Background and Current Status of Google in China

Background and Current Status of Google in China

            Google Inc. was founded in the year 1998 by Sergey Brin and Lawrence Page. The original work and concept of the search engine was formulated in 1996 by the two founders who were then students at Stanford. From the initial launching period, Google Inc. has made large investments and has advanced in stature both financially and geographically. In fact, the corporation has a worldwide service area. Google Inc. ventured into the China market in January 2006 with the objective of increasing information flow and benefits to the people of China. This venture was carried out amidst raised discomforts and concerns that search some materials and information would be censored (O’Rourke, Brynn & Allison, 2007).

Just like any other institutions, Google Inc. has confessed that it has faced a number of usual cyber hits with varying intensities. The most recent cyber crime that the incorporation has faced has been established to originate from China. This finely orchestrated cyber attack was discovered in mid-December 2009 but was only released to the public in January 2010. The objective of the attack was to infiltrate Google’s corporate infrastructure where it resulted to the successful stealing of some intellectual property. The company has revealed that only a negligible amount of consumer information was compromised in the process. Evaluations of the crime indicated that information from the Chinese human rights activists was the primary target of the attack.

Further scrutiny on the case showed that, numerous accounts of China human rights campaigners living in Europe, China and United States had been accessed by secondary parties on a regular basis. It is only in two of the accounts that the criminals were able to get information that fortunately was very limited in nature. At least, twenty other organizations were also targeted by the attacks. The cyber hackers infiltrated the e-mail accounts through a technique known as phishing were the mail is sent from an individual masquerading as a genuine user that the recipient knows and trusts. The e-mail is then laced up with an attached trap that is activated once the mail is accessed by the recipient. The trap then attaches malware on the computer being used, compromising the user’s e-mail account. The hacker is then able to gain access into the target mail account and acquire the information needed.

The e-mails were sent to the targeted individuals and organizations via six internet addresses connected to Taiwan servers. On one instance, the hackers posed as individuals in need of defense information, where in reality, they were after the organization’s source code that is deemed as the most important piece of intellectual property since it bears all the computer appliances. The success of the attacks was because the e-mail messages appeared to be genuine and no cause of alarm was called for. China has the biggest population of internet users totaling to 350 million. The revenue collected from web surfing and web searches amounts to $1 billion per annum. This was probably what attracted Google Inc. for investments in the China market. China’s internet market has had market entry restrictions with the strict censorship rules enforced by Beijing  (Jacobs & Helft, 2010).

With this scenario, Google has only been able to secure a third of the country’s search engine market with Baidu being the dominant market player. From this, Google Inc. realizes annual revenue of about $300 million. This dictates a less vibrant market for Google in the China market when compared to other regions. Ironically, the attack has had a positive impact on Google’s business activity on different aspects. First, the bold step that the company has taken towards bringing the public to the light concerning the crime has increased user trust and confidence. The successful infiltration of the hackers into the Gmail accounts served to show that all information systems are susceptible to cyber attacks calling for more awareness on the hacking issue. The uncovering of the operation helped to create awareness for prevention and enhancement of security measures to the other targeted organizations. The victimized companies were able to acquire courage and channel for raising their concerns involving cyber crime. These moves had a positive influence in the cementing of the business relations that Google has with the other companies.

In addition, Google has now been able to appraise its business operation and feasibility in the China Republic. This mainly concerns the censoring inflicted upon internet companies in the country. The company revealed that it would no longer conform to the internet freedom barring rules. Discussions were to be arrayed with the country’s officials on the decision of running filter free search engine services within the stipulated laws. This decision may have either positive or negative results for Google as a company. This is because the company has decided to maintain its operations in China only if allowed to conduct searches without the censorship. Should China’s government insist on the predominant cyber rules, Google is willing to exit the market. Currently, Baidu holds the highest market share of search engines in China. In addition, the company has a very close affiliation with the government (Meserve & Ahlers, 2010).

There is a strong suspicion that the cyber attacks may have been authorized by the Chinese government. This has been collected from sources that believe the attack may have direct or indirect employees of China’s intelligence in connection with the attacks. This inference is attached to an earlier case that resembles the Google attack, which was taken against 100 information technology companies in China during 2009 midyear. Baidu benefited for a little while from the cyber attack on its biggest rival. This was marked by a 3% increase on Baidu’s shares following public speculation of Google leaving the market. During this period, the share price rose from $390 to $470. On one occasion, the company’s shares gained $13.97 in a single day. However, the ratings decreased with Google’s announcement of remaining in the market (Letzing, 2010).

