Brand Google Burnished, China Bruised, France Buried

Michael Hedges January 18, 2010 Follow on Twitter

Enlightenment comes hard to enterprise management struggling day-to-day. Often it’s economic stress that brings on the ‘ah, yes’ moment, usually when that moment is lost. Horizon can make a difference.

Scores of experts – and others – weighed in last week, analyzing the positioning battle between search giant Google and Chinese authorities. Google spokespeople said the company would no longer bend to the censorship will of the Chinese authorities, even if that meant taking their great big football and going away. Spokespeople for the People’s Republic of China, still a generation away from being PR savvy, didn’t appear to blink.

Brand management experts quote the maxim, attributed to Disney, “Protect the park.” Nothing is more important. It’s possible Google’s senior management is doing just that. Google’s chief lawyer Dave Drummond said the money is “truly immaterial.”

That kind of talk infuriates accountants, stock traders and other financial experts. For them, nothing is more important than increasing shareholder value. In the cryptic language of high finance that means nothing more nor less than bringing in basket loads of cash. Nice talk about brand strength is just fuzzy, non-essential. And they hate that “Don’t Be Evil” slogan.

Google supporters hoisted praise. China critics joined in. Open access to global markets coupled with free speech and human rights are utterly defensible concepts. Google’s right to protect its intellectual property against Chinese (or other) hackers is more than a mere concept.

Investor advocates were aghast.  The Chinese market is too important, they said. Turning down the money is irresponsible, they said, fuzzy stuff be damned.

Some voices of free-market capitalism were resolute. “How do you say ‘don’t be evil’ in Mandarin?” asked Barron’s columnist Alan Abelson (January 15). “You can’t.”

“Besides ‘don't be evil’ and ‘kosher,’ the phrase ‘intellectual property’ seemingly is alien to the Chinese lexicon,” wrote Abelson.

"We have never seen a company take on the Chinese government in such a public and confrontational manner," said Apco Worldwide advisor James McGregor to Reuters (January 17). Recent history shows how companies seeking business opportunities in China – from Yahoo to News Corporation – play by Chinese rules and still lose. 

Of course, China’s brand managers have their own set of problems. In their great scheme of things, Google is a minor irritant. They must deftly manage internal Brand China in parallel with external Brand China. That only works when internal and external customers, if you will, have very little contact with each other.

Here in the 21st century, that’s difficult. Smart as they obviously are, there’s no escaping the lesson of Brand Soviet Union. Once television brought “openness” to screens from Moscow to the hinterlands the future was clear. The internet can be choked and squeezed but not shut-off.

The last great challenge to Brand China came with the 2008 Beijing Olympic Games. Brand China played to a draw while the International Olympic Committee (IOC) – also known as Brand Olympics – escaped with their money intact.  London was chosen as a safer Olympic venue and richer, too, with bankers expected to invest appropriately. But City of London bankers are on the run, and next Brand Olympics will try Rio.

The so-called “Green Dam” software Chinese authorities said would be installed in each and every computer to prevent citizens from accessing “pornography” or anything else sensitive to censors eyes is still in the plans. But if Chinese hackers are good enough to break into Gmail, it will only last a few weeks.

"There is no sense blowing things out of proportion and turning a business issue into a political or diplomatic dispute," said official Chinese news agency Xinhua (January 17). Internet usage rose in China, said the article, and even government controlled search engine Baidu “suffered” a hacker attack.

But bringing Chinese authorities to heal, in the Western view, is extremely unlikely. They, too, have a horizon, far deeper than a quarterly profit and loss statement.

The folks from Mountain View, Google’s California home, are closer to negotiating a truce with Europeans, particularly the French. After a government sponsored report suggested, among other things, a “Google Tax” to fund “culture”, French Culture Minister Frédéric Mitterand said he’d be willing to negotiate directly with Google leaders so long as they promise to stop negotiating directly with French libraries. Google’s plan to digitize books – many being ‘orphans’ with no traceable copyright holder – is light-years ahead of the French publicly funded Gallica program.

A proposed levy on internet service providers (ISPs) to augment State aid to French public broadcasting is winding its way through the European Commission’s Competition directorate, DG Competition. In 2008 French President Nicolas Sarkozy announced that advertising on public television would end, commercial TV the expected beneficiary. That didn’t work out so well. The estimated €500 million annual ad spending seems to have drifted to other, largely new media.

Search engine advertising in France is estimated, according to the report, at €800 million. The proposed tax would raise between €20 and €50 million, small change considering the crowd that would be lined up for a pay-day. Now that Johnny Halliday has returned to health he, logically, would be first in line.

Support for arts and culture is important. Subsidies for the music business – or the advertising business – are more dubious. From the French culture supporters, it’s another example of punishing the successful and, with Google again a target,

European governments have largely given up grand designs for rivals to Google, which has a larger market share outside the US than inside. Even EC Info Society and Media Commissