The Corporate Policy for Yahoo! China

With respect to the case of Shi Tao, I wrote the following previously:

In Shi Tao's case: Yahoo! knew more than they claimed, Rebecca MacKinnon noted the appearance of a new document: the Beijing State Security Bureau's request to Yahoo!'s Beijing office for information about the e-mail account of the person who turned out to be Shi Tao.  Does that document change everything?  Perhaps with respect to the testimony of a Yahoo executive at a U.S. Congressional hearing, but the general problem remains unsolved.  Rebecca MacKinnon uses this sentence to describe that general problem: "What Yahoo! China's employees in Beijing might have done differently without getting themselves in trouble is an open question."  That was the problem that I identified before, and it remains unsolved.

To make things very concrete and precise, I formulate the problem:

Yahoo! China is an Internet Content Provider (ICP) in China working under Beijing ICP permit 000022.  Under the terms of agreement for that permit, Yahoo! China agrees to comply with legal police warrants for information.  Such conditions exist in every country.

Consider the specific situation.  The following document was brought in by a police officer one day to the Beijing office of Yahoo! China (which is a subsidiary of Yahoo! (HK) Holdings Ltd.):

[Translation via RConversation]

Beijing State Security Bureau
Notice of Evidence Collection

[2004] BJ State Sec. Ev. Coll. No. 02

Beijing Representative Office, Yahoo! (HK) Holdings Ltd.:

According to investigation, your office is in possession of the following items relating to a case of suspecting illegal provision of state secrets to foreign entities that is currently under investigation by our bureau. In accordance with  Article 45 of the Criminal Procedure Law of the PRC, [these items] may be  collected. The items for collection are:

Email account registration information for, all login times, corresponding IP addresses, and relevant email content from February  22, 2004 to present. 

Beijing State Security Bureau (seal)  April 22, 2004

The task is to come up with a satisfactory Corporate Policy for Yahoo! China to handle such a case.  In so doing, please address the following three items.

1. Describe the action to be taken with respect to this warrant.
2. Describe the likely consequences
3. Describe the benefits/losses to Chinese Internet users and their likely reaction

In the following, I discuss some of the various corporate policies that appear to be open to Yahoo! China.  These are the ones that are obvious to me.  You may come up with alternatives.

Option 1:

1. Yahoo! China shall comply with the warrant and provide the requested information.

2. Since this is what Yahoo! China actually did, the known consequence is that the information led to the jailing of Shi Tao.  His case also drew western media attention and U.S. Congressional oversight to the actions of Yahoo!

3. This is largely a matter of indifference to Chinese Internet users, because they know that every Chinese Internet Content Provider/Internet Service Provider/Blog Service Provider will comply with information requests from the government security units.  Therefore, it is no surprise that Yahoo! China would do so as well.

From the viewpoint of the corporate brand of Yahoo!, this was a bad option -- they did evil.  In addition, Yahoo! has obviously wronged Shi Tao.

Option 2:

1. Yahoo! China shall refuse to comply with any warrant on cases "of suspecting illegal provision of state secrets to foreign entities" because this may result in the arrest of political dissidents such as Shi Tao.

2. The likely consequences are that Yahoo! China will see its Internet Content Provider permit revoked with almost 100% certainty and its executives may be jailed/fined.  That much is certain.  One can speculate on whether the world will ever hear about courage of Yahoo! and its executives, or the loss in Yahoo! shareholder value due to its disappearance in the second largest Internet market in the world, or the ultimate status of Shi Tao, but those are just speculations.

3. This is largely a matter of indifference to the majority of Chinese Internet users who do not worry about their email security because they think that they have nothing to fear.  The most vociferous reaction will come from the "angry young people" who will deride Yahoo! for being so stupid as to think that "illegal provision of state secrets to foreign entities" automatically equates to "political dissidence on behalf of freedom and democracy."  Even they recognize that there are legitimate national security interests for any country (China or otherwise).  For example, what could "suspecting illegal provision of state secrets to foreign enttiies" entail?  Try:

Exhibit 1: The detailing of which sensitive topics (such as June 4th, 1989) shall be banned in media reporting (as in the case of Shi Tao)
Exhibit 2: The list of the 1,000+ Chinese secret agents in Australia
Exhibit 3: The names of the infiltrated state agents into the Uighur independence movements
Exhibit 4: The geographical coordinates of the 900+ cruise missiles aimed at Taiwan
Exhibit 5: The downloaded computer code from the Los Alamos National Laboratory on nuclear bomb testing

Do you think that that all of that should be published and the truth can sort itself out without damage to state interests?  Hmm ... why don't you try publishing the geographical coordinates of the Intercontinental Continental Ballistic Missile (ICBM) silos in the United States and see if you get arrested?

