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Google Out of China? Well, Not Really.

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Google just revealed its new China strategy, which turned out to be redirecting its Chinese customers to an uncensored version of Google search based in Hong Kong. Our first thought was that somehow Google missed the news that the British handed Hong Kong back to China in 1997. We were tempted to dash off a quick memo to Google that if they were actually planning to leave China they needed to try a little farther out; sure, Taiwan would create its own problems, but maybe Manila would work. Joking aside, Hong Kong might be a bit freer than mainland China, but as a practical matter Hong Kong's liberties extend only so far as Beijing allows.

During the Vietnam War, a popular chant in Ivy League schools went something like this: "U.S. out of Vietnam/Harvard out of Gulf." A conservative acquaintance would show up at these demonstrations and add his own additions: To "U.S. out of Vietnam," he added "slowly, slowly." After "Harvard out of Gulf," he would caution "one share at a time." It would seem that Google is pulling out of China not with a dramatic gesture, but "one share at a time."

David Drummond, Google's general counsel and a lawyer apparently well-informed regarding China's jurisdiction over Hong Kong, concedes that "at any time the Chinese government could block access to our services." He then adds "we very much hope" that they don't. Indeed.

So, as it's hard to imagine that Google failed to Google "Hong Kong Legal Jurisdiction," we figured there had to be a deeply clever reason for Google's latest China strategy. Is it a compromise aimed at the Chinese government? Google gets to keep a stake in the extremely profitable Chinese Internet search and advertising markets while theoretically sticking to its 'human rights' principles -- and yet enabling China to save "face"?

The Chinese are big on saving face, which means that when you are negotiating you don't try to back someone into a corner or embarrass them. In this case it appears Google is extending an invitation to the Chinese government to save face by not censoring Google's Hong Kong service. That way Google can say it has upheld human rights and China can say maybe, but not on mainland China.

China doesn't play a short game, so the results of Google's decision won't necessarily be clear for some time -- and the next move is up to Beijing. Will Chinese regulators take up Google's implicit offer of a compromise and end a battle that neither they nor Google really want? Or will they push Google out into Hong Kong's famous fragrant harbor and tell them to sail out somewhere farther down the South China Sea? There's always Borneo.