Internet giant Google, Inc. and domain-name registration company GoDaddy Group—which recently stopped selling .cn Web addresses—encountered difficulties in doing business in China without becoming complicit in its censorship on the Internet and the monitoring of its citizens’ free expression.
Another aspect of China’s censorship is free trade.
“Internet censorship not only raises important human rights concerns, but also creates significant barriers for U.S. companies doing business abroad,” said Alan Davidson, Google’s Director of Public Policy, at a recent hearing of the Congressional-Executive Commission on China (CECC) in Washington.
Ed Black, president and CEO of Computer & Communications Industry Association (CCIA), made the case that Internet suppression erects a kind of trade barrier.
”The success of e-commerce depends on users feeling comfortable and secure enough to utilize the services our industry provides,” Black said. “That comfort and security can only exist in an environment of Internet freedom.”
“When a foreign government stifles online freedom or otherwise restricts the Internet, it creates a hostile market environment by preventing its consumers from fully using new products, applications and services offered by or through U.S. tech companies,” he continued.
Black took aim at the policies of countries like China and Iran that filter searches and disable access to sites that they disfavor. U.S. companies that sell information products and services are put at a disadvantage when seeking access to foreign markets. U.S. trade policy should dismantle trade barriers and any attempt to force U.S. businesses to engage in content filtering, he noted.
Cyber Attacks on U.S. Businesses
GoDaddy Executive VP and General Counsel Christine Jones testified of China’s increased monitoring and surveillance of .cn domain name registrations, prompting the firm to cease offering new .cn domain names.
Jones spoke of other China policies—denial of service, spam, and payment fraud—that has adversely affecting GoDaddy’s business in a number of ways. Attacks from distributed denial of service (also known as DDoS) can disable Web sites which Go Daddy hosts. Hackers can also insert malicious code on GoDaddy customers’ Web sites.
“In the first three months of this year, we have repelled dozens of extremely serious DDoS attacks that appear to have originated in China,” she said. GoDaddy expends hundreds of millions of dollars to protect itself from DDoS attacks on its systems worldwide.
“We have found that an overwhelming majority of websites promoted through spam are hosted in China, often at service providers that choose to ignore complaints of spam and other illegal activity,” Jones said.
China’s business environment provides a good climate for the spam industry and organized crime. “To date, China has not enforced significant penalties against spammers and others who utilize the Internet to engage in criminal activities… China today is basically the only market where spammers can do just about anything they want,” she said.
Adverse Business Climate
To Black, China’s rules is a scheme by the Chinese communist regime to give its domestic companies an advantage in the Chinese marketplace. China openly promotes a policy of “indigenous innovation,” which gives local technology companies a competitive advantage—and this policy extends to the technology industry. Chinese government agencies can only purchase products developed and owned by Chinese companies.
“Indeed, the unreasonable demands the Chinese government has continuously placed on U.S. companies—from censorship coercion to ‘Green Dam’ to indigenous innovation—all seem to have the added objective of clearing the competitive deck of foreign companies,” Black said at the CECC hearing.
When a domestic Internet company gains a business advantage by the government’s censorship policies, it violates “international trade principles of non-discrimination and maintaining a level playing field,” said Davidson, who was referring not only to China but other countries that enforce similar policies.
When a foreign government blocks an entire Web site because of concerns for a handful of user-generated postings, it is restricting international commerce. The practice goes well beyond merely content censorship, such as filtering offensive language, but disrupts trade and commerce in general, according to Davidson.
