U.S. internet companies like Yahoo and Google may have gone to China hoping to find a gold mine. But it's also turned out to be a mine field of controversy over censorship and political rights.
In the latest case of a major U.S. brand landing in hot water, a rights group has revealed that Yahoo's China operation provided a Beijing court with information used to jail a political dissident.
Human Rights in China, a New York-based group, said Thursday that Wang Xiaoning was sentenced to 10 years in prison in Sept 2003 for "incitement to subvert state power" after Yahoo provided authorities with his email address. Wang allegedly used a Yahoo service to publish articles advocating democratic reform and a multi-party system.
Yahoo's China division was acquired by mainland e-commerce firm Alibaba in October 2005, but continues to operate under the Yahoo brand.
"Among the evidence against Wang cited in the judgment is information provided by Yahoo Holdings (Hong Kong) Ltd. stating that Wang's 'aaabbbccc' Yahoo! Group was set up using the mainland China-based email address email@example.com," Human Rights in China said in a press release.
Yahoo is no stranger to controversy in China. This is the fourth time the company has been accused of helping authorities jail its users for expressing controversial political views. Nor is it alone in its troubles. Google was stung by criticism in January after it bowed to Beijing's demands that politically sensitive results be censored out of searches on its Chinese site. And Microsoft was accused of shutting down a political blog last December on pressure from authorities.
But Yahoo has been the subject of the most frequent, and most serious, accusations. On April 19, rights group Reporters Without Borders released a transcript of a Nov 2003 verdict in which a Beijing court sentenced activist Jiang Lijun to four years in prison for political subversion after Yahoo provided prosecutors with an email saved on his account. In February the same group disclosed that Yahoo provided information that helped jail government critic Li Zhi in 2003. And in September 2005 it found that Yahoo turned over information used to convict journalist Shi Tao of "leaking state secrets".
When contacted by MarketWatch, Yahoo denied the company was involved in any wrongdoing. "We obey local laws wherever we operate," said Pauline Wong, a Yahoo spokesperson in Hong Kong. She noted that Yahoo's China operations are now run by Alibaba independently of the U.S. and China business. However, all four cases took place before the acquisition.
Alibaba also denies it is accountable for turning over information of dissidents.
"That was prior to out acquisition of Yahoo China so we're not in a position to comment on the details of what may or may not have happened," said Alibaba spokesman Porter Erisman.
"If we're approached by the government, we make sure the request complies with the law. If it's a court order, then we follow the law," he said.
Erisman pointed out that Alibaba frequently cooperates with the government in investigations of e-commerce fraud, but added that the company "hadn't received any requests" for information on government critics.
Reporters Without Borders believes Internet companies won't stand up to Beijing until they have a financial incentive to do so.
"The only way to really hit Yahoo and make them change is to get the support of the financial markets," said Julien Pain, who heads the Internet freedom desk at the group's Paris headquarters. "We hope people will stop investing in Yahoo because they fear that in the long run it could damage their financial interests."
The group is trying to convince investment funds to avoid companies involved in violations of online political freedoms. So far, 32 funds controlling a total of $24 billion have signed onto the initiative.
But big Internet firms don't have much to fear from this type of action, according to analysts.
"Investors are not really worried about these things," said a China internet analyst at a major U.S. investment bank in Hong Kong who asked not to be named. "The companies are well aware of the issues."
"I think that if they don't comply with the government, they'll be hurt even more," he added. "It's true that certain socially conscious funds may not invest in Google or Yahoo now. But mostly there will be no financial impact. And the majority of the users don't care about this. It doesn't impact page views or eyeballs."
In other words, don't hold your breath for internet companies -- Chinese or foreign -- to start standing up to Beijing. In the meantime, Reporters Without Borders' Julien Pain has this tip for Chinese who choose to criticize their government online: "Use Gmail, Hotmail or another email server that's located outside China."
Ilya Garger is a reporter for MarketWatch based in Hong Kong.
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