positive force" that counterbalance what's been done to Shi Tao or Li Zhi? Each jailed dissident convicted based on information Yahoo (or Google or Microsoft or any American company) gave to the Chinese government belies the notion of the Internet ultimately being good for China.

Reporters Without Borders counts 81 journalists and dissidents currently jailed on questionable grounds. The details of those prisoners' cases are all just ticking time bombs that could further damage reputations of U.S. Internet companies if it turns out that they are now in jail because of information those companies willingly gave the Chinese government.

It's one thing to comply with the law in foreign countries. It is another to become a surveillance arm in those countries or to be complicit in censoring their citizens. The fast-growing Chinese Internet is perhaps the most appealing market in the world right now, but what will it cost U.S. companies to remain there?

Representatives from Yahoo, along with those from Google (Research) and Microsoft (Research), will have the chance to answer such questions and defend their China policies at a Congressional hearing on Internet ethics to be held by the Committee on International Relations on February 15. 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.