January 22nd, 2010
05:44 PM GMT
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January 22nd, 2010
02:38 AM GMT
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In her Internet freedom policy speech Thursday, you can hear U.S. Secretary of State Hilary Clinton channeling Winston Churchill as she described a “new information curtain is descending across much of the world.”

Indeed, the echoes of Cold War enmity and “iron curtain” rhetoric seem to reverberate in the past week, with companies – rather than countries – as proxy combatants.

The brinksmanship of Google’s announcement it may pull out of China because of self-censorship requirements and what it claims as recent China-led cyberattacks has been followed by state controlled media characterization of the company as “White House’s Google."

Baidu, China’s largest Internet search engine and Google’s biggest competitor in the country, on Wednesday filed a lawsuit in the U.S. against Domain.com saying the domain name server provider didn’t do enough to thwart cyberattacks led by a group calling itself the “Iranian Cyber Army.” When Yahoo gave tepid support to Google’s stand in China, its Chinese partner Alibaba.com countered that the statement was “reckless, given the lack of facts in evidence.”

Fresh in the minds of all Western companies doing business in China is the arrest of mining giant Rio Tinto staff in China on allegations of stealing “state secrets” as part of its iron-ore negotiations with Chinese steel makers.

The current debate blows a hole in the idea that liberalization of the flow of information, like its embrace of capitalism, is inevitable. That needs a rethink.

A free choice of brands of soap in China has not led to a free flow of ideas.  Indeed, as the new decade begins and China is poised to become the world’s second largest economy (if it hasn’t already), the Chinese government has only ramped up efforts to secure “The Great Firewall of China.”

Google’s Chinese staff interviewed in the past week felt the company’s controversial choice to enter the market was a way to help transform China from within. That belief, now, seems to have given way to disillusion.

Among the reasons why Google may quit the world’s largest Internet market is fear of the long-term effect of the Chinese market on company policy. If China eventually becomes Google’s largest moneymaker, it would give Beijing extraordinary leverage to influence company policy in other markets.

The Google-China spat seems to me one of the first salvos in a fight that may well characterize the next decade: The conflict between the great economies of the West, built on free and unfettered flow of information, and access to the exploding economy of China, which most economists agree will surpass the U.S. as the number one economy in the next 15 years.

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