Entrepreneur Watch

Bill Gates vs. Sergey Brin: Succumb to Chinese censorship?

    We don't yet know whether Google will remain in China. Google's top attorney, David Drummond, says the company is negotiating with the Chinese government to ease some controls it maintains on the Internet and may have a decision within weeks.    

    I doubt if much will come of it. There can be no significant progress with China on the censorship issue. China is run by an isolated dictatorship, and the country has never had western-style freedoms. The Chinese Communist Party sees nothing wrong with controlling information and restricting free speech.

    In fact, David Bandurski, an analyst with the China Media project, tells the New York Times that control of information has become even more important to the Chinese government recently. (Yeah, I'd say that's probably since the Olympics, now that it doesn't have to worry so much about world opinion. Remind me again how holding the Olympics there was supposed to make China more open?)

    The Chinese censors are so entrenched they're laughable to outsiders like us. The NYTimes says that the Global Times, backed by the Chinese Communist Party, wrote an article about how the whole Google issue was initiated by the U.S. government as a joint campaign to take over the world:

“As the global landscape is undergoing profound irreversible shifts, the calculated free-Internet scheme is just one step of a U.S. tactic to preserve its hegemonic domination,” Yan Xuetong, who heads the Institute of International Studies at Beijing’s Tsinghua University, said in the article.

(Unfortunately, you can't find that article on the Chinese publication's web site. The most recent article on that site mentioning Yan Xuetong that I can find through a Google search is one dated August 10, 2009: (Global Times - Think tank scholar has more fresh ideas than old shoes).)

And I didn't even know that old shoes had fresh ideas. 

    That puts Google into a Chinese Pickle. If it remains in China now, it will take a big PR hit. If it does back out, Microsoft gets the PR hit because Bill Gates and Steve Ballmer have been shrugging their shoulders and asking What's So Bad About Censorship? Bill's latest comment to the NYTimes: If Google pulls out of China, "What point are they making?"

    So Google will not be able to claim it has made any progress with the Chinese government in the next few weeks. Sergey Brin has never been comfortable going along with the regime and would certainly like to abandon ship there. But if Google does leave China behind, it loses all chance of trying to improve the flow of information within China. That's a task that has but a sliver of a chance of success in the next decade or two anyway, but who knows what will happen in the next few decades?  

    But here's the real problem. Google--and all major online services--are voluntary censors. The Chinese must find it strange that Google can't publish books in the U.S. and Europe that are out of print because of copyright laws. In Germany, Google must censor neo-Nazi sites from its search engine (and who complains about that?) 

    In fact, some people complain when Google doesn't censor offensive stuff. A couple of years ago, management refused to block the search engine from pointing people to an anti-Semitic site called JewWatch. Bloggers angrily decried that decision as essentially condoning evil. Sergey (who is Jewish) publicly defended the company's position as an anti-censorship stance. And, of course, all the publicity increased traffic to the offensive site.

    But sometimes, Sergey feels the company has no choice but to remove material. Several years ago, for example, the Church of Scientology made a copyright claim against an anti-Scientology site that had excerpted text from the Church's writings. Sergey saw it as a free speech issue but had to back down because the anti-Scientology site did, removing the material rather than fighting.

    So who is right? What's the right thing to do? Unfortunately this is close to a no-win game for Google. The best it can do is make the issue a loser for Microsoft. 

    Unless Sergey can pull a fresh idea out of his shoe.

Google, Obama Administration team up against Chinese censorship. Go Hillary!

Why is Secretary of State Hillary Rodham Clinton following up on Google's report of a cyber-attack from China and its threat to withdraw from Chinese soil with her own remarks condemning the country's policies?

Makes you wonder what conversations may have gone on behind closed doors between President Barack Obama and one of his science/technology advisors, Google CEO Eric Schmidt.

Secretary Clinton has called for the Chinese government to conduct a "transparent" probe into who was behind the attacks. (WSJ summary) Yeah, good luck with that.

For good measure, she threw in the names of other countries that love to censor too much, including Tunisia, Uzbekistan, Egypt, Iran, Saudi Arabia and Vietnam. Sounds like a list Google could have provided, as it has done in certain books. 

Can there be any doubt that everybody thinks or knows the attack was perpetrated by the Chinese government? I mean, come on, if the search for dissidents doesn't show it, Secretary Clinton's involvement has to. Chinese officials think so, and are pissed. (Another WSJ article)

"We urge the U.S. side to respect the facts, and to stop using the so-called Internet freedom issue to make groundless charges against China," Ma Zhaoxu, spokesman for the Ministry of Foreign Affairs, said Friday in a statement on the ministry's Web site. 

Secretary Clinton sent a message to the Chinese that businesses are hampered without a free flow of information.

"Increasingly, U.S. companies are making the issue of information freedom a greater consideration in their business decisions," she said.

Sounds like a message to China, like President Obama's earlier statements in support of Google, that the U.S. government approves of the threat to withdraw.

Perhaps this is a way for the U.S. government to encourage other U.S. companies to also put pressure on China to change its ways. 

I don't think Microsoft will, though. Steve Ballmer displayed a bad case of foot-in-mouth disease by discounting this whole issue.

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NOTE: I'm collecting updates on this story at my site, RichardLBrandt.com

Open letter to Steve Ballmer: Leave China if Google does

Dear Steve,

    I've known you for a long time. Long and closely enough to know that you're not so much the killer bulldog your reputation. makes you out to be. You're actually a smart, thoughtful, interesting and likable guy in person, albeit a ruthless negotiator and hard-hitting executive who plays the game of business like war.

    But, man, you really blew it when you responded to questions about whether Microsoft might back out of China, as Google is considering doing in light of the cyber attacks from there. You have been quoted as saying,

"We're attacked every day from all parts of the world, and I think everybody else is too. We didn't see anything out of the ordinary."

    Whoa. Nothing out of the ordinary? How about the following? 

• According to Google's announcement of the attack, "it soon became clear that what at first appeared to be solely a security incident--albeit a significant one--was something quite different."
• Google won't say it publicly, but others have expressed strong belief that this attack came from the Chinese government.
  
• Google also notes that "a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists." That includes a young woman at Stanford who has been publicly critical of China's stance toward Tibet. That lends credence to the government attack theory.
• So does the sophistication of the attack. The New York Times notes that "people familiar with the investigation" -- which is often a euphemism the press uses to mean the company itself (Google) -- say the attacks were aimed at source code repositories. 
• McAfee says the attack exploited an Internet Explorer flaw, a fact that will not be lost on people reading your "what's the big deal?" statement. 
• McAfee also says the malware allows the "attacker to perform reconnaissance and gain complete control over the compromised system." This ain't your teenage kid's usual hack. 

I don't know if leaving China is a good idea or not. But Google has gotten enormous criticism for years just for being in the market -- criticism that has skipped right past Microsoft because Google has been a better target.

Suddenly, Microsoft -- and you -- looks like the evil empire again.

Here's what the vast majority of people think: Microsoft is partly culpable because of the IE hole, is turning a deaf ear to the speculation that this could be a government attack, and wants to exploit any withdrawal by Google to gain market share and revenues in China, to hell with any ethical stance.

It's certainly what I think. And that's not good for the long-term future of Bing.

I'm maintaining updates on this story at my site, RichardLBrandt.com:

McAfee: Chinese cyber-attack Aurora is Microsoft's fault. Sort of.

China: Foreigners please come do business here. Our Internet is "open"

White House: Hooray for Google! Microsoft: We weren't attacked

Google stock down, Baidu up

What do/don't we know about what happened?

Thought for 2010: How to succeed in business? Don't be evil

Greed is bad. Fear is bad. Google is good. 

(Wait. Hear me out.)

    As we enter a new year and, full of hope, crawl toward a better year than the one that brought many of us to our knees, I thought it would be good to stop and think for a moment about what it means to be an entrepreneur.

    I take my example, of course, from the two most successful entrepreneurs in the world Larry Page and Sergey Brin. Despite the cynics (and I'm usually among the most cynical), and despite an arrogance born of oversized brains and an almost religious belief that they are doing the right thing, they really do their best to build an ethical business. Their model is the one that will prove to be the most successful in the coming decade. Get used to it.

    Greed is no longer good. With all due respect to Andy Grove, a man I have always and still do admire, is a life built around greed and fear really worth living? The most fascinating thing to me is the irony that, in what has become the most hyper-competitive business climate the world has ever seen, greed and fear are no longer the best motivators for success.

    Consider that when they were still at Stanford, Larry and Sergey wanted a search engine to be a non-profit. Scoff it you like (the folks at CNBC did when I mentioned this on-air) but it is absolutely true. They did go commercial, but when they did it, they did it on their own terms.

    Neither men came from families with capitalist roots. Academia, not entrepreneurship, was the families' prominent aspiration. Certainly, when Larry and Sergey went to Stanford, they had a strong entrepreneurial leaning.

    So how did two nerds with no business experience create such a successful company? Quite simple, really. They decided to ignore Wall Street. 

    In today's world, almost any CEO of a public company will tell you that his or her primary constituency is the shareholder. Larry and Sergey had a radical idea: What if your company was actually dedicated to making a great product, something that makes the world a little better? And what if you considered your customer to be your boss?

    Every time they faced a business decision that would either benefit the users or increase revenues, they chose the users (and consider the fact that these were not even "customers," since Google's revenues come from advertisers, not users.) They even favored the customers over advertisers when it seemed as though the decision would reduce revenues and profits. If that makes you nervous, do not buy Google stock.

    That is what being an entrepreneur should be all about. Larry, Sergey - and Craig Newmark, for that matter - show that the right approach to business can do more than bring wealth, it can bring contentment, a sense of satisfaction, a sense of self-worth. Now compare that to greed and fear.

    That is not to say that wealth is bad. I wish I had some. But as it happens, these ideals turn out to be the surest path to success. This is the most hyper-competitive business environment the world has ever seen, thanks to the Internet. It's reducing old industries to rubble and rebuilding new versions from the wreckage -- sometimes way too slowly (I know; I'm a journalist.)

    The only way to compete in that environment is to return to basics: Products built with the most intense passion, designed and sold with the highest regard for the customers, created for the sake of the product itself, not for the wealth it brings. 

    The new opportunities the Internet brings make this approach essential. Why does Google get into so many new businesses -- a smart phone called Nexus One, or a new tablet PC with free software, for example? Because the computer industry and the wireless industry are being destroyed by their own greed! Two-year lock-ins, extra charges for text messages that cost the wireless carriers zero, software that costs hundreds of dollars; these industries are full of inefficiencies and over-pricing that the Internet renders obsolete. And that means (as it always does) new opportunities for smart, savvy entrepreneurs with a new approach.

    In a world of near-frictionless capitalism, where every company, product and service is at the tip of those fingers tapping on a keyboard, why would customers choose anything less?

Is Google no longer the 'Don't be evil' company? You decide. Win free books. Seriously.

                                                               

(SEE ALSO MY POSTING ON NON-EVIL LESSONS FROM GOOGLE.)

    On its march to world domination, has Google come to a fork in the road and taken the corporate path more traveled? The one that leads a giant corporation to arrogance, monopolistic practices, disregard for competitors (and the welfare of whole industries), and just plain evilness?

    To many, Google's power and size have turned it into the old Microsoft, while the new Microsoft has become the poor underdog fighting the good fight against the Google monopoly. Google is abusing its power, poking its Snidely Whiplash nose into our personal Internet transgressions, monitoring our phone calls, stealing copyrighted books for its own gain, destroying the journalism business, censoring search results in China, and even dodging taxes in the UK.

    But I've got a problem with all that. Now, here's my confession. Please don't judge me too harshly. So far, I'm not worried about any of this. 

    And it bugs me. Everyone thinks I'm too soft on Google. It has absolutely ruined my reputation as a hard-hitting, skeptical, curmudgeonly, Snidely Whiplash-ish journalist. Those were the days.

    So I need your help. Please help me regain my bad reputation.

    I'm looking for feedback. Is Google evil?  I'm holding a contest at RichardLBrandt.com for the best examples of kindness or evil deeds by Google and the best opinions on why Google is/isn't the meanest thing to come along since Dick Cheney. 

    I'm really giving out prizes for this one. Good stuff! Books! The first 10 people to post comments -- whether you think Google is good or evil -- will get a free, autographed (with effusive praise of your wit and wisdom) copy of the extraordinary new book, "Inside Larry & Sergey's Brain" (a book about the founders of Google). Although it does not say "Google" anywhere on the cover, it is indeed about the Google founders. You know, Larry and Sergey. Page and Brin. Some people don't know that. Talk to the publisher about it.

    But wait! There's one more incentive: The person with the most interesting response -- whether it's 'Good Google' or 'Evil Google' -- will get free autographed copies of both "Inside Larry & Sergey's Brain," (a book about the founders of Google) AND Ken Auletta's book, "Googled: The End of the World as We Know it." It takes much longer to read and doesn't have the snazzy writing of "Inside Larry & Sergey's Brain," (a book about the founders of Google) but you get more pages for the money. 

    Go to RichardLBrandt.com to enter and to vote on the winner. Please! You'll get more background on this issue, including perspective on google, evil, don't be evil, microsoft, snidely whiplash, henry blodget, search, search advertising, server advertising, adwords, adsense, admob, censorship, android, nexus one, verizon, t-mobile, netbook, google netbook, british taxes, open source software, china, opinion, inside larry & sergey's brain, googled: the end of the world as we know it, ken auletta, google contest, don't be evil contest, dick cheney, and chopped liver.

     You won't be sorry. But I might.

Google the monopolist. Ooh, scary.

Is it fair to label a company a monopoly simply because it's big? It happens to Google all the time.

There is a rule of thumb that somebody made up once that says if you have 75 percent market share you qualify as a monopoly. But a monopoly is not illegal. Abuse of monopoly power is illegal.

Unless I'm less observant than a fruit bat with a bag on its head, Google has never abused its monopoly. It hasn't raised advertising rates, for example, because the rates are set by AUCTION!

Get it? You bid on it? Kinda hard to price-fix that way.

But Consumer Watchdog and the Center for Digital Democracy want to block Google's proposed acquisition of AdMob because it will:

    -- become a "juggernaut." Ooh, sounds bad. Isn't he Archie's sidekick? Is he illegal?

    -- leverage its lead in search to get a "leg up" in other markets, according to the SF Chron. Is paying $750 million for a company a new description of "leveraging a lead in search"? Microsoft has lots of money, so I guess it can also "leverage its lead in search" to buy AdMob too.

    -- instead of using "legitimate competition and innovation" to grow its market share in mobile advertising, Google is "buying its way to a pre-eminent position." Buying your way into a market is now illegal? Did anybody tell NationsBank -- sorry, Bank of America -- that? I guess that means it is illegal to buy ANY company with a dominant market share in anything. You can't buy your way to prominence!

    -- the deal would ALLOW Google to hike up ad rates. See above.

    -- and then there's the issue of amassing even bigger "super data profiles" of users, raising "tremendous privacy issues." Please, SOMEBODY let me know what privacy issues these are. When has Google ever used its data for anything but providing us with better service? Anybody? Give me an example of abuse? Something? 

Get over it folks, there is no privacy any more. Google is just the whipping boy on this issue. Everything you do online is being watched by somebody, most of them with less honorable motives than Google.

Yeah, I know, I'm a Google apologist. Believe me, if I can come up with a legitimate complaint of Google's business practices, I would love to write a lengthy editorial explaining what it's doing wrong.

So show me. Give me a real example of Google's evil. Anything that harms someone in any way. PLEASE! I want to stop being such a wimp. I want to be a hard-ass, curmudgeonly, immoral, asshole journalist again. Come up with some mean, nasty, evil, immoral thing that I can't refute to the satisfaction of 95 percent of the population and I'll, I'll ... I don't know ... run naked past Google's Street View camera. Or give me another suggestion of appropriate punishment.

Send arguments to [email protected] with the phrase "You're an asshole" in the subject line.

Disagreeing with Ken Auletta's opinions

              Ken Auletta's new book, “Googled: The End of the World As We Know It,” is out. I'm just starting to read it, and I'm sure it's very good. 

