11:29 AM

Remembering Tiananmen . . . And Gutless Silicon Valley Companies

The Chinese government is blocking access to various services and web sites such as Twitter, Flickr, Bing because of the anniversary of the Tiananmen Square protests. This peaceful demonstration, which would have been allowed by our democracies, turned into a massacre as the Chinese government ordered the army to crush it.

The most powerful image of that time, if not the century, is the lone protestor, calmly walking out in front of a column of tanks and stopping them with a shopping bag in each hand. The column tried to go around him, each time he moved to step in front.

Please take 1.12 minutes to view this:

The phenomenal courage of this unknown protestor is incredible. Contrast it to the gutless behavior of Silicon Valley companies towards the Chinese government.

"Tank Man" risked having his guts spilled while Silicon Valley companies faced merely the risk of losing some profits from the Chinese government's purchases of equipment and the possible loss of access to its population.

Despicable behavior

Unlike other Silicon Valley companies, such as Google, Cisco Systems, that escaped a lot of criticism over their China policies, Yahoo got caught red-handed when it handed over information to the Chinese government that led to a 10 year prison sentence for Chinese journalist Shi Tao.

I was one of very few journalists that took Yahoo management to task over its despicable behavior and kept a constant pressure on the company. I felt a responsibility as a journalist to take on this muckraking role, which used to be a traditional role of newspapers, "attacking injustice, exposing abuses, and circulating information about misconduct to the general public."

I received little support from my colleagues, probably due to their editors. I remember being at a dinner hosted by Seagate's CEO at his beach house, where journalist colleagues from Wall Street Journal, BusinessWeek, San Jose Mercury, and other large publications were gathered, and saying to them let's all get behind this issue, of Yahoo's outrageous behavior. Most of them nodded but George Anders, from Wall Street Journal, said all the Silicon Valley companies do it, it's not worth it.

I certainly thought it was worth it. I had nothing to lose.

I published a lot of articles about Yahoo and China and I know I wasn't popular among its top executives. But so what? I knew that I had a lot of support among Yahoo rank-and file. I knew that Yahoo workers were not proud of their company's behavior and even booed CEO Terry Semel at an internal meeting.

I wrote that Yahoo's China policy was its contribution to global population control because any Yahoo engineer at any party, would be very unlikely to exchange genetic information with anyone.

I also offered a simple way for Yahoo to comply with local laws yet keep its users safe by laundering the data in overseas centers, so that it was all anonymous.

A massive cost to Yahoo!

Yahoo worked hard to extricate itself from its mistake over China, selling it's stake in its China joint venture. And as part of its penance, it agreed to give $1m to fund university research into "international values."

The cost to Yahoo was huge. It had a demoralized staff and one that never really recovered, as Yahoo's performance has clearly shown since that time.

Soon after Reporters Without Borders outed Yahoo, reporting it had acted as "a Chinese police informant" Yahoo's stock price began a long fall. Yahoo lost 78% of its value from a high of $43.21 at the beginning of 2006 to a low of $9.39 in November 2008.

A demoralized staff contributed to Yahoo shareholders losing an astounding $47.49 billion in market cap over that period!

Moral pygmies

And it's top management was completely embarrassed.

The late and great Tom Lantos, House Foreign Affairs Committee Chairman, D-San Mateo, called Yahoo CEO Jerry Yang to Washington DC.

He said: "While technologically and financially you are giants, morally you are pygmies."

He called on Yang and Yahoo chief counsel Michael Callahan to turn and face the dissidents' families, seated in the front row, and plead for forgiveness. "I would urge you to beg the forgiveness of the mother whose son is languishing behind bars thanks to Yahoo's actions," Lantos said. Shi's mother, Gao Qin Shen, had tears in her eyes as the two executives complied.

I wish there was a YouTube video of that scene.

Let's remember the extraordinary courage of the Tiananmen protestors on this anniversary. And let's encourage our Silicon Valley companies to stand up for something good in regards to China, rather than compromise their morals because of profits. Let Yahoo's misfortune serve as an example.

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[Also, please see my ZDNet column: Yahoo's China "police informant" role sparked a $47.5 billion slide in market value]

...Was that the true cost of Yahoo’s mistaken China policy? We could quibble over a billion or even ten billion dollars.

But the fact remains that employees working at a company that has been publicly accused of being moral pygmies and acting as a police informant for a repressive Chinese government won’t be highly motivated. No matter how many free doughnuts you provide.

In a highly competitive environment such as the Internet market, a demoralized workforce will place any company at a serious disadvantage.

People spend much of their life at work and they will work that much harder at a company that is morally and ethically responsible.

Yahoo’s experience creates a great lesson for corporate leaders: Do the right thing - its good for your shareholders. And what's good for your shareholders also happens to be your fiduciary duty.

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Please see:

Let's bring back muckraking journalism. Just in case you forgot what it is:

Muckraking is a term applied to journalists who use newspapers as a means of attacking injustice, exposing abuses, and circulating information about misconduct to the general public.

What Is Muckraking Journalism?: History Fact Finder

All references to Tiananmen Square massacre closely censored for ...

Screw China!

Would You Work For Moral "Pygmies?" - The Costs Of Yahoo's Actions In China

Despicable behavior by Yahoo management - Shi Tao gets ten years

Using off-shore companies to launder Internet data

Yahoo and Google and China - it's time to Do Some Good

Dissidents within YHOO and GOOG will make ethical companies

A View from Within on US Companies and China

12.15.06: Indictments, guilty pleas on Chinese trade secret thefts

US Tech Firms Lame Excuse on China Business

Test to see if your website is being blocked in China

How China Censors the Internet - List of Banned Topics & Blacklisted Websites

An employee of Baidu, the Google of China, has leaked a document folder that suggests in detail how authorities in China censor the Internet.

– Google's full help entry on "Principles - Does Google censor search results?" (January 26, 2006).

"Google does not censor results for any search term. The order and content of our results are completely automated; we do not manipulate our search results by hand. We believe strongly in allowing the democracy of the web to determine the inclusion and ranking of sites in our search results. To learn more about Google's search technology, please visit ..."

Google Now Censoring In China - Search Marketing News Blog - Search Engine Watch (SEW)

Oh, the irony. Less than a week after we hear that Google is ready to fight the US government in part to defend its users, now comes news that Google will cave into the Chinese government's demands for its new Google China web site.