Inside Google

Google’s ties to the Obama administration are perhaps unrivaled in corporate America, but the Internet giant’s announcement this week that it’s considering pulling out of China because of Chinese censorship and hacker attacks put the White House in a tricky spot.

Under fire from human rights groups and Republicans for not being more aggressive in pressing the Chinese government on free speech issues, the White House was initially noncommittal in its reaction to Google’s announcement. But by Friday, it said it supported the company’s position.

Yet the test of whether Google may have pushed the administration into a more aggressive stance will come next week, when Secretary of State Hillary Clinton is scheduled to give a speech on Internet freedom.

"Everybody’s waiting for Secretary Clinton’s statement next week. That’s when the rubber will hit the road," said Danny O’Brien, international outreach coordinator for the Electronic Frontier Foundation, a nonprofit that pushes for Internet freedom. "I would like to see the United States government pursuing a stronger Internet human rights agenda, but I’m happy with the administration taking its time to work out how it should react to this."

Clinton’s State Department was more quick-footed and assertive than the White House in embracing Google, releasing a statement calling on China to explain itself only hours after Google made its hacking allegations and pledged to close its Chinese language website unless the government dropped its demands that the company censor its search results.

"We have been briefed by Google on these allegations, which raise very serious concerns and questions," Clinton said in her statement. "We look to the Chinese government for an explanation." And on Friday, a Clinton spokesman said the department would be lodging a formal protest with the Chinese government early next week.

The White House’s response has come under close scrutiny, not only because of the significance of the United States economic relationship with China but also because of the involvement of Google. The $30 billion company, whose hip branding did to tech what Obama’s 2008 presidential campaign did to politics, has worked assiduously over the last few years to build Washington clout, and has earned a special place in Obama world.

Google’s brass were early Obama backers. Though the company hosted several of the major presidential candidates at its "Googleplex" headquarters during the 2008 campaign, executives including CEO Eric Schmidt served as Obama campaign advisers.

Google’s employees and their families were the fourth-largest corporate source of campaign contributions to Obama’s campaign, the company sponsored lavish see-and-be-seen parties during both the Democratic convention and Obama’s inaugural weekend, while its executives – including Schmidt and Drummond – contributed a total of $166,000 to the non-profit committee Obama set up to fund his Inauguration.

Obama appointed former Google officials Katie Stanton, Sonal Shah and Andrew McLaughlin to posts in his administration, and he named Schmidt to a presidential council on science and technology. Schmidt has been a guest at the White House and he (and other tech execs) had dinner with Clinton only days before the company went public with its China allegation, though a State Department source said the issue wasn’t discussed at dinner.

Google also has increased its congressional and agency lobbying budget exponentially, from $80,000 in 2003 to more than $2.9 million through the first nine months of 2009, according to data maintained by the nonpartisan Center for Responsive Politics. In addition to a stable of well-connected contract lobbyists, the company also has hired lobbyists and policy and communications officials with ties to both Democrats and Republicans, including Jill Hazelbaker, a former top spokeswoman for McCain’s 2008 presidential campaign and independent New York City Mayor Michael Bloomberg’s 2009 reelection campaign.

"Every time I turn around, they are hiring someone new who is really savvy," said Art Brodsky of Public Knowledge, a media consumer advocacy group that has worked with Google.

"They started with one guy in an office not knowing their way around and, true to their corporate culture, they have evolved quickly and smartly and agilely," he said.

Google took a major public relations hit when it initially agreed to censure its search results as a condition of gaining access to the enormous Chinese Internet market. But this week, Internet and human rights advocates seized on Google’s announcement in a blog post Tuesday that it had discovered what it called "a highly sophisticated and targeted attack on our corporate infrastructure originating from China" aimed partly at "accessing the Gmail accounts of Chinese human rights activists."

The rights groups urged other Internet companies doing business in China to follow suit and called on the Obama administration and the international community to demand an end to Chinese censorship. David Drummond, Google’s chief
legal officer and the author of the Tuesday blog post, seemed to be echoing that implicit criticism of the White House when he told a public radio show Wednesday night that the U.S. needed "to get more involved to put pressure on China to open up."

Asked about Google’s stand Wednesday, White House press secretary Robert Gibbs initially offered only a general comment about supporting a free Internet. But in subsequent statements the White House offered progressively stronger support, culminating with press secretary Robert Gibbs on Friday telling reporters that the White House "supported the efforts of Google to stop censoring their searches in China."

Privately, the Obama team was, if anything,  even more effusive in its praise of the Mountain View, Calif., company: "[News Corporation Chairman] Rupert Murdoch has one policy, which is a little more like Neville Chamberlin," said a senior administration official. "And Google’s trying to have another, which is a little more like Winston Churchill."

Google said it notified the White House and officials on Capitol Hill of its decision to wind down its censorship in China before it went public with the announcement. And it said that it is working with the "relevant authorities" to investigate the alleged cyber attacks, which it said affected at least 20 companies and resulted in the breach of e-mail accounts of two Chinese dissidents.

The White House emphasized that Obama is on the record telling the Chinese he supports an open internet, pointing to a November speech at a town-hall-style event in Shanghai where Obama said, "I’m a big supporter of noncensorship."

Still, some industry observers asserted that Google’s move was at least equally motivated by Google’s bleak financial prospects in China. A source familiar with the numbers said that Google’s revenue in China are in the $100 million per quarter range, which makes them an extremely minor piece of the Silicon Valley behemoth’s overall earnings.

"I’m not saying human rights didn’t play into the decision, but this was as much about business," wrote Sarah Lacy on the blog TechCrunch.

"Google has a really loyal fan base of geeks, but only around 30 percent of the search market, which is dominated by Baidu (a search engine controlled by the Chinese government)," said Jeremy Goldkorn, the Beijing-based editor of the Chinese media blog Danwei.org. "Google is widely seen as not really knowing how to do business in China."

"They like to go around and sing the mantra, ‘Don’t be evil,’" said John Simpson, a consumer advocate with the nonprofit Consumer Watchdog. "But they almost always act in what they perceive to be Google’s interest – and that doesn’t necessarily coincide with that of any government."