Yahoo, China, and the Power of Information
As if things couldn’t get any worse for Yahoo this week, the World Organization for Human Rights (WOHR) is suing the web giant for its alleged role in the arrest of Chinese dissidents. The human rights group claims that Yahoo assisted the Chinese government with torture when it passed along user information that resulted in state arrests. Yahoo has acknowledged turning over data to local authorities — as have several very prominent web companies — but Yahoo is the lone company named in this suit.
Web companies such as Yahoo contend they have little choice but to surrender information, since company employees could be subject to civil and criminal sanctions if they ignore local laws. Yahoo says it will to continue offering services in China in part because the Internet has the power to enable change. Yes, it’s also the hottest market on the planet. But I don’t find this line of argument disingenuous. I may be naive and idealistic, but I do believe the Internet will prove to be transformative for Chinese society. There are ironies and paradoxes in all this, but at the end of the day, there still does not exist any reliable way to control the distribution of information over the Internet. If this condition persists, then the network should eventually prevail. [For more information on China's efforts to restrict blogging, see my earlier post here].
One of the only ways to reliably limit undesired information is to cut it off at the source, which is the heart of the matter in this case. Yahoo allegedly turned over information that led to the arrests, and torture, of the information purveyors. My feeling is that the burden of proof (of prior knowledge and intent on the company’s part) is incredibly high in this case. But even assuming that the suit is dismissed, the WOHR will have achieved its goal of publicizing the issue. And it will make companies like Yahoo pay much closer to attention to some atypical opportunity costs of doing business in China.
On another front, the other bad news for Yahoo this week: first quarter profits were down some 9 percent, dashing investors hopes that the much-hyped Panama project would prove a quick fix to the company’s search engine woes. Oh, and archrival Google just reported 69 percent profit growth for the quarter.
For more on the human rights story, see the Associated Press, “Human rights group sues Yahoo over actions in China,” via the San Jose Mercury News.
