Her tenure came to an end when Google discovered that she had taken it upon herself to give Chinese officials new iPods. She had charged them to Google, and another executive had approved the charge. In the Chinese business culture such gifts were routine, but the act unambiguously violated Google policy, not least because it was an explicit violation of the U.S. Foreign Corrupt Practices Act. Google fired both her and the executive who had approved the expense. When she was called to Kai-Fu Lee’s office for dismissal, she was dumbfounded that what she considered a normal business practice had led to her firing.
In Mountain View this breach was another sign of how difficult the China situation was. Alan Eustace later recalled the incident as “the worst moment in our company” and blamed himself for not making sure that Google’s representative to the Chinese government knew how dimly the company would view such an act. “I was crushed by it,” he says. “Our decision could have cost us our brand. We’d take a huge worldwide hit in an office we had just started with a person we didn’t train well enough in a culture we didn’t completely understand. It was my failing.”
Google’s response to the violation also reflected that culture gap. It sent tough investigators from a firm specializing in white-collar crime to Beijing. “They act like prosecutors—they do an investigation,” says Andrew McLaughlin. “I’m sure it was extremely unpleasant.” In tandem with Chinese employees’ existing resentment of the restrictions on code access, it was traumatic. “I was really ashamed at the way Google handled it,” says a Google China executive. “They treated everyone like a thief.” And all for some gift iPods in a country, thought the Chinese Googlers, where everybody does that! It took months before the Beijing office got over that morale-busting incident.
After the employee’s departure, Google chose a three-person government relations team, all female, led by Julie Zhu, an energetic woman in her thirties. She was hired straight from a government ministry, instead of working in the commercial sector with its backscratching culture. Zhu was better able to communicate with Mountain View. But she had her hands full fending off Chinese government directives. A demand would come from a government ministry to take down ten items; Google would typically take down seven and hope that the compromise resolved the matter. Sometimes after a few days or weeks Google would quietly restore links it had censored. Every five months, Google’s policy review committee in China would meet to make sure it was filtering the minimum it could possibly get away with.
It was, as Google China engineering director Jun Liu put it, “trench warfare,” but he believed that Google’s continuing problems were proof that it was indeed moving the democracy needle in China. One could see evidence of the effect even on Baidu, which had adopted Google’s policy of letting users know when results were truncated because of mandated filtering. Baidu also was scrambling to duplicate Google’s practices of divorcing paid advertising links from the organic search results: it began work on a much-touted new ad system called “Phoenix Nest,” which was a virtual clone of AdWords. “Before us people didn’t even have a clue to what that means for search to be transparent, to be balanced, to be fair,” says Liu. “The reason that the government is so uncomfortable with us is that we are pushing our philosophy and making progress.”
But for all the progress, some Google executives were beginning to think that its great China compromise wasn’t working. Though not formally organized, they consisted of a rump group of skeptics on China policy, and they looked ahead to a day when Google would no longer censor its search engine there—or leave the country. A turning point came in 2008, the year China hosted the Olympics. In the run-up to its turn in the international spotlight, China apparently decided to increase its restrictions. It demanded that in addition to censoring the .cn results, Google purge objectionable links from the Chinese-language version of Google.com. This of course was unacceptable to Google—it would mean that Google was acting as an agent of repression for Chinese-speaking people all over the world, including in the United States. Other search engines, including Microsoft’s, agreed to such demands. But Google stalled, hoping that after the Olympics the Chinese would back off. They did not. The demands for censorship became broader and more frequent. “I knew of specific instances where skirmishes involving minor government officials were censored, as well as instances where they tried to limit access to information about certain natural disasters and things like that,” says Bill Coughran. “The level of censorship seemed to be increasing.”
It was then that David Drummond and Andrew McLaughlin suggested that Google should begin considering a change in direction. (For McLaughlin, this was a no-brainer: “Every opportunity that I’ve had, I re-presented the case for getting the hell out of China, and I’d always lose,” he says.) Google had held its corporate nose and made a dirty bargain to get into China. Now China was changing the deal. Maybe it was time to leave.
“The environment was getting more difficult and closed, not more open as we had hoped,” says Drummond. China was now insisting that all computers in the country be outfitted with filtering software called Green Dam. Ostensibly intended to block viruses and porn, it was universally identified by critics as an effort to extend the Great Firewall into people’s homes and offices. Manufacturers managed to resist installing this software, but the incident was only one indication that China was clamping down. “We had more services blocked than before,” says Drummond. Also, China kept its ban on YouTube. “It was all about the Chinese government’s desire to lock down cyberspace. And there was a growing fatigue with how we could deal with it.”