              But I'm going to jump ahead and address some opinions Auletta has expressed outside the book, based on what he learned from writing it. It's just my humble opinion, but I disagree with some of his conclusions. Patrick Phillips at iwantmedia.com got him to explain in an interview some of his views.

  

              Auletta claims that Google is now a media company. As evidence, he points out that Google has made production deals for others to create content for YouTube. And because of that, "tensions between remaining the Switzerland of search and pushing its own content will only grow."

Wrong and wrong. A media company creates media. Google is a media distributor. Yes, it owns companies that publish media, like YouTube and Knoll. But the content is still produced by others. Google may pay some people to create content, because we need more good content, not just videos of cute cats. 

 

              As for "pushing its own content," most other companies would do that, but Google does not. Before Google, all the "portals" did it -- and were then destroyed by Google's unbiased searches. Do a comparison between the hugely successful Wikipedia and Google's own lukecold Knol. Google searches put Wikipedia articles at the top of the search results, with Knol nowhere to be found. So where's the tension?

Google executives have a tendency to put the users' interests first, not their own. As long as they keep playing fair, there is no conflict here. Even Auletta points out that Google "is not obsessed with killing competitors; they're obsessed with eliminating inefficiencies." Knol didn't catch on because Wikipedia isn't inefficient -- a strategic error from Larry and Sergey that violates their own criterion. 

 

              Perhaps Google will someday try to buy Wikipedia. When it created its own unsuccessful video site, it couldn't compete with YouTube so it bought the company. I doubt that plan would work with Wikipedia, though. Too many people want it to remain an independent non-profit. Rightly or wrongly, they don't trust Google because it makes money.

  

              Auletta points out one step Google considered that would have put it at the center of the media business: "Larry Page and CEO Eric Schmidt told me that they had discussed buying the New York Times,” Auletta says, “but in the end decided that if they succeeded it would sabotage their identity as a neutral search engine." Doesn't that show that Google is trying to avoid conflict with the content providers it depends on?

 

              So why even consider such a step? CEO Schmidt has told me that he has grave concerns about what the Internet is doing to newspapers and other media. He'd like to figure out how to help, which probably led to the consideration of buying the Times. Google could probably figure out how to make money from online advertising linked to NYT content. 

           However, keep in mind that it's the Internet itself, not Google, that's destroying news outlets. If Google didn't collect and link to articles, someone else would, including bloggers. And nobody has demonstrated that those links, which drive traffic to the original sites, has done one iota of damage to publications' revenues.

 

             Auletta himself points this out, citing the "conundrum" for media companies. If they really don't like Google News, why don't they just opt out? Auletta explains, "Opt out of search and reduce the number of people exposed to your newspapers,” he says. “Opt in and risk becoming a commodity." That's why Rupert Murdoch is simultaneously claiming that Google is turning news into a commodity, while at the same time refusing to opt out of Google News. He's contradicting himself, betting that Google's search engine actually adds value to media sites. He cannot have it both ways. The media conundrum is self-inflicted.

 

              Here's an argument I strongly disagree with: Auletta asserts social media sites such as Facebook or Twitter are a threat to Google's search engine. In these sites, your friends point you to interesting items on the Internet. "That's a more trustworthy search result than a flood of anonymous search results," Auletta claims.

 

              Nonsense. Yes, friends can point out things of interest to you. But they won't replace search engines. Several search engines have tried to out-search Google by relying on “industry experts” to point to sites, on the theory that the results will be better than "a flood of anonymous search results." None of them have succeeded.

 

              Google has a different model, complementary to that of the social networks: Google masses together the interests of millions of people to find the most relevant sites. It's a different method, relying on the “wisdom of crowds,” and it often produces better results. I wouldn't be surprised to see Goolge buy Twitter or Facebook, though.

 

              One interesting observation from Auletta: the Google founders are often naïve. When Sergey told him that all books should be free online, Auletta asked him who was going to pay for the writers, editors, indexers, marketing and legal folks. Sergey changed the subject.

