Google entered this market in early 2006 knowing both of these things and has worked hard to make Google.cn the most popular western based Internet site in that country, with an estimated 80 million users- almost a quarter of all internet users in the country.Now Google and the Chinese government are engaged in a very high-stakes game of chicken and both have a lot to lose.

When Google entered the Chinese marketplace, the government was putting the finishing touches on a program it had been developing for the last 8 years.Known as the “Golden Shield Project” officially and unofficially as the “Great Firewall of China”,this project is as close as any real government has ventured into the Orwellian dystopia of 1984.According to the International Centre for Human Rights and Democratic Development,its ultimate objective is to “integrate a gigantic online database with an all-encompassing surveillance network – incorporating speech and facial recognition, closed-circuit television, smart cards, credit records, and Internet surveillance technologies.”

From a western perspective, that sounds downright evil.Google’s motto is famously, “Don’t be evil.”How did they reconcile this in moving into China?According to David Drummond at Google, they “launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results.”

They agree that censorship is bad, but agreed to do to it because basically, they believe that the flood of information is too great for the Golden Shield to catch everything and the information that did get though would benefit the people of China and the ideals of free speech.Making that argument does have a “pact with the devil” feel to it, but the reality is that Google was largely correct.Four years later it turns out that Google.cn users are on average better educated and wealthier than those who use Baidu.com, the search engine used by the majority of Chinese Internet users.As in most countries, these are assumed to be the most liberal segment of the population, and those who most value free speech.They are also the ones who are best equipped to bypass government censorship.

But the paranoia of the Communist Party of China knows no bounds.Either that or they are extremely sensitive people.Either way, anyone who says anything remotely critical of them is a target to be shut down.This includes mentioning Tiananmen Square, Tibet or the Dali Lama, Taiwan, Uighur riots, pollution problems, or their human rights violations, of which there are many.If you are in China and search for any of these things, Google will likely tell you, “In accordance with local laws, regulations and policies, part of the search result is not shown.”This is part of their self-censorship deal with the government.The Chinese government tells Google which search terms to censor, then watches Google big brother style to make sure Google complies.

No doubt this situation was unpalatable to Google executives at the time, but even more than their “wedge of free speech” argument, they put up with it because of the incredible amount of money they could make in the most populated country on the planet.This fragile status quo has been in place since the inception of Google.cn but last Tuesday (Jan. 12, 2010) Google said no more.

The change of heart came about after Google discovered that the Chinese government was hacking their infrastructure to gain access to accounts and information pertaining to Chinese human rights activists.Not just Google accounts either; according to Google’s official statement at least twenty other large companies were targeted.Even if they were not aware of it, their company’s infrastructure was doing evil.

Google’s response has been to declare that it will no longer take any part in any censorship, even if that means getting kicked out of the country.This is where things stand now, and how this problem resolves will no doubt have far reaching implications.Google stands to lose a whole lot of money.It is rare the corporation that is willing to lose that kind of revenue for an essentially idealistic stand. Virtuous to be sure, but we can also be thankful that Google makes money hand over fist in other markets, giving them the leeway to make this threat credible.

What does the Chinese government have to lose?Mostly, it risks upsetting the 80 million Google users in China.The question then becomes, how much do these people like Google?Will they switch back to Baidu.com with a shrug, or will it cause a bigger backlash?These are among the most wealthy and educated Chinese after all, suggesting they might have elevated influence.

What I really want to ask the Chinese government is, “What are you so afraid of?”If the United States has been able to prove anything, it’s that giving citizens the ability to freely criticize their government doesn’t seem to affect that government’s power one iota.

A lot of the Chinese censorship policies seem to have their origins in preventing the China Democracy Party from gaining control.Of course, the China Democracy Party is currently banned, so if it is indeed a threat, it’s a true phantom menace.

