February 11, 2006

Executives from Google Inc. and other Internet companies head to Capitol Hill next week, where they will become feature players in an awkward debate:

Are U.S. companies giving in to China too easily?

Last month, Google announced an agreement with the Chinese government to censor search results from its Chinese site. It was the latest Internet company to accede to the Chinese government's censorship restrictions, following Cisco Systems Inc., Microsoft Corp. and Yahoo Inc.

The hearing will likely produce more embarrassing publicity for the companies, and it may drive legislative momentum among lawmakers concerned about China's influence on the U.S. economy. Congressional aides are expecting a standing-room-only crowd, and the reception from politicians may be chilly.

"I was asked the question the other day, do U.S. corporations have the obligation to promote democracy? That's the wrong question," says Rep. Chris Smith, the New Jersey Republican and chairman of the House human-rights subcommittee that is holding the hearing. "It would be great if they would promote democracy. But they do have a moral imperative and a duty not to promote dictatorship."

Mr. Smith plans to introduce legislation next week that would impose restrictions on Internet companies seeking to expand into China but also provide some legal protection from Chinese demands.

The bill would require U.S. Internet companies to keep email servers used for Chinese traffic offshore. That would help prevent the Chinese government from compelling the release of Internet user data. The bill also calls for creation of an office inside the State Department that would make an annual determination about which countries are restricting Internet use. It would provide a framework for users to pursue legal action against U.S. Internet companies over privacy violations.

The disclosures about Internet companies cooperating with the Chinese government are having a wider political impact. Last week, Sens. Lindsey Graham, (R., S.C.) and Byron Dorgan (D., N.D.) cited Internet companies' efforts to help the Chinese government monitor citizens' online activity as a reason to permanently revoke China's most-favored-nation trading status.

Ironically, the controversy comes as Google, Yahoo and others are fighting for "Internet freedom" in the U.S. Google is resisting a Justice Department request for information on user searches to help prosecute violations of a federal child-pornography law. Meanwhile, the company has joined competitors to resist plans by telephone and cable companies keen on exerting more control over Internet lines, which has led to concerns about discrimination and content blocking.