Asked earlier in the day by Reuters if Microsoft (MSFT) had plans to pull its business out of China, Ballmer answered, “No….I don’t understand how that helps anything. I don’t understand how that helps us and I don’t understand how that helps China.”

Of course, Microsoft has quite a bit more at stake in China than Google (GOOG)–all those pirated copies of Windows, for example.

“We actually did an evil scale and decided not to serve at all was worse evil.”

– Google CEO Eric Schmidt on the company’s decision to offer a censored version of its search services in China, Jan. 30, 2006

Evidently Google is taking its informal “don’t be evil motto” a bit more seriously these days. The search sovereign threatened late Tuesday to pull out of its operations in China after detecting a “highly sophisticated and targeted attack on [its] corporate infrastructure originating from China.” Targeted in the assault: The Gmail accounts of Chinese human rights activists.

“These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China,” Google’s chief legal officer, David Drummond, wrote in a post to the company blog.

“We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all,” Drummond added. “We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.”

Shut down Google.cn, and potentially our offices in China? Hmm. What’s the Chinese word for “Bing”?

Drummond didn’t directly accuse the Chinese government of orchestrating the incursion, but he certainly seems to be implying there’s a link. And you’d think one would have to exist for Google (GOOG) to threaten pull out of a country that has more Internet users than the total population of the U.S.–even if its efforts to gain market share there haven’t met with the same success as in the rest of the world.

It’s tough to stake your claim in a country where the government favors the local rival and blocks your traffic if you fail to censor. Baidu’s share of the Chinese search market in the third quarter was 77 percent, up from 75.6 percent. Google’s share for the same period? Just 17 percent, down from 19 percent.

So, to some extent, Google can probably threaten to leave China because the country accounts for such a small portion of its revenue. On the other hand, China leads the world in Internet users and presents a hell of a market opportunity–large enough that Google willingly provided a censored version of its services as a prerequisite for doing business there. Or, rather, it used to.

At $395.50 Baidu shares are up more than two percent after hours on the news. Google shares are down 1.6 percent at $581.01.

Drummond’s post in full, below, as well as another on the safety of data on Google by Dave Girouard, President of Google Enterprise:

A new approach to China

Like many other well-known organizations, we face cyber attacks of varying degrees on a regular basis. In mid-December, we detected a highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property from Google. However, it soon became clear that what at first appeared to be solely a security incident–albeit a significant one–was something quite different.

First, this attack was not just on Google. As part of our investigation we have discovered that at least twenty other large companies from a wide range of businesses–including the Internet, finance, technology, media and chemical sectors–have been similarly targeted. We are currently in the process of notifying those companies, and we are also working with the relevant U.S. authorities.

Second, we have evidence to suggest that a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists. Based on our investigation to date we believe their attack did not achieve that objective. Only two Gmail accounts appear to have been accessed, and that activity was limited to account information (such as the date the account was created) and subject line, rather than the content of emails themselves.

Third, as part of this investigation but independent of the attack on Google, we have discovered that the accounts of dozens of U.S.-, China- and Europe-based Gmail users who are advocates of human rights in China appear to have been routinely accessed by third parties. These accounts have not been accessed through any security breach at Google, but most likely via phishing scams or malware placed on the users’ computers.

We have already used information gained from this attack to make infrastructure and architectural improvements that enhance security for Google and for our users. In terms of individual users, we would advise people to deploy reputable anti-virus and anti-spyware programs on their computers, to install patches for their operating systems and to update their web browsers. Always be cautious when clicking on links appearing in instant messages and emails, or when asked to share personal information like passwords online. You can read more here about our cyber-security recommendations.

We have taken the unusual step of sharing information about these attacks with a broad audience not just because of the security and human rights implications of what we have unearthed, but also because this information goes to the heart of a much bigger global debate about freedom of speech. In the last two decades, China’s economic reform programs and its citizens’ entrepreneurial flair have lifted hundreds of millions of Chinese people out of poverty. Indeed, this great nation is at the heart of much economic progress and development in the world today.

We launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results. At the time we made clear that “we will carefully monitor conditions in China, including new laws and other restrictions on our services. If we determine that we are unable to achieve the objectives outlined we will not hesitate to reconsider our approach to China.”

