Googling with China Google was formed by two PhD students from Stanford University, Sergey Brin and Larry Page, who had developed new Internet search technology. With an initial investment of US $100,000, from one of the founders of Sun Microsystems, Google began as a start-up technology company in California in the autumn of 1998. Brin and Page rapidly gained investment of US $25 million from two venture capital fi rms. Google became a public company through an ‘initial public offering’ (IPO) in the summer of 2004, although Brin and Page maintained control through ownership of special shares. By this time, Google was by far the world’s most popular search engine. From the year 2000, Google had a revenue stream from text-based advertising, which appeared in a separate column next to search results. In 2005, they introduced a system of placing adverts on other websites, sharing revenue with the content providers.

Google explicitly set out to be a business that was different from the norm. Its IPO letter to potential investors in 2004 began boldly: ‘Google is not a conventional company. We do not intend to become one.’ This letter also encapsulated the company’s well-known ‘Don’t be evil’

injunction, which had been proposed and adopted at an early staff meeting:

DON’T BE EVIL Don’t be evil. We believe strongly that in the long term, we will be better served—as shareholders and in all other ways—by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company.

[Bold and italics in original]

Google’s internal HR practices have been designed to engage employees in innovation. Famously, for example, engineers can take 20 per cent of their time to focus on their own projects. It is claimed that over half the company’s product innovations each year, including Gmail and Google News, began life in this ‘20 per cent time’.

China was a huge potential market for Google, with a fi fth of the world’s population as well as a rapidly growing number of Internet users: 103 million by 2005. However, Internet information fl ow into and out of China had to pass through a state ‘fi rewall’ system that blocked connection with certain sites. In addition, the government had used the Internet to track down and prosecute dissidents. In the early 2000s, Google hosted its Chinese-language service from the US. However, the national fi rewall often slowed the connection from China to Google and contentious links in the search fi nds were blocked. In 2004, the Chinese authorities shut down the connection entirely for two weeks. Meanwhile, Baidu, a rival Chinese search engine company, had a rapidly growing share of the market, considerably exceeding Google’s.

The Chinese government would agree to a mainland-based service only if Google censored search results at source. In a move that has been subject to much public criticism in the West, in January 2006, Google set up a Chinese language operation, Google.cn, acceding to the government demands.

In a speech, Google CEO Eric Schmidt explained: ‘We concluded that although we weren’t wild about restrictions, it was even worse to not try to serve those users at all. We actually did an “evil scale” . . .’ Of course, defi ning what ‘Don’t be evil’ means in practice was never going to be easy. Once, when asked what it meant, Schmidt is said to have replied that evil is ‘whatever Sergey says is evil’.

Four years on from the 2006 move, however, Baidu was still more successful than Google in mainland China. Then, on 12 January 2010, Google announced that the previous month:

we detected a highly sophisticated and targeted attack on our corporate infrastructure originating from China . . . we have evidence to suggest that a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists . . . We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfi ltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offi ces in China.
The Chinese government did not agree to the operation of an unfi ltered search engine and Google announced that it would redirect searches from Google China to Google Hong Kong. Hong Kong is a Chinese territory, but has a different political system from mainland China and an independent judiciary. The Google redirect went into operation on 23 March. However, the Chinese authorities duly threatened to withdraw Google’s licence to operate as an Internet content provider if this continued. On 30 June 2010, Google compromised, stopped the redirect, and instead simply put a link to Google Hong Kong on its Chinese site. For the Chinese mainland public, while search results were not censored directly, some links were once again inoperable, as they had been in the early 2000s.
Questions 1. If you had 20 per cent of your work time to dedicate to projects of your own choosing, would that make you more engaged with your current work (as an employee or as a student)? In which ways might your organization change if everyone in your position had a day a week to work on his or her own projects?
2. What do you think is meant by doing an ‘evil scale’ as Eric Schmidt explained had been done at Google in relation to dealings with China? Have a go at drawing up a scale of good and evil yourself, and using it to assess the various ways in which the company did business in China.
3. Imagine you are Eric Schmidt and consider what processes of sensemaking were involved in the decisions about Google’s China operation, in 2001, 2006, and 2010. What did you believe, how did you behave, and how did you explain how your actions and beliefs matched up?
4. To what extent can you identify Google’s intended strategy, emergent strategy, and realized strategy in relation to the Chinese market during this period?