Posner has a very good discussion of many aspects of the controversy over the concessions to the Chinese government by Google, Yahoo, and a few other high-tech companies. I generally will come to similar conclusions but from a little different perspective.
I do believe that it is reprehensible for Yahoo to disclose the names of Chinese citizens using its services, particularly when the information Yahoo gave about one of them led to his arrest and imprisonment. Whatever one√¢‚Ç¨‚Ñ¢s beliefs about other rules of corporate behavior in China, disclosure of names of "dissidents" who face arrest and punishment is unacceptable.
During the remainder of my comment I will pretend that I am the CEO of Google (alas, I am slightly less rich) to discuss whether Google should accede to the demands by the Chinese government to prevent access to Google users in China to websites on democracy, the Tiananman Square uprising in 1989, the Falun Gong sect, and a few other subjects. Presumably, it might be very profitable to make these concessions under the very likely assumption that the government would not agree to any significant compromise.
However, profits in the Chinese market are not the only consideration, even from the viewpoint of maximizing Google's (and mine as CEO) market value. Google has a deserved reputation as a very independent as well as innovative company that does not cave in to unreasonable government demands. From our vantage point the Chinese government's demands are not reasonable. For this reason we did indicate on our website in China that we were excluding certain enumerated subjects from our search engine.
That said, under present conditions we are still providing millions of people in China, we hope that will climb to hundreds of millions, access to an unbelievable array of information. The subjects covered are far too numerous to enumerate, but let me just mention information about DNA and its discovery, medical treatments for breast and prostate cancers, the determination of prices under different market conditions, riots in the U.S. and elsewhere, the Becker-Posner blog, and many more.
Chinese Google users also have access to information that is highly informative about democratic institutions and processes. This includes discussions of elections in Japan, Great Britain, the U.S., the turnover of parties in power in democracies, histories of countries that were transformed slowly, like Great Britain, or rapidly, like Japan, from powerful monarchies to lively democracies. They also have some access to information on the overthrow of communism in East Germany, Poland, and the USSR, although that information is not as openly available as I would like.
In this way Google is still exposing millions of Chinese to information and knowledge that was unavailable to any one in the West even a decade ago. Isn't this a priceless contribution to the welfare of the Chinese people, despite the restrictions placed on their access to certain subjects from using Google?
Suppose we at Google had refused to go along with the Chinese demands and were excluded from the Chinese market. It is very possible that our place would have been taken either by European or Japanese companies, or indigenous Chinese companies, only too willing to comply with the government's demands. In this case, American stockholders, workers, and taxpayers would be (a little) worse off, and the Chinese people would also be also worse off since these other companies are not as good as Google. The only gainer, aside from the company taking our place, would be the Chinese government since they would have a more docile search engine company to deal with.
A different scenario is that the Chinese people would have been deprived of a search engine for years. Perhaps that would slightly weaken the government because of increased resentment among the population, but it would hurt the typical Chinese computer user much more. Why should we be the instrument of making the Chinese people suffer any more than they already have during the past many centuries from isolation from Western technology and knowledge?
Let us also not forget that not only has the Chinese economy been expanding for the past quarter century at a remarkable rate, but so too have freedom of expression, travel abroad, and some other freedoms that are important parts of the foundation of a true democracy. The Chinese government supports strongly the economic progress, yet bemoans the increased freedom that naturally accompanies this progress. Government controls over these freedoms cannot keep up with their pace of development as the economy charges forward.
Software is rapidly developing that would enable Chinese users of the internet to bypass their censors, and gain access to the information that they prevent us, Yahoo, and other companies from directly providing them. Chinese censors and other Chinese restrictions on basic freedoms are engaged in a losing battle as long as the economy, including its human capital, continues to go global. Even somewhat limited access to the vast information made possible by Google further pushes the battle in favor of freedom and against government restrictions.
Given these considerations, and admiting our concern as a company with maximizing the wealth of our stockholders and employees, does not the entry of Google into China even under these restrictive terms contribute to the tidal wave of freedom that is overwhelming the Chinese government?
I (that is, GSB) agree with the CEO, for I would give an affirmative answer to that question.