These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

The decision to review our business operations in China has been incredibly hard, and we know that it will have potentially far-reaching consequences. We want to make clear that this move was driven by our executives in the United States, without the knowledge or involvement of our employees in China who have worked incredibly hard to make Google.cn the success it is today. We are committed to working responsibly to resolve the very difficult issues raised.

Keeping your data safe

Many corporations and consumers regularly come under cyber attack, and Google is no exception. We recently detected a cyber attack targeting our infrastructure and that of at least 20 other publicly listed companies. This incident was particularly notable for its high degree of sophistication. We believe Google Apps and related customer data were not affected by this incident. Please read more about our public response on the Official Google Blog.

This attack may understandably raise some questions, so we wanted to take this opportunity to share some additional information and assure you that Google is introducing additional security measures to help ensure the safety of your data.

This was not an assault on cloud computing. It was an attack on the technology infrastructure of major corporations in sectors as diverse as finance, technology, media, and chemical. The route the attackers used was malicious software used to infect personal computers. Any computer connected to the Internet can fall victim to such attacks. While some intellectual property on our corporate network was compromised, we believe our customer cloud-based data remains secure.

While any company can be subject to such an attack, those who use our cloud services benefit from our data security capabilities. At Google, we invest massive amounts of time and money in security. Nothing is more important to us. Our response to this attack shows that we are dedicated to protecting the businesses and users who have entrusted us with their sensitive email and document information. We are telling you this because we are committed to transparency, accountability, and maintaining your trust.

Malaysia, Thailand and Vietnam lack the kind of technology and financial resources that China and some other large countries use to police the Internet. The Southeast Asian nations are using other methods–also seen in China–to tamp down criticism, including arresting some bloggers and individuals posting contentious views online.

That is distressing free-speech advocates who had hoped that Southeast Asia–until recently a region where Internet use was relatively unfettered–would become a model of open debate in the developing world as its economies modernize.

Read the rest of this post on the original site

Last week, the U.S. senator sent a letter to Google CEO Eric Schmidt decrying YouTube as a clearinghouse for terrorist propaganda videos and calling upon Google to remove them. “… Islamist terrorist organizations use YouTube to disseminate their propaganda, enlist followers and provide weapons training–activities that are all essential to terrorist activity,” Lieberman, Chairman of the Homeland Security and Governmental Affairs Committee, wrote. “According to testimony received by our committee, the online content produced by al-Qaeda and other Islamist terrorist organizations can play a significant role in the process of radicalization, the end point of which is the planning and execution of a terrorist attack. YouTube also, unwittingly, permits Islamist terrorist groups to maintain an active, pervasive and amplified voice, despite military setbacks or successful operations by the law enforcement and intelligence communities.”

Lieberman would like Google (GOOG) to smoke these YouTube terrorists out of their holes. To that end, he provided Schmidt with a list of offensive videos. Some featured gratuitous violence or hate speech and were removed. But many more featured legal non-violent, non-hate speech. These YouTube refused to remove because they don’t violate its Community Guidelines.

“While we respect and understand [Lieberman's] views, YouTube encourages free speech and defends everyone’s right to express unpopular points of view,” YouTube said in a post to its company blog. “We believe that YouTube is a richer and more relevant platform for users precisely because it hosts a diverse range of views, and rather than stifle debate we allow our users to view all acceptable content and make up their own minds. Of course, users are always free to express their disagreement with a particular video on the site, by leaving comments or their own response video. That debate is healthy.”

Last week, the U.S. senator sent a letter to Google CEO Eric Schmidt decrying YouTube as a clearinghouse for terrorist propaganda videos and calling upon Google to remove them. “… Islamist terrorist organizations use YouTube to disseminate their propaganda, enlist followers and provide weapons training–activities that are all essential to terrorist activity,” Lieberman, Chairman of the Homeland Security and Governmental Affairs Committee, wrote. “According to testimony received by our committee, the online content produced by al-Qaeda and other Islamist terrorist organizations can play a significant role in the process of radicalization, the end point of which is the planning and execution of a terrorist attack. YouTube also, unwittingly, permits Islamist terrorist groups to maintain an active, pervasive and amplified voice, despite military setbacks or successful operations by the law enforcement and intelligence communities.”

Lieberman would like Google (GOOG) to smoke these YouTube terrorists out of their holes. To that end, he provided Schmidt with a list of offensive videos. Some featured gratuitous violence or hate speech and were removed. But many more featured legal non-violent, non-hate speech. These YouTube refused to remove because they don’t violate its Community Guidelines.

