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February 2010
War of a Different Kind
By John Paul Galles

     For thousands of years through the 19th century, war as we knew it was man-to-man, eyes locked in mortal struggle. In the 20th century, the distance between combatants was substantially lengthened due to better weapons, bombs, ships and planes. And by the end of the century it was not even necessary to fight in the same place with the advent of intercontinental missiles and satellite targeting. Now in the 21st century, wars are becoming even more impersonal and deadly as we use drone planes in maneuvers over enemy camps and mechanized robots to enter hostile territories.

      The events of 9/11 thrust a new type of enemy attack front and center—terrorism—which we perceived at the time to be confined to the nations of Iraq and Afghanistan and are now realizing foments well beyond those borders into other countries and perhaps even within our own shores. But we have given short shift to the cyber-terrorism brewing, and in this case, spewing, from China.

     On January 12, 2010, search engine Google disclosed that it had been a victim of cyber-attacks from China—specifically that dozens of human rights activists in China had had their Gmail accounts hacked.  Computer security firm VeriSign said it had traced the Google attacks back to “a single foreign entity consisting either of agents of the Chinese state or proxies thereof,” and that 30 companies in all were targeted. Google took the bold step of threatening to shut down its Chinese-language search engine and curtail its operations in China if officials there did not back down from requiring it to self-censor search results.

     Google’s threat to pull out of China over security and censorship issues risks little in the short term, but the online giant could find itself at a permanent disadvantage in a rapidly growing Internet market—already the world’s largest.

      It is estimated that revenue from China could reach about $310 million, or about 2 percent of Google’s total revenue, in 2010. Basically it’s a duopoly in China—Google and Baidu (developed within China). And though  Google’s market share is significant, Baidu has about 300 million visitors, a market value of more than $15 billion, and 63 percent of Internet search revenue in China, nearly double the 33 percent share of Google.

      Of more consequence is the impact to Google’s long-term goals. With an estimated 360 million Internet users and about 700 million mobile phone users, China has been widely seen as a market Google cannot ignore. Pulling out now will sorely diminish the likelihood that Google will ever be able to catch up to search competitors should it decide to re-enter the Chinese market.

     This is a new war—an information war and a cyber-conflict that is being waged against a most formidable foe. The nature of this war may dramatically affect the future of the United States and all the principles upon which we stand including free market capitalism.

      In 1977 Coca-Cola, Inc. faced a similar challenge and showed how much it would sacrifice in order to protect its secret formula. The drink was selling well in India, especially since the Dalai Lama, exiled there after the Communist takeover of Tibet, was photographed enthusiastically enjoying a Coke. However, the company chose to shut down 22 bottling plants rather than divulge the recipe to the Indian government, which wanted to “Indianize” the beverage business. When the Indian economy opened up in the 1990s, Coca Cola had some catching up to do, but it had successfully protected its proprietary formula.

      China has denied this reported hacking activity and, while they may hold discussions with Google, they remain emphatic that “China proscribes any form of hacking activity.” The U.S. government is also stepping into this conflict. If the Chinese people are limited to the search engine, Baidu, they will have limited access to information. At some point that will become a larger problem.

     This is an important battle with significant ramifications far beyond Google. Thank goodness that Google is confronting these attacks. None of our businesses or governmental sites is immune from this aggressive hacking activity. The cyber-conflict is a war of information that cannot be lost to the power of the Chinese government or people.


Google / China Cyber-conflict

     Google’s threat to shut down its search engine and operations in China in response to cyber-attacks is certainly the most publicized confrontation to date, but by no means the first significant occurrence of hacking.

     Similar techniques have been used to gain access to confidential information and/or cause damage to sensitive data across a multitude of scenarios. Chinese hackers have penetrated deeply into the information systems of U.S. companies and government agencies and have even gained access to electric power plants, possibly triggering blackouts in Florida and the northeast.

     As a typical scenario, consider the following: Gregory Fayer opened an e-mail from a fellow lawyer at another law firm that looked like a normal electronic chat with a colleague. Instead, it was laced with a computer virus intended to allow the sender to spy on Fayer’s computer, a blatant act of espionage and a similar technique to that used in the Google attack.

     It turns out that Fayer’s firm had filed a blockbuster lawsuit against the Chinese government on behalf of CyberSitter LLC, which makes parental control software. CyberSitter says the Chinese stole its computer code while creating the infamous Green Dam censorship program, which was designed to be placed on every Chinese citizen’s PC last year.

     The technique the hackers employ fools one victim at a time—and then uses that computer to spy on the target agency or steal data.


The Great Firewall of China

     Google’s response to the Chinese was based on dual concerns: enabling their use of the Internet to unethically obtain and/or destroy information, while at the same time enabling them to prohibit the free flow of information on it.

     In order to start up in 2006,  Google agreed to screen out content that the Chinese government specified as objectionable, drawing criticism from some human-rights groups.

     Internet control is considered a critical matter of state security in China. Beijing promotes Internet use for commerce, but heavily censors content it deems pornographic, anti-social or politically subversive and blocks many foreign news and social media sites, including Twitter and Facebook and the video-sharing site YouTube.

     One big question is whether ordinary Chinese will continue to accept China’s arguments justifying Internet censorship. Although urban, middle-class Chinese often support government policies on sovereignty issues such as Tibet or Taiwan, they generally deride media censorship.

     That feeling is especially pronounced among those who call themselves “netizens.” China has the most Internet users of any country, some 384 million by official count, but also the most complex system of Internet censorship, nicknamed the Great Firewall. Canny netizens across China use software to get over the Great Firewall while chafing at the controls.


The Information Curtain Descends

     In response to the situation, Secretary of State Clinton was quoted as saying, “a new information curtain is descending across much of the world” and named China as one of a handful of countries that had stepped up Internet censorship in the past year. She also praised companies such as Google that are “making the issue of Internet and information freedom a greater consideration in their business decisions.”

     The English-language edition of The Global Times said Mrs. Clinton “had raised the stakes in Washington’s clash with Beijing over Internet freedom.” The American demand for an unfettered Internet was a form of “information imperialism,” the newspaper said, because less developed nations cannot possibly compete with Western countries in the arena of information flow. It called the U.S. campaign for the uncensored flow of information “a disguised attempt to impose its values on other cultures in the name of democracy.”

     We will see how this conflict plays out over the coming weeks. Like its electrons, Internet information will flow freely by any means it is unrestricted; censorship has an uphill battle in that regard. However, proscribing its use while at the same time using it to censure activists or engage in organized hacking activity should be unacceptable in all instances.


*Google is a registered trademark of Google Inc.

John Paul Galles is the publisher of Greater Charlotte Biz.
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