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### Viewing cable 10BEIJING105, GOOGLE DAY 2: BALL STILL IN GOOGLE'S COURT

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
10BEIJING105 | 2010-01-14 11:11 | 2010-12-04 21:09 | CONFIDENTIAL | Embassy Beijing

`

    VZCZCXRO7898
    OO RUEHCN RUEHGH
    DE RUEHBJ #0105/01 0141157
    ZNY CCCCC ZZH
    O 141157Z JAN 10
    FM AMEMBASSY BEIJING
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 7611
    INFO RUEHOO/CHINA POSTS COLLECTIVE IMMEDIATE
    RUEHUL/AMEMBASSY SEOUL IMMEDIATE 1453
    RUEHKO/AMEMBASSY TOKYO IMMEDIATE 0167
    RHMFISS/DEPT OF HOMELAND SECURITY WASHINGTON DC IMMEDIATE
    RHMFISS/FBI WASHINGTON DC IMMEDIATE
    RUEAWJA/DEPT OF JUSTICE WASHDC IMMEDIATE
    RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE
    RHEHNSC/NSC WASHDC IMMEDIATE

` `

    C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 000105

    SIPDIS

    NSC FOR MEDEIROS AND LOI

    E.O. 12958: DECL: 01/13/2020
    TAGS: ECON EINV PGOV PREL CH
    SUBJECT: GOOGLE DAY 2: BALL STILL IN GOOGLE'S COURT

    REF: A. BEIJING 104
    ¶B. BEIJING 86

    Classified By: Economic Minister Counselor Weinstein for reasons: 1.4(B
    ), (D)

    ¶1. (C) Summary. Google's Beijing headquarters continued
    business "as usual" today as it still provided the
    China-based version of its search engine. Google emphasized
    its filtering of that search engine remained "unchanged" and
    "compliant with Chinese law." Google has not yet engaged the
    Chinese government in discussions about continuing its
    operations here. The Chinese Government provided the first
    official reaction to Google's January 14 announcement, with
    the MFA spokesperson and other PRC officials rejecting
    allegations of Chinese responsibility for the recent, alleged
    cyber attacks on Google and other companies' internet
    architecture. Local industry experts and American
    businesspersons here almost unanimously expect Google will
    withdraw from the market, despite its claims to still be open
    to resolving its problems with China. Local media coverage
    included numerous business articles on Google's travails,
    with at least one Chinese website claiming to have conducted
    an opinion poll showing a large majority support China not
    making concessions to Google. End Summary.

    ¶2. (C) Google China's Beijing HQ remained relatively quiet
    January 14, with Google employees continuing to work.
    Spectators, press, and well-wishers continued to visit,
    according to XXXXXXXXXXXX. XXXXXXXXXXXX
     explained Google has still not  engaged with PRC authorities
    to reach a solution to the  current impasse, but noted China's
    State Council Information  Office (SCIO) did contact Google
    China's government relations  staff January 13 following a
    several-hour suspension of  Google.cn's search filtering
    mechanisms, which XXXXXXXXXXXX explained
    were due to technical issues. XXXXXXXXXXXX explained
    that SCIO asked  Google's government relations team if this was
    a deliberate  modification of its filtering. XXXXXXXXXXXX
     said Google had not disabled its filters, and SCIO accepted
    Google's explanation.  At present, according to a U.S.-based Google
    representative,  Google "continues to comply with the law in
    China and is  filtering Google.cn as (it) has been." The U.S.-based
    rep  did concede that Google's filter is undergoing changes, but
    publicly Google is not "explaining the changing nature of
    (its) filter" and maintains the filtering remains in
    compliance with Chinese law.