Although I have never travelled there, I had spoken to several people that have lived in China.Based on these conversations and what I’ve read, I have concluded that if you made of list of countries at risk for a revolution or citizens revolt, China would near the bottom.Most people who understand this country agree that the average citizen of China has absolutely no interest in a new government, especially though any sort of dramatic means like a revolution or a coup.This is an ironic situation.The Chinese government has taken the most extraordinary measures to censor the information their citizens receive, all the while the citizenship of the country is among the least inclined to rise up against the state.

All of this suggests that the government of China is afraid that honest discussion of many of these important issues will turn their loyal subjects into revolutionaries.If that is indeed the case, I would suggest that any censorship is just postponing the inevitable.Tech savvy Chinese have been bypassing the Golden Shield for 5 years now, and will similarly bypass the newer “Green Dam Youth Escort.”If news from the outside world, or criticisms of the government were truly inflammatory enough as to provoke a revolution, it probably would have already happened.Rural China is isolated to be sure, but with their incredible cell phone coverage they aren’t that isolated.If their government had done something to truly make their blood boil and cause wide scale civil unrest, I’m convinced that the word would have spread.

My point is that the Chinese government is spending tons of money in this incredible effort that is either postponing the inevitable or protecting against something that will never happen.Either way, it doesn’t seem like the best way to address their concerns.If they believe that censorship is only postponing inevitable civil unrest, the best idea would be to attempt to address the reasons for that unrest, which might include censorship.On the other hand, you could be spending all this time and energy censoring people whose actions and decisions would be roughly the same had you not spent all that time and energy.In the business world, we call that bad ROI.

Clearly my advice to the Chinese government would be to allow Google to continue to operate Google.cn uncensored.From a negotiations perspective, this is the only win-win outcome.I’m convinced that such a move would be truly beneficial to both Google and the Chinese government, but I doubt the Chinese government will see it this way.To them I would ask that they objectively evaluate the value of their censorship efforts. Weigh that against openly addressing your critics and trusting your citizens to deal with criticism of their government responsibility.Such a move would generate a lot of positive press.

– Update Jan. 22 –

On this subject, Secretary of State Hillary Clinton said, “Censorship should not be in any way accepted by any company from anywhere.  American companies need to take a principled stand.  This needs to be part of our national brand.”

Well said.  Left or right leaning, all Americans should really be unified in this opinion and commend Mrs. Clinton for her concise and unambiguous analysis.

– Update Mar. 23 –

The clever people at Google just moved to Hong Kong.  Bad pollution, but free from tyranny.  Needless to say, the Chinese government is pissed.  To Google I say: awesome move worthy of the Tai Pan himself.  To the Chinese government I say: in your face you paranoid dickwads.

This week Google announced that it is developing Chrome OS, a lightweight Linux based operating system aimed primarily at the netbook market.Predictably, stories emerge about how Google is taking aim at Microsoft.Hearing the description of Chrome OS, it seems more in direct competition with Ubuntu than Windows, not to mention the fact that it is years away from any sort of market adoption.We have seen how slowly Android has taken to enter the marketplace, and even Eric Schmidt is still using a BlackBerry.So Chrome OS represents a minor threat that is years away.

Microsoft on the other hand,is a huge threat to Google’s search dominance right now.While I still use Google (mostly because Chrome is my browser of choice),I have examined Bing, Microsoft’s new search engine, and have followed the reviews closely.The verdict is that Microsoft has a serious search offering that can compete with Google.While Bing is still not quite as accurate as Google is in overall search, it offers an enhanced user interface that many users are starting to appreciate.Combine that with the fact that many are simply interested to try something new after years of using Google.Even Kevin Rose, who has always been a Microsoft detractor, changed his default search to Bing on Diggnation at the urging of his co-host Alex Albrecht just to “give it a chance.”Clearly there is some appetite for a Google alternative.