“While we respect and understand [Lieberman's] views, YouTube encourages free speech and defends everyone’s right to express unpopular points of view,” YouTube said in a post to its company blog. “We believe that YouTube is a richer and more relevant platform for users precisely because it hosts a diverse range of views, and rather than stifle debate we allow our users to view all acceptable content and make up their own minds. Of course, users are always free to express their disagreement with a particular video on the site, by leaving comments or their own response video. That debate is healthy.”

Second, the [Temporary Restraining Order] against Wikileaks violates the First Amendment because judicial orders enjoining reporting on or dissemination of documents constitute prior restraints. Under Pentagon Papers, the First Amendment prohibits prior restraints in nearly every circumstance, even where national security may be at risk and the press’s source is alleged to have obtained the documents unlawfully. The privacy and commercial interests Plaintiffs cite are simply not on the same order of magnitude required to justify a prior restraint, and the grab bag of federal, state and foreign laws they cite do not authorize prior restraints.”

–Excerpt from amicus brief in Bank Julius Baer v. Wikileaks

The U.S. District Court judge who issued the injunction ordering Wikileaks.org disabled has, after a bit of thought, come to view it as privacy and civil-rights groups had: overly broad and violative of the whistleblower site’s First Amendment rights.

Responding to a barrage of motions filed by a coalition of media and public-interest organizations Friday, Judge Jeffrey White reversed the permanent injunction he issued two weeks ago shuttering Wikileaks. In his ruling, White–while not admitting that his original order may well have violated prior restraint –acknowledged it was complicated by free-speech issues. “There are serious questions about prior restraint, possible violations of the First Amendment, which the court can make no definitive findings about at this point,” he wrote. “It is clear that in all but the most exceptional circumstances, an injunction restricting speech pending final resolution of the constitutional concerns is impermissible.”

Clear, too, that attempting to restrict free speech on the Internet is a near impossibility these days. “There are serious concerns that the court has, and serious questions raised, about the effectiveness of any order that this court might issue given the current state of affairs,” White continued. “Maybe that’s just the reality of the world that we live in. When this genie gets out of the bottle, that’s it.”

Or as Internet pioneer John Gilmore once put it, “The Net interprets censorship as damage and routes around it.“

PREVIOUSLY:

Like Trying to Take Pee Out of a Swimming Pool …

Second, the [Temporary Restraining Order] against Wikileaks violates the First Amendment because judicial orders enjoining reporting on or dissemination of documents constitute prior restraints. Under Pentagon Papers, the First Amendment prohibits prior restraints in nearly every circumstance, even where national security may be at risk and the press’s source is alleged to have obtained the documents unlawfully. The privacy and commercial interests Plaintiffs cite are simply not on the same order of magnitude required to justify a prior restraint, and the grab bag of federal, state and foreign laws they cite do not authorize prior restraints.”

–Excerpt from amicus brief in Bank Julius Baer v. Wikileaks

The U.S. District Court judge who issued the injunction ordering Wikileaks.org disabled has, after a bit of thought, come to view it as privacy and civil-rights groups had: overly broad and violative of the whistleblower site’s First Amendment rights.

Responding to a barrage of motions filed by a coalition of media and public-interest organizations Friday, Judge Jeffrey White reversed the permanent injunction he issued two weeks ago shuttering Wikileaks. In his ruling, White–while not admitting that his original order may well have violated prior restraint –acknowledged it was complicated by free-speech issues. “There are serious questions about prior restraint, possible violations of the First Amendment, which the court can make no definitive findings about at this point,” he wrote. “It is clear that in all but the most exceptional circumstances, an injunction restricting speech pending final resolution of the constitutional concerns is impermissible.”

Clear, too, that attempting to restrict free speech on the Internet is a near impossibility these days. “There are serious concerns that the court has, and serious questions raised, about the effectiveness of any order that this court might issue given the current state of affairs,” White continued. “Maybe that’s just the reality of the world that we live in. When this genie gets out of the bottle, that’s it.”

Or as Internet pioneer John Gilmore once put it, “The Net interprets censorship as damage and routes around it.“

PREVIOUSLY:

Like Trying to Take Pee Out of a Swimming Pool …