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Google: Supranational Company, Emerging Nation State

A very amused and cheerful quack to the reader in the Eastern Mediterranean who sent me some useful snippets about Russia and online. I want to capture these before my flakey email system nukes the information. Gentle reader, you may want to go elsewhere if you loathe Russia or simply don’t care much about the policies of nation states. Keep in mind that this Web log is a diary and opinion drop point for me. Let me run down the items provided by my sun baked correspondent and then conclude with some comments, again designed for me to capture my thoughts on October 26, 2008.

Set Up

In Google Version 2.0 I expanded on the argument I introduced in my 2005 study The Google Legacy. In a nutshell, I presented information to support my notion that Google was not perceived correctly by competitors or regulators. The kindergarten colors and lava lamps filed down the claws of the company’s technological trajectory. Heck, Google is about Web search and online advertising. The general consensus was in 2005, “What me worry?” Flash forward to October 2008, and I think we see that publishers, telephony companies, and enterprise software vendors understand that Google is exerting some “strange force”. Most executives can’t put their finger on what Google is doing. The view is that Google is just too darned diffused, chaotic, and unbusiness like to figure out. A recent book characterizes Google as a planet. I don’t think that’s a useful analogy. The metaphor connotes bigness, but it misses the organic nature of how Google is a transformative entity. It’s not a planet; Google is an information applications platform that could alter how traditional businesses operate. Moving operations out of a location and into a barge holding servers outside the three mile limit poses some interesting challenges for Google’s competitors and opponents.

The metaphor that comes to mind is a mesh that wraps the earth. The mesh is a meta layer that puts competitors inside a planet sized drift net. Competitors can’t get away from Google. Competitors–even countries–are within Google. I see this as a Google mesh, something like this:

Source: http://publib.boulder.ibm.com/infocenter/db2luw/v9/topic/com.ibm.db2.udb.spatial.doc/g7nation.gif

There is now a general discomfort triggered by Google’s trajectory is causing regulators to dig in their boot heels. The messages sent by different regulatory groups are confused, almost on again and off again. Google continues to do what it wants. The company appears to be tolerating regulatory and legal issues, but in general the company continues to move forward like gas diffusing through a closed space. You can’t pin down where the molecules are going, but the molecules are distributing themselves and each continues to wag its tail and do interesting things.

I am now thinking about Google’s buying a jet fighter. Information is here.

Insight into Why Google Wants to Acquire In Country Operations

My questions to myself are: “Does this allow a new loophole for Google in China after the acquisition of Yahoo?  And is this the strategy behind the attempt to acquire Begun in Russia?” These were stimulated by Lindsay Eastwood’s “Don’t Be Evil: Google Faces the Chinese Internet Market and the Global Online Freedom Act of 2007” in the Minnesota Journal of Law, Science & Technology  This is an academic write up and you can read it here. For me, the key passage was:

“…many U.S. Internet companies do not own their Chinese counterparts, but operate through local owners. One of the four main targets of the legislation, Yahoo! Inc., runs its China operations through Alibaba.com, of which it owns only a 40% stake. As a result, Yahoo! could find itself unaffected by the Act and its work in China immune from liability. Google operates its Google.cn business under a license owned by a local company, Ganji.com, but the precise nature of the relationship between the two entities has not been made public.”

My thought is that this in-country strategy may be a way to deal with certain business barriers to expansion inside of other countries.

• Two further quotes from Eastwood demonstrate intent and ethical confusion in equally opposite ethical directions:
  “Choosing to ignore U.S. Internet speech violations while enacting legislation that would target similar activities abroad may seem overly hypocritical” (p.311)
• “…The vast majority of Internet searches in China are for local Chinese content such as local news, local businesses, weather, games and entertainment, travel information,blogs, etc.—Google, Inc. determined that the ethical balance tipped in favor of the introduction of the new [censored or filtered ]site. Indeed, Schrage testified that Google estimated that fewer than 2% of all queries in China would result in pages from which search results would be unavailable due to filtering [out results].” (p.303)

Russia and Control over the Internet

EDRI gram is a biweekly newsletter about digital civil rights in Europe. In May 2008, EDRI published here this comment, which I found interesting:

“Since the beginning of this year, the pressure to regulate the Internet has increased in Russia. In January [2008], Russia’s Parliament began work on a law “On the Internet,” that should create a legal framework to deal with online matters. In February, Vladimir Slutsker, a Federation Council delegate, introduced a draft normative act that will force all Internet sites with more than a thousand daily visitors to register as mass-media outlets. There is also a project currently in the State Duma that would limit foreign investment in the telecommunications and Internet industries. On 25 April 2008 Russia’s lower house of Parliament, the State Duma, passed, nearly unanimously, an amendment to the law on mass-media, in its first reading, giving greater powers to authorities to shut down media outlets.The new law forbids using a registered media source to spread “false facts that discredit the honour and dignity of another entity, or undermine their reputation.”

Extend Reach in Cyberspace

The Washington Post said on October 28, 2007, here that the Kremlin sought to extend its reach in cyberspace. For me, the significant comment was:

“in July [2007], Putin briefed his Security Council on plans to make Russia a global information leader by 2015. Russian news media reported that those plans included a new network apart from the global Internet and open only to former Soviet republics.’To put it bluntly, we need to fight for the water mains,’ Gleb Pavlovsky, the Kremlin’s foremost political consultant, said in an interview. ‘We need to fight for the central networks and for the audience segments that they reach.’Wolfgang Kleinwaechter, special adviser to the chairmen of the Internet Governance Forum, a group convened by the United Nations, said some Russian officials he has spoken to are considering a separate Internet, with Cyrillic domain names, and appear to be studying China’s Internet controls. Peskov, the deputy presidential spokesman, said in an interview that a Russia-only Internet was still in the ‘investigative phase,’ adding, ‘I don’t know if it’s more than thinking aloud.”It’s not meant to get rid of the global network,’ he said. ‘It’s a discussion of creating an addition.’ For now, supporters as well as critics of Putin see the Kremlin doing something atypical: competing on more or less equal terms with its opponents.”

Russia and the Freedom of the Internet

In June 2007, Susanna Niinivaara published here an interesting comment about unfettered Web surfing in Russia. For me and my correspondent the key passage in this article:

“A question arose in the spring on whether or not the new state authority established to regulate the activities and licensing of the media was to be enhanced by controlling Internet publications as well. The office that was established to “monitor the mass media and protect cultural heritage” was set up by linking two old services with each other. Its mandate includes “the legal regulation, control and guidance” of the media, ‘as well as questions of copyright’. Critics say that the new office has laid the groundwork for closer control of the media.”

My Thoughts This Cold Sunday Morning

Several ideas surfaced when I scanned these sources:

1. Google will try a variety of methods to enter and grow revenues inside certain markets and countries. I think the company will use its permanent beta approach to building its business in Russia and China; that is, there won’t be one effort, nor will the company try one thing at a time. I surmise that Google will use multiple methods simultaneously. One or some combination will unlock treasure chest.
2. Certainly friction and possibly clashes will occur between Google and political authorities. The uncertainty about Google’s ultimate intent and the risk of losing control once Google gains traction will create these problems. Google is sufficiently different to cause conservatives to want to keep the stallion in a stall until the corral is built that can be used to break and train Google. I’m not sure this is possible, but governments are not too good at predicting the future. Governments are good at trying to clamp down on certain activities as the clips about Russia illustrate.
3. Google will be difficult to regulate. The reasons range from [a] legal squabbles over the definition of certain terms. Google’s lawyers will seek benign definitions. Opponents will seek negative definitions. Without a definition of what Google is doing, the legal processes will drag on. [b] Google morphs. The company can change what it does or change where it performs certain functions or argue that not even Google knows where certain transactions occur because software, not humans, govern where money was collected, charged, or transferred. [c] Google may act more like a nation state than a company. The worsening economic climate means that Google can divide the riches with a nation state. Use fees, taxes, or other considerations can create a Google-nation state partnership which leaves the regulations in place but Google unfettered.

This issue of Google as a country, not a supranational enterprise, warrants more thinking.

Stephen Arnold, October 27, 2008

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