    GOVERNMENT REACTION COOL
    ------------------------
    ¶3. (C) XXXXXXXXXXXX reports that the PRC still has not
    directly addressed the firm's announcement with Google.
    However, MFA spokesperson Jiang Yu addressed the Google
    matter in a regular January 14 MFA press briefing (reported
    Ref A), during which reporters barraged her with questions on
    Google. Jiang stated the Chinese government has made its
    position clear to the U.S. and asserted Chinese law
    prohibited cyber attacks, including hacking. Jiang also said
    China's internet is "open and the Chinese government
    encourages its development." State Council Information
    Office (SCIO) Minister Wang posted a web statement January
    13, which, while not directly addressing Google, stressed
    that the internet should be used to shape public opinion and
    should comply with state control. Yao Jian, Spokesperson for
    the Ministry of Commerce (MOFCOM) on January 13 said only
    that MOFCOM would follow the Google matter closely. A MOFCOM
    specialist on multinational investment policies was quoted in
    the press as arguing that the Google case is unique and
    should not be seen as relevant to other multinational
    investments in China. Officials at the Ministry of Industry
    and Information Technology (MIIT) declined to comment on the
    case, claiming that they do not have enough information.

    SPECULATION ON NEXT STEPS
    -------------------------
    ¶4. (C) XXXXXXXXXXXX spoke January 13 with
    XXXXXXXXXXXX, who opined that the Chinese
    government was likely surprised  by Google's
    announcement of its potential withdrawal, and the
    PRC would be unlikely to seek out talks with Google.
    XXXXXXXXXXXX anticipates we will see a slow,
    perfunctory attempt to engage  between U.S.-based Google
    representatives and the Chinese,  but that, in
    XXXXXXXXXXXX opinion  the PRC has already
    likely decided

    BEIJING 00000105 002 OF 003

    that Google is a company that "does not understand how to
    work with China." Only if Google continues to accept China's
    mandates would an accommodation be possible, according to
    XXXXXXXXXXXX. XXXXXXXXXXXX also predicted that,
    failing an agreement, the Gmail  accounts of Chinese users would
    suffer sporadic interruptions  of access, and the potential for a
    complete blockage of  Google.com is also not out of the question.

    ¶5. (C) A highly-regarded long-term local industry analyst
    XXXXXXXXXXXX, also saw Google's actions as  leading
    quickly to its withdrawal from the Chinese market.
    XXXXXXXXXXXX speculated to Econoff that Google may
    have an extremely limited window to seek a solution, given
    the increasing  "maniacal" posture of elements of the Chinese
    bureaucracy  with respect to information control and discriminatory
    policies and practices toward foreign elements. XXXXXXXXXXXX
     also  opined that Google's withdrawal from the market would
    undermine competition here and therefore innovation in
    China's internet industry. He saw Baidu's success as a
    direct result of competition with Google and other western
    companies; without that competition, Baidu and other Chinese
    companies would likely lose their competitive edge in the
    long run. Separately, XXXXXXXXXXXX was quoted in the
    media as  saying "there has been this received wisdom tha
     no one can  afford not to be in China, but that is being
    questioned now."

    BUSINESS COMMUNITY REACTIONS
    ----------------------------

    XXXXXXXXXXXX

    ¶7. (SBU) XXXXXXXXXXXX told XXXXXXXXXXXX
     January 14 that logistics  had made it impossible for its Board to
    clear and release a press statement January 13 XXXXXXXXXXXX
    The Committee has drafted a statement on the security and
    free flow of information that it now hopes to clear and
    release within twenty-four hours. XXXXXXXXXXXX noted
    that  in seeking to remove all filters from its China-based search
    engine, Google has firmly positioned itself publicly and will
    not be able to back down. XXXXXXXXXXXX believes
    Google's China  exit is imminent, and would only at the
    margins affect  information flows, IT services, and the
    development of  competition in China. He did hope that
    this matter would  force the PRC to use greater caution
    before implementing  policies harmful to the business climate.

    ¶8. XXXXXXXXXXXX thought Google,  however, had backe
     itself into a corner from which it could  not likely exit, given
    the Chinese reputation for  non-compromise in such matters.

    ¶9. (SBU) Jack Ma, Chairman of Chinese internet giant Alibaba
    (with ownership links to Yahoo China, which has faced its own
    difficulties in China) struck an exhortatory chord in media
    interviews: "Giving up is the biggest failure. Nothing is
    easy. It is admirable if one can still do well no matter how
    many difficulties are on the way."

    XXXXXXXXXXXX

    HUNTSMAN

`