Is Jerry Yang correct that the company had “no choice”? Assuming that Yahoo was legally required to do what it did, does that justify its conduct morally

Is Jerry Yang correct that the company had “no choice”? Assuming that Yahoo was legally required to do what it did, does that justify its conduct morally

CHAPTER 5 Corporations 249

agreed to apply the Chinese censors’ blacklist to its new Chinese search engine. And a con­ gressional investigative committee* has accused Google, Yahoo, and Cisca of helping, to main­ tain in China “the most sophisticated Internet control system in the World.” In their defense, the companies ask what good it would do for them to pull out of the Chinese market. They contend that if they resist the Chinese govern­ ment and their operations are closed down or if they choose to leave the country for moral reasons, they would only deny to ordinary Chi­ nese whatever fresh air the Internet, even fil­ tered and censored, can provide in a closed society. It’s more important for them to stay there, play ball with the government, and do what they can to push for Internet freedom. As Yahoo chairman Terry S. Semel puts it: “Part of our role in any form of media is to get whatever we can into those countries and to show and to enable people, slowly, to see the Western way and what our culture is like, and to learn.” But critics wonder what these companies, when they are compficit in political repression, are teaching the Chinese about American values.

Some tech companies are turning to the U.S. government for help. Bill Gates, for example, thinks that legislation making it illegal for American companies to assist in the violation of human rights overseas would help. A carefully crafted American anti-repression law would give Yahoo an answer the next time Chinese offi­ cials demand evidence against cyber-dissidents. We want to obey your laws, Yahoo officials could say, but our hands are tied; we can’t break American law. The assumption is that China would have no choice but to accept this because it does not want to forgo the advantages of hav­ ing U.S. tech companies operating there.

Still, this doesn’t answer the underlying moral questions. At a November 2007 congressional hearing, however, a number of lawmakers made their own moral views perfectly clear. They lambasted Yahoo, describing the company as “spineless and irresponsible” and “moral pyg­ mies. ” In response, Jerry Yang apologized to the mother of Shi Tao, who attended the hearing. Still, Yahoo has its defenders. Robert Reich,

for instance, argues that “Yahoo is not a moral entity” and “its executives have only one responsibility … to make money for their shareholders and, along the way, satisfy their consumers.” And in this case, he thinks, the key “consumer” is the Chinese government. –

Discussion Questions 1. What moral issues does this controversy

raise? What obligations should Yahoo have weighed in this situation? Was the company a “traitor” to its customer, as Liu Xiabo says?

2. In your view, was Yahoo right or wrong to assist Chinese authorities? What would you have done if you were in charge of Yahoo?

3. Is Jerry Yang correct that the company had “no choice”? Assuming that Yahoo was legally required to do what it did, does that justify its conduct morally?

4. Assess the actions of Yahoo and of Micro­ soft, Google, and Cisco from the point of view of both the narrow and the broader views of corporate responsibility. What view of corporate responsibility do you think these companies hold? Do you think they see themselves as acting in a morally legiti­ mate and socially responsible way?

5. In light of this case, do you think it makes sense to talk of a corporation like Yahoo as a moral agent, or is it only the people in it who can be properly described as having moral responsibility?

6. Would American companies do more good by refusing to cooperate with Chinese authorities (and risk not being able to do business in China) or by cooperating and working gradually to spread Internet free­ dom? In general, under what circumstances is it permissible for a company to operate in a repressive country or do business with a dictatorial regime?

7. Assess the pros and cons of a law forbid­ ding American high-tech companies from assisting repressive foreign governments.



248 PART TWO American Business and Its Basis

G A S E 5 . 1

Yahoo in China Shi Tao is a thirty-seven-year-old Chinese journalist and democracy advocate. Arrested for leaking state secrets in 2005, he was sen­ tenced to ten years in prison. His crime? Mr. Shi had disclosed that the Communist Party’s propaganda department had ordered tight controls for handling the anniversary of the infamous June 4, 1989, crackdown on dem­ onstrators in Beijing’s Tiananmen Square. A sad story, for sure, but it’s an all too familiar one, given China’s notoriously poor record on human rights. What makes Mr. Shi’s case stand out, however, is the fact that he was arrested and convicted only because the American company Yahoo revealed his iden­ tity to Chinese authorities.^^

You see, Mr. Shi had posted his information anonymously on a Chinese-language website called Democracy Forum, which is based in New York. Chinese journalists say that Shi’s information, which revealed only routine ins­ tructions on how officials were to dampen possible protests, was already widely circu­ lated. Still, the Chinese government’s elite State Security Bureau wanted to put its hands on the culprit behind the anonymous posting. And for that it needed Yahoo’s help in track­ ing down the Internet address from which had accessed his e-mail. This turned out to be a computer in Mr. Shi’s workplace. Contemporary Business News in Changsha, China.

A few months after Shi’s conviction, the watchdog group Reporters Without Borders revealed the story of Yahoo’s involvement and embroiled the company in a squall of contro-

• versy. After initially declining to comment on the allegation, Yahoo eventually admitted that it had helped Chinese authorities catch Mr. Shi and that it had supplied information on other customers as well. But the company claimed that it had no choice, that the information was provided as part of a “legal process,” and that the company is obliged to obey the laws of any country in which it operates. Yahoo cofoundeq Jerry Yang, said: “I do not like the outcome

of what happens with these things . . . but we have to comply with the law. That’s what you need to do in business.”

Some critics immediately spied a technical flaw in that argument: The information on Mr. Shi was provided by Yahoo’s subsidiary in Hong Kong, which has an independent judiciary and a legal process separate from that of mainland China. Hong Kong legisla­ tion does not spell out what e-mail service pro­ viders must do when presented with a court order by mainland authorities. Commenta­ tors pointed out, however, that even if Yahoo was legally obliged to reveal the informa­ tion, there was a deeper question of principle involved. As the Financial Times put it in an editorial: “As a general principle, companies choosing to operate in a country should be prepared to obey its laws. When those laws are so reprehensible that conforming to them would be unethical, they should be ready to withdraw from that market.” Congres­ sional representative Christopher H. Smith, a New Jersey Republican and chair of a House subcommittee on human rights, was even blunter: “This is about accommodating a dictatorship. It’s outrageous to be com- plicit in cracking down on dissenters.” And in an open letter to Jerry Yang, the Chinese dissident Liu Xiabo, who has himself suf­ fered censorship, imprisonment, and other indignities, wrote: “I must tell you that my indignation at and contempt for you and your company are not a bit less than my indignation and contempt for the Commu­ nist regime. . . . Profit makes you dull in morality. Did it ever occur to you that it is a shame for you to be considered a Jraitor to yoiir customer Shi Tao?”

Whether profit is dulling their morahty is an issue that must be confronted not just by Yahoo but also by other. Internet-related com­ panies doing business’ in China. Microsoft, for example, recently shut down the MSN Spaces website of a popular Beijing blogger whose postings had run afoul of censors. Google has

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