From the viewpoint of corporate finance, this was a bad option since it is suicide.

Option 3:

1. Yahoo! China recognizes this problem and withdraws from China.  It will not use the Internet Content Provider permit and it will not have mainland offices/subsidiaries.  Instead, it will offer Chinese-language services (such as news, email, discussion forums and blogs) from overseas servers under the URL (as opposed to  Mainland security units cannot request information from foreign content providers.

2. The likely consequence is that the Yahoo service will be blocked by the Great Fire Wall of China.  The same thing has happened to any number of overseas websites that could be popular inside China because they allow free speech.

3. This is largely a matter of indifference to the majority of Chinese Internet users.  Yahoo! China was only a small player in a highly competitive field whether inside or outside China for the reason that their services were not particularly attractive to Chinese users, and the Internet users will not take the trouble of breaching the Great Fire Wall.

From the viewpoint of corporate strategy, this was a bad option since this is surrendering the China market for good.

Maybe you can come up with an option with good consequences one way or the other, but I couldn't.

Now I get to my personal thoughts about this whole Yahoo! thing.  The simple truth is: I don't care about Yahoo!  This is not just because Yahoo! is only a minor player in the Chinese market at this time.  Rather, I am repulsed by the orgy of corporate brand trashing outside of China.  All that is fine, except it has little or nothing to do with the interests of the Chinese Internet users.  This is not about Yahoo!; this is about the Chinese Internet users.  Do you get that?  This is the reason why I insist that people explain the relevance of any your proposed corporate policy for Yahoo! to the Chinese Internet users in the exercise above.  In all the options, Yahoo! is largely irrelevant and that is why they are not the issue at all.

Unfortunately, many people outside of China don't get the Chinese Internet.  Instead, they are very proficient at trashing western corporate brands.  But as far as I am concerned, whether Yahoo! goes out of business altogether or Yahoo! adopts a corporate policy of non-compliance with information requests from Chinese security agencies will mean nothing to the Chinese Internet users.  That is why I don't care.  I just don't want to waste my time talking about Yahoo!

Instead, I believe that the important landmark cases in China are seemingly minor local cases that do not involve big western brands (such as Cisco, Google, MSN Spaces or Yahoo!).  For example, a very important case was the Pengshui SMS case (see Satiric SMS or libel? Writing political poetry in Chongqing and SMS case dropped) in which an ordinary citizen was detained for sending around a sarcastic poem via SMS about local government misdeeds:

Following a week in which the story blanketed the national media and the county's dirty laundry was aired in front of the whole country, the Pengshui PSB realized that it shouldn't have pursued criminal charges against Qin and made a decision to drop the case. The pretrial officer at the PSB called up Qin with the good news, and apologized for the harm caused by this mistaken case, which had been going on since the beginning of September.  In addition, the county procuratorate, on its own initiative, applied for state compensation for the 29 days that Qin was detained - Qin received 2125.7 yuan yesterday (calculated using the average full-time daily wage of 73.3 yuan).

This case was much more important to the overall space for free speech in China than any Yahoo! trashing.  The Chinese Internet users spontaneously took on an obvious case of local government abuse, they made it into a national issue at the discussion forums, the national media followed up and the local government beat a quick retreat.  This case was precedent-setting and a new space was carved out for freedom of speech.  No local government official who pays any attention to this case would want to be in the center of that kind of public opinion storm.  Maybe this was nowhere as sexy as the appearance of a Yahoo! executive at U.S. Congressional hearing, its impact was infinitely more powerful in China.

There are many more such cases since then and some more cases are still in development.  Just this week, we have a forum discussant arrested for spreading rumors about drowning deaths at a shopping plaza during the July 18 Jinan flood (see China Media Project).  Whereas the invocation of "spreading rumors to cause public disorder" used to be sufficient to clamp down discussion, the Internet users came back with a widely circulated forum post titled: "It didn't rain on July 18th in Jinan."  Since it was known that there was a huge rainstorm on July 18th in Jinan, this assertion was patently false and the signers are daring the government to arrest them for "spreading false information" as well.  Of course, the Jinan government wouldn't dare and could not even do so if they wanted to because so many people have signed up.  This case has highlighted the problem with defining what is a "rumor."

To summarize: If freedom of speech on the Chinese Internet is ever to come about, it will not be handed over to them because of U.S. Congressional actions against American corporations.  The Chinese people will fight and obtain that freedom for themselves through struggling on local issues.  Those issues may be seemingly trivial, but we are talking about accumulation and aggregation.  The western world can help by focusing on such cases because international attention always helps in the sense that an allegedly rising and proud nation would never want to be caught with exhibiting uncivilized behavior.  The war will not be won by a single nationwide strike.  Instead, this is about the consecutive small victories at the local level.