 

              I'm more optimistic than Auletta. He says he will never offer his books free online. "Writing is how I earn a living. For me 'free' would send me to the poor house." He seems stuck in the same mode of 'don't mess with my paradigm' as Murdoch and the other old-line business executives.

 

              Larry and Sergey may not have the answer – I'm not sure anyone does – but I am sure there is one. There always is. There's a demand for good writing, and where there's demand there is profit to be made. Somewhere out there, some clever person will come up with a new revenue model. Advertising seems the most likely to me.

            It may even benefit publishers. Right now they have to take a huge risk on what books to bet on, and if they don't sell, the bookstores get to send them back. If books are online (or sold through e-readers), the costs of bookstore returns, paper, ink and shipping are eliminated. They may be able to take more risks and give opportunities to lesser-known writers.

 

              And don't forget Google's controversial book search efforts. Whatever you think of it, Google is trying to make “orphan” books available again. Putting them online might provide more revenues by reviving sales if the book is re-published for the kindle. It's the only way to give orphan books a chance.

 

              Auletta, like executives running older and obsolescent businesses, just seems afraid to take that leap of faith to maintain relevance. That in itself is the best commentary on the conflict between the old world and the new.

Confession: I haven't taken the jump either, because I don't see the revenue model yet. But if I really want to write a certain book, and can't convince a publisher to give me an advance, I'll try an online model.

              I'm less pessimistic in general than Auletta, who seems very concerned about the companies Google is killing. True, the world will be different, and companies will die. But the industries will not. We're in a transition time, as is always the case when new technology changes the world. Existing companies always have an incredibly difficult time switching to new models, especially when it calls for cutting prices. They're used to making money one way, and understand how to make money from that approach. So they resist while new companies come along to exploit the new paradigm.

 

              Microsoft and Intel killed off old computer companies, but not the industry, which is bigger than ever. Google is now one of the companies killing off the old, like Microsoft. Think about the change required at Microsoft: In order to compete with the new “cloud computing” companies, it will have to stop selling $300 software programs and figure out how to offer them at greatly reduced prices (or for free and supported with advertising.) Would you like to be in charge of that transition?

 

              I'll write more when I've finished Auletta's book.

Inside Larry and Sergey's Brain

This blog will soon be transferred to my website, http://RichardLBrandt.com

Please visit to see more information and to post your own comments. 

My new book about the founders of Google is out. It's written for entrepreneurs curious about how to achieve Google-like success themselves, and for anyone wondering what these two guys are like and how they think. More information at my website.

If Steve Jobs is ill, does he have the right to keep the information private?

Rich Karlgaard at Fortune has a very thoughtful discussion over whether Steve Job's health is a private matter. If he is seriously ill, should he disclose the information because of the fact that people's pension funds and livelihoods are dependent upon him? Or is it callous to suggest that money trumps the right to privacy?

This is an extraordinarily difficult issue, about which I have many doubts. But in the end I have to say that in the modern age of health insurance, the right to privacy is a fallacy.The only benefit I can see for most people in keeping their illness a secret is in order to get medical coverage, in which case their insurance will be canceled if the insurer finds out you lied in your application.

Yes, certain illnesses, such as AIDS, carry a social stigma, and there is a benefit to the victims keeping the information to themselves. But the question with Mr. Jobs is whether his cancer has returned.

I lost my sister to cancer two years ago, and it was the most traumatic experience of my life. Thankfully, she had medical insurance. There was no secret about her illness, nor any thought of keeping the information from anyone who loved her, worked with her or in any way depended on her. What would she have gained? What would we have gained?

To those who say it's callous to insist that financial concerns take precedent, I have to ask, what does Mr. Jobs gain from keeping such a secret – assuming he's ill – besides the temporary financial health of his company?

I knew a powerful CEO who once kept the news of his cancer private simply because he was afraid valuable employees would bail out, worried that the company would fail. Of course, the company would have failed if he had died as well, but no one would have had the opportunity to protect their own interests -- or to show their loyalty to the CEO by standing by him.

There is a public good in such a public figure as Steve Jobs disclosing whether he is seriously ill. I fail to see the private good to him by keeping it a secret.