During the Google annual shareholders meeting on May 8, 2008, Brin took the rare step of separating himself from Page and Schmidt on the issue. Shareholders unhappy with Google censorship in China had forwarded two proposals to mitigate the misdeed. The first, organized by Amnesty International and submitted by the New York state pension fund, which owned 2 million shares of Google, demanded a number of steps before the company engaged in activities that suppressed freedom. The second would force the board of directors to set up a committee focusing on human rights. Google officially opposed the proposals, and with a voting structure that weighted insider shares ten times as heavily as those owned by outside investors, the proposals were easily defeated. But Brin abstained, sending a signal—though maybe only to himself—that his conscience would no longer permit him to endorse the company’s actions in China unreservedly. When shareholders had a chance to question Google’s leaders, Brin explained himself: “I agree with the spirit of both of these, particularly in human rights, freedom of expression, and freedom to receive information.” He added that he was “pretty proud of what we’ve been able to achieve in China” and that Google’s activities there “honored many of our principles.” But not all.
It was a clear sign that Brin no longer believed in Google’s China strategy. Another signal was the fact that after Google China was established, and despite Kai-Fu Lee’s urging, neither Brin nor Page ever crossed the threshold of their most important engineering center abroad. Even in mid-2009, when the pair decided to fly their private Boeing 767-200 to the remote Eniwetok Atoll in the Pacific Ocean to view a solar eclipse and Brin used the occasion to drop in on Google Tokyo, they skipped China.
Still, Google was reluctant to defy the government of China. There was still hope that things would turn around. In addition, its business operations in China were doing well. Though it had far to go to unseat Baidu, Google was clearly in second place and more than holding its own. In maps and mobile Google was a leader. In the world’s biggest Internet market, Google was in a better position than any other American company.
In 2009, though, the government demands got even worse. This was yet another sensitive year for China, because of several anniversaries, including the sixtieth year of the establishment of Communist rule and the twentieth year since the Tiananmen Square uprising. China’s requests to filter search results increased. Google would comply, while trying
to do so in the least restrictive way possible. And Google could also point to the fact that it offered users of its .cn search engine a link to the standard Google.com site. Including that link had been a key part of Google’s internal compromise to allow filtering. It was like an escape hatch to freedom, even if the Chinese government then blocked the results from that site.
Chinese officials themselves used the link: one member of the Politburo, Li Yuanchao, visiting Mountain View in 2009, wryly called the .com link his social secretary—he used it often to find news articles about himself. But apparently another member of the Politburo, Li Changchun, was horrified when he Googled himself on the global search engine and discovered links to critical comments about him. Since Li Changchun was China’s top propaganda officer, he had a means to express his outrage. That spring the government demanded that Google remove the link on its local site that directed interested users to the Chinese language Google.com.
Google officials considered this demand beyond the scope of censorship; it meant that Google would be breaking the commitment it had made to Congress that it would always keep that link, just as it did on every localized version of the Google search service in the world. After a couple of months of standoff, the Chinese government suggested that maybe Google should join it in a joint committee to study the problem further. Google was off the hook but realized that at any point, the problem could resurface.
In June, a new problem arose. It involved Google Suggest, a search feature that instantly offered fully developed search queries when users typed just a few characters or words into the search box. This innovation, ultimately offered globally, was developed first in China, after Google’s search team realized that, because of difficulty in typing, Chinese users generally entered shorter queries into the search box. Naturally, the quality of the feature was driven by the amount of data Google collected. In this case, the trick was for Google to examine the first few keystrokes and immediately access its servers to plumb the indexes for the most popular queries that began with the same letters as those partial entries. Unfortunately for Google, Chinese officials discovered that in an alarming (to them) number of instances, the suggestions offered by Google were related to sexual matters.
Chinese officials informed Google of their unhappiness by summoning Kai-Fu Lee and other Google China executives to a local hotel. Representatives of three ministries were waiting with a laptop and a projector. Once everyone was seated the show began. The Chinese went to the Google.cn website and typed in a vulgar term for breasts. Google Suggest offered links that displayed raw nudity, and more. The official typed in the word meaning “son,” and one of the Google Suggest terms was “love affair between son and mother.” The links to this term yielded explicit pornography. The woman serving tea in the conference room almost fainted at the spectacle. The Google people tried to explain that apparently someone had successfully spammed the keyboards in Google Suggest to artificially boost the popularity of sex sites. The officials were not impressed. “This is the antiporn year,” they said. “You’ve been warned twice before, and this is the third time. So we’re going to punish you.”
By that time Kai-Fu Lee had already decided to leave Google but hadn’t given notice. As was standard, his options were vested after four years, enough time for reevaluation. He’d decided that his strength was building things, not managing them after they were built. He was proud of what he had built in China for Google: a strong business, with impressive and motivated workers. He felt that his greatest success was balancing what seemed to be two mutually exclusive demands: Google’s company values and the requirements of the Chinese government. But he also knew that some people in Mountain View—including Sergey Brin—believed that Google’s efforts were not paying off and that the compromises made in China were tainting the Google brand. His main frustration with Mountain View, though, was its refusal of his constant requests to spend more to promote its search engine. Had Google given him the resources to really take on Baidu in the marketplace, he may well have stayed another year.
