Microsoft Censors Chinese Blogger

Microsoft (Nasdaq: MSFT) has pulled a well-known Chinese blogger's site off the Internet -- a dramatic reminder that doing business in the booming Chinese economy comes with significant strings attached.

Microsoft removed the blog of Chinese journalist Zhao Jing from its MSN Spaces service at the end of December, saying that it was complying with the country's law in doing so.

The blog was taken down after Zhao Jing, under the pen name of Michael Anti, wrote about the firing of an editor of the Beijing News, which in turn sparked a strike by some 100 journalists at the paper.

The blog did not explicitly endorse or support the actions of the journalists, but may have contained key words that the Chinese version of Microsoft's blog tool is programmed to screen or flag.

Microsoft had been contacted by a government official about the blog, but it was not clear whether the company received an order to remove it or any threat of consequences should it fail to do so.

The case underscores the challenges that foreign businesses will face as they attempt to set up shop in China, which boasts the world's fastest-growing economy -- one that all major tech companies are eager to help mature.

Yahoo (Nasdaq: YHOO) has already faced a wave of criticism for turning over information in an e-mail account to Chinese authorities, who then imprisoned a Chinese journalist based on the contents. At the time, Yahoo said it was forced to comply with local law if it wanted to do business in the country.

Sensitive Issues

Free speech advocates have condemned the Microsoft action as censorship. The issue is complicated by the fact that the blog and others that have been removed in the past are maintained on servers in the United States. The blogs are often written in English, but can be accessed from China.

The apparent willingness to comply with government demands for censorship and invasion of privacy in China could have implications elsewhere, including at home in the U.S., Rebecca MacKinnon, a fellow at the Berkman Center for Internet and Society at Harvard Law School, wrote in her blog.

"Can we be sure they won't do the same thing in response to potentially illegal demands by an overzealous government agency in our own country?" MacKinnon asked. "Do not count on these companies to protect your human rights, if those rights are threatened by the over-stretching hand of any government anywhere on the planet."

Several Microsoft employees discussed the development in their own blogs. Some defended their company's policy as a necessary evil, but others spoke out against the move.

Robert Scoble, self-dubbed "technology evangelist" for Microsoft, said the development was "depressing to me."

"It's one thing to pull a list of words out of blogs using an algorithm," he wrote in his blog. "It's another thing to become an agent of a government and censor an entire blogger's work."

Cost of Doing Business

Some speculated that MSN was being targeted by native Chinese blogging companies, which may have been feeding information to the government about content on the MSN Spaces sites.

While censorship is a tough pill for U.S.-based companies to swallow, the opportunities in China are likely compelling enough to prompt some to take the public-relations hit. A recent report showed that the Chinese economy grew at a rate of nearly 17 percent last year, dwarfing the rate of expansion in the U.S.

Those businesses may also be able to argue that the presence of foreign companies will help change China's policies over time by helping to open up the economy.

"Economics matters a great deal , and American companies are often torn when they consider their actions in a foreign land," said Sonia Arrison, director of technology studies at the California-based Pacific Research Institute.

As a rule, however, "they should reject collaboration with tyranny and instead establish the American group-building needed to bring China into the fold," she added.

The importance placed on China was underscored last year when Microsoft and Google (Nasdaq: GOOG) battled over Google's efforts to hire a former Microsoft executive to set up Google sales efforts within China. The two companies eventually settled the matter.

Morgan Stanley has predicted that China's Internet economy will surpass that of the U.S. by 2010.