Google’s ultimatum that they’ll leave China rather than continue to censor their search engine is an interesting case, and one in which I feel we haven’t been told the full story.

Let’s be honest, not many corporations have qualms about doing business in China from a moral standpoint. The global recession has seen to that. Why Google would throw down the gauntlet in this way baffles my business sense—though there was a brou-ha-ha when they set up within the Great Firewall, it soon died down and people went back to pirating images and searching for porn with as much ease as before. We love Google—it makes our work so much easier, why not just turn a blind eye to their toadying to the Chinese government? Yahoo reported human rights activists to the Chinese government, Microsoft happily censored MSN.com, and MySpace ditched politics and religion discussion groups when they set up in China. Ethics are ethics, but a Chinese cash cow is a Chinese cash cow.

One would ask why the sudden change of heart, when Google has been happy to censor their content up to now. Why do they suddenly notice that Chinese hackers are using their skills to access sensitive material? Did they not expect this? For a company that prides itself on its access to information and the intellect of its employees, this seems like an obvious oversight.

Is this really an issue of censorship?

The Chinese government ensures that any corporation wanting to set up in China needs to do it through Chinese people and Chinese channels—there’s little room for companies to exert their own policies regarding employee training or sourcing. Playing the human rights card just helps to make them look like the good guys, and not a profit-driven corporation. (Which they are, by the way.)

Baidu claims that Google is trying to cover up what has been a rather embarrassing market failure, largely due to its relatively sparse Chinese-language content and English-language bias. “Would Google top executives still proclaim that they would ‘do no evil’ and quit China if they had taken 80% of China’s search market?” said Sun Yunfeng, chief architect of Baidu. This market failure, I have no doubt, has been partially engineered by the Chinese government, and a Chinese-based, government-approved search engine has done very nicely because of it.

Once again, opinion is polarized. The East says Google is failing in China, and is retreating to save money—the “human rights” card is a red herring to curry favor with the West. The West seems to think Google is doing well in China and is taking this stance to set an example to other companies pandering to Chinese law.  The activists involved have gone on record saying they’re used to their accounts being hacked—why all the kerfuffle? I think the Google execs know why they’re taking this “stand.” And if their bonuses are anything to go by, it’s unlikely to be an entirely principled one.

This is more a case of China looking out for Chinese companies: simple protectionism. And we Westerners really hate protectionism, unless, of course, we’re practicing it ourselves.