Yahoo has found itself in the middle of a dispute between Google and China over cyber-attacks and web censorship, with its Chinese partner, Alibaba Group, calling Yahoo’s backing of rival search engine “reckless.”
Yahoo had expressed approval of Google’s condemnation of web censorship and attacks on its networks by China. A Yahoo spokesman said last week the company stood “aligned” with Google against the “deeply disturbing” cyber-attacks and prying into users’ web activities. Alibaba said Yahoo’s move was irresponsible given the lack of evidence in the case and that the Chinese company definitely did not share the opinions of Yahoo.
Yahoo owns 40 percent of Alibaba Group, which operates China’s largest online retailer Taobao and the e-commerce website, Alibaba.com.
Google had earlier threatened to pull out of China in the wake of a sophisticated cyber-attack launched in December. Google officials said the attack, believed to have originated in Beijing, was an attempt to hack the Gmail accounts of Chinese human rights activists. Yahoo also reportedly suffered a similar attack but has remained tight-lipped about the incident.
Google said its investigation showed that the hackers targeted not only the world’s largest web search engine but at least 20 other companies from various industries.
Google issues ultimatum
Google said it would no longer tolerate China’s cyber espionage policies and censorship of search results even it meant cutting ties with the Chinese market.
In his January 12, 2010 entry to Google’s official blog, entitled “A New Approach to China,” Google’s David Drummond, chief legal officer and senior vice president for corporate development, wrote:
“We launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results. At the time we made clear that ‘we will carefully monitor conditions in China, including new laws and other restrictions on our services. If we determine that we are unable to achieve the objectives outlined we will not hesitate to reconsider our approach to China.’
These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.”
Rumors quickly spread that Google has in fact already turned its back on the Chinese search market, although the company later clarified that it was still hoping to reach an agreement with Beijing.
China has downplayed the standoff, saying the issue could be resolved in a number of ways, although it remains adamant in its position on web censorship. Chinese officials said foreigners doing business in the country must conform to local laws.
Google’s hard stance against China has surprised many. The country boasts of some 384 million Internet users, the largest market in the world. While analysts believe it’s an unwise move, business-wise, the search engine giant’s decision to put its foot down against conservative Beijing has the backing of the White House. Washington officials have long been worried about China’s attempts to infiltrate U.S. computers to harvest military intelligence information.
Already, members of Congress are out to revive a bill banning American tech companies from operating in foreign shores wherein cyber spying is allowed.
In China, Google only controls 35.6 of the market share, trailing behind local search engine Baidu Inc. which dominates 58.4 percent of the search market, according to market research firm Analysys International.
Google’s possible departure will benefit Yahoo Inc. and Microsoft Corp’s Bing, which share a measly 1 percent popularity rating in China. Microsoft Corp. already reiterated that it had no plans of leaving the booming Chinese tech market and that it would continue to abide by local laws.
Microsoft flaw exploited
According to Internet security firm McAfee, the cyber-attacks targeted against Google and other businesses were made possible by exploiting a previously undetected flaw in Microsoft Corp’s Internet Explorer. The perpetrators tricked the employees of various companies to click on a website link and in the process, unwittingly downloading malicious software onto their computers.
Once installed, the programs worked stealthily, said McAfee, which was hired by the affected companies to look into the incident.
McAfee said this type of attack was only previously observed in government information networks but never in commercial computers. McAfee said Microsoft Corp. has yet to fix the flaw, although the company assured the public that it was looking into the report and working on a solution patch.
The attack raised serious security concerns for Google, although Drummond insists the cybercriminals were not able to access the actual contents of the emails of Chinese human rights activists. He said the hackers were able to access only two Gmail accounts and that the exposure was limited to the email’s subject line and the date the account was created.
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