By July, when Lee had to go to the hospital for minor surgery, he was debating several options for his next career step, none of them involving Google. He was thinking of his future when the phone rang in his hospital room. The Chinese were once more blocking Google.cn, meting out the punishment they had promised. In addition, Google was singled out in a scathing news report on the main television network, where content is carefully controlled by the government. Now he was hearing that the government demanded that Google remove Suggest. There was a second demand—to remove foreign websites from its indexes. Google refused. Though Lee would not say it, he had to have been thinking, I won’t miss this.
That August, Lee went to Mountain View for a previously scheduled GPS on China. Before the executives went into the Marrakesh conference room in Building 43, Lee quietly told Alan Eustace that he had decided to leave. Then he went into the GPS and outlined the progress and difficulties of Google China, only afterward telling Schmidt that he would be departing. He had decided to start a company that would incubate Internet start-ups in China. “It was hard,” he later said, “but it was harder to say good-bye to the team here [in China], some of whom I talked into joining. I wanted to personally assure them that things are going to go great.”
Many employees of Google China didn’t believe it when they first heard the news, because there had been so many earlier false reports about Lee leaving.
Lee’s departure party took place on September 18. Instead of the usual TGIF, all hands gathered at the WenJin Hotel. Chinese Googlers tried to keep things upbeat; they called him onstage and had him pretend he was a contestant on a game show where they asked him silly questions and meted out “punishments” (belching three times, talking like Donald Duck, imitating Mike Tyson) whether he answered correctly or not. Then people shared stories about him. The evening ended with the entire room breaking out in a well-known Chinese pop song called “Blessing.” That was when the crying began. People were singing and sobbing at the top of their lungs. The next day, Lee repeated the lyrics in an email to former colleagues: “You and I will meet again in the brilliant season!”
Some China Googlers still felt optimistic about the company’s prospects. A few weeks after Lee’s departure even Xuemei Gu, who was not reluctant to deliver blistering criticisms of her employer, said that she still believed in the mission. She thought her time in China was well spent. “I will say Google will probably be the most popular Internet service in China,” she said. “I’m still happy. A lot of tears and challenges, but yes, I’m still happy.”
Just before Christmas, Heather Adkins learned that she would fall short on her annual “don’t get hacked” OKR. Google’s monitoring system had detected a break-in to Google’s computer system, and some of the company’s most precious intellectual property had been stolen.
Apparently someone had hacked into Google from what was supposed to be a security stronghold—its password system, called Gaia. It was a serious breach that involved a theft of code. As her forensics team dug deeper, using all its digital CSI-style techniques to walk back over what happened, more alarms went off. The hack was geographically tied to China. What’s more, both the sophistication of the attack and the nature of its targets pointed to the government itself as an instigator of or a party to the attack. “The more we learned as we looked into it, the more we realized this wasn’t just a classic hack, but folks who were after something. This was hacking with a purpose,” says David Drummond.
The attackers used a vulnerability in Microsoft’s instant messaging system to break into the accounts of Google employees in Beijing. The openness among its employees that the company cherished turned out to be a vulnerability—and the paranoia that Google had exercised in limiting code access to the Chinese turned out not to be so paranoid. The victims were apparently people whom the attackers had identified as being useful to efforts to penetrate Google’s safebox. The bandits had tracked their targets dilige
ntly, accumulating knowledge via their activities on sites such as Facebook and Twitter; then they had set up a phony photo website, sending a link to the employees that appeared to be from a familiar contact. When the employees followed the link, the trap sprang, injecting their computers with malicious software. That allowed the penetrators to take control of their computers. The outsiders had accessed MOMA, Google’s internal website, to locate the engineers who were working on Gaia, the company’s master password system. Then the bandits had monitored those employees to learn enough about the system to work their way into Google’s internal operations and eventually copy confidential code. What they stole was apparently so critical that Google never revealed its nature.
As Google’s security specialists kept looking, they found even more horrendous consequences. The hackers had dug into some Gmail accounts. Not just any Gmail accounts, but those of Chinese dissidents and human rights activists. All their contacts, their plans, their most private information had fallen into the hands of intruders. It was hard to imagine that the Chinese government was not poring over them. “It hadn’t even occurred to us that that kind of targeted attack would be happening,” says Nicole Wong. One of the compromised Gmail accounts belonged to a Chinese student at Stanford. Google arranged with campus security to meet with her, and Google’s corporate head of security and safety personally took charge of her laptop. The malware was so sophisticated that it had already self-destructed.
Within days, Google set up the most elaborate war room in its history—it was actually a war building, as an entire Google facility was filled with a mix of security engineers working on the forensics of the incursions and policy lawyers trying to figure out what to do next. No one could get in without special light blue laminates affixed to their Google employee badges. In a move that would disturb privacy advocates already worried about Google, the company invited security experts from the National Security Agency to help analyze the attack and devise future defenses. Meanwhile Google’s executives began a series of meetings to determine the next step in the company’s China policy. “We had an interesting holiday season,” says Bill Coughran.