From this scenario, it is evident that if Google loses the censorship act forcing it to exit the market, Baidu will gain massively. Indeed, the cost of leaving the Chinese search market will have a negative long-term impact on Google Inc. Google’s projected revenue growth for the financial period 2010 is expected to double to $600 million. Leaving the market means forgoing this growth. In addition, the market share that Google owns would be turned over to Baidu by default. The advertising share that Google has would fall from 31% to 20% by the year 2011. This would have diverse consequences on the company since its primary earnings are from advertisements. On the other hand, Baidu would gain tremendously and move up to a stable share of 47%. Some analysts differ with this view on the stand that, Google ranks as the world’s most used search engine having recorded 76.7 billion searches in 2009 (Simons & Higher, 2010).

Yahoo follows with 8.9 billion searches in the same year and Baidu ranked in as the third with 8 billion searches. From this information, this group of analysts believes that Google’s exit from Chinese market will have a negligible effect on its world population share of internet users. On protective measures, Google has been an ardent user of cloud computing. This is a type of computing system encompassing the storage of user information on server clusters. The security breech has been blamed on the biased company’s focus on matters of speed, enhancement of user interactivity by ensuring interfaces are easy to use, and program/ process efficiency. The cyber attack was therefore more of a wake up call for Google to improve on its protective measures. Cloud computing needs frequent or automated checks on the environment’s security because the attacks can take place on any part of the network.

Google has analyzed the malware used in the attack and found that it is made up of many encrypted layers that enable the program to attack an institutions network without any detection. In addition, the program can hide and survive in the attacked system for the longest time possible without being discovered. Google shared that they have been able to upgrade their security infrastructure from the information got from the attack. Improvements have also been made on the structural designs of the security programs. On the issue of cloud computing, users have been assured of its safety as the company has decided that it will continue using the system. In addition, users have been warned to be on the look out for any links posed in instant messaging services or e-mails. Sharing of passwords online is not recommended and it is advisable to have long passwords that have a combination of numbers, symbols and letters. It is also advisable to fit personal computers with anti-spyware and anti-virus software. The operating systems should be equipped with patches while web browsers should be updated on a frequent basis (Shiels, 2010).

The Chinese government has given its views on the Google attack by firmly holding the ground that cyber crime is wrong and is rightfully punishable just like any other form of crime. The states spokesperson said that the government has given its full support in the fight against cyber attacks and that the claims of its involvement in Google’s attack were baseless. The comments were ranked as the most straightforward reaction that the China government has had concerning Google’s misfortunate attack. The Chinese government was highly criticized on the issue of censorship by the US secretary of state as being opposers to information flow. In addition, it was urged to perform thorough investigations on the cyber attack where it has followed up the request by reinforcing its standpoint on the issue (Branigan, 2010).

 

References:

Branigan, T. (2010). China denies involvement in cyber attacks on Google. Retrieved February 18, 2010 from http://www.guardian.co.uk/technology/2010/jan/25/china-denies-cyber-attacks-google

Letzing, J. (2010). Baidu shares regain momentum on Google flap. Retrieved February 18, 2010 from http://www.marketwatch.com/story/baidu-shares-regain-momentum-on-google-flap-2010-02-01

Simons, S., & Higher, W. (2010). Trouble in China: Baidu. Scholarly Communications Report, 14(1), 11.

Jacobs, A., & Helft, M. (2010). Google, Citing Attack, Threatens to Exit China. Retrieved February 18, 2010, from http://www.nytimes.com/2010/01/13/world/asia/13beijing.html

Meserve, J., & Ahlers, M. M. (2010). Google reports China-based attack, says pullout possible. Retrieved February 18, 2010 from

http://www.cnn.com/2010/TECH/01/12/google.china/index.html

Nakashima, E., Mufson, S., & Pomfret, J. (2010). Google threatens to leave China after attacks on activists’ e-mail. Retrieved February 18, 2010 from http://www.washingtonpost.com/wp-dyn/content/article/2010/01/12/AR2010011203024.html?nav=emailpage

O’Rourke, J. S., Brynn, H., & Allison, O. (2007). Google in China: government censorship and corporate reputation. Journal of Business Strategy, 28(3), 12-22.

Shiels, M. Security experts say Google cyber-attack was routine. Retrieved February 18, 2010, from http://news.bbc.co.uk/2/hi/8458150.stm