When it comes to Bing adoption, let’s not forget the fact that Internet Explorer accounts for about 40% of browser marketshare (Firefox overtook them as the most used browser in January of this year).Internet Explorer will default to MSN, which will default to using Bing.Consequently, Bing will take a significant chunk of Google’s search traffic.

Turning back to operating systems, it should be mentioned that Windows 7 has been getting glowing reviews, even from some Apple fans.Priced at $50, I expect this to be the next “Windows XP” in terms of staying power in the marketplace.It should be mentioned that Apple’s Snow Leopard OS will be priced as an upgrade at only $29, and has also been well received.With these polished, robust operating systems selling so cheap, it seems that there is less opportunity for Ubuntu and Chrome OS to gain a market foothold.It is my sense that Windows will continue to be the dominant OS for years to come.

One reason that Windows will continue to thrive is Microsoft’s .Net framework.In the last few years Microsoft has really delivered to the development community.Their language, C#, is among the most popular programming languages in the world, and in the last 2 versions, Microsoft has packed in tons of geeky stuff that developers love.Things like lambda expressions, LINQ, generics and duck typing.They have created Windows Communication Foundation, a truly excellent framework for building services of all kinds.Windows Presentation Foundation is a revolutionary step in Windows application development.Then there is ASP.NET MVC, a new flavor of ASP.NET with a development paradigm similar to Ruby on Rails.Every web developer I know who has used it absolutely loves ASP.NET MVC.Given time, I suspect it will overtake ASP.NET web forms development. With every year that passes, it becomes more and more enjoyable and rewarding to develop on the platforms that Microsoft provides.This means people will continue to write a lot of software for Microsoft platforms, which increases the overall values of the platforms.

It is certainly true that Microsoft is often a “Johnny come lately” when it comes to their offerings.Windows itself was ripped off from Xerox and Apple.Internet Explorer ripped off Netscape.Zune ripped off iPod.Bing ripped off Google.And soon, project Azure will rip off Amazon’s EC2.Someone at Microsoft must have read The Innovator’s Dilemma.Microsoft have long since realized that they don’t need to be the first to do something, they need to sit back, see what works, copy it, and do it really, really well.It is hit or miss process.Even with IE8, I consider Internet Explorer the most inferior internet browser out there.As I’ve stated, I loathe Outlook (in fact, my Mom just called me telling me she has a virus- I suspect that it exploited Outlook to get on her system).

In recent months however, I’ve loved what Microsoft has been doing.Some of it, like Bing and Azure, is reactionary, but not all.Microsoft has been the first to offer a large multi-touch device to the marketplace: the Microsoft Surface computer.Planet Telex has bought one and we love playing with it, as does just about everyone I show it too.My mom has called it “really cool” and I believe my dad called it “magic”- neither one cares much for computers in general.

Cool as they are, they aren’t ready for the home consumer market yet.But there is a Microsoft made piece of hardware that is already in millions of households throughout the world: the Xbox 360.An article on the successes at Microsoft just wouldn’t be complete without mentioning the most popular console on the market today.If you don’t have a modern console, like a PS3 or an Xbox 360, you might be surprised to hear that they are for far more than simply playing video games.They offer video-on-demand and can integrate with a number of web technologies, like Netflix, Hulu, Facebook and Twitter. Quite honestly, an Xbox 360 with an internet connection can provide all the entertainment options one could want.Comcast, Dish Network, and DirecTV should be concerned.

As we approach the end of a decade, we can look back and see the big winners have been Apple, Google, and Amazon.But the 1990’s went to Microsoft, and they have coasted on their immense success then for most of the last 10 years.But the thing is, the people at Microsoft aren’t dumb- far from it. And they have thought a lot about where the world is going in the years to come.They have studied their enemies, listened to their consumers, and taken action.In short, Microsoft has found its second wind. The big winner of the next decade is up for grabs, and Microsoft might still have what it takes to come out on top.However I suspect that it won’t be too long before I find myself writing a follow up post: “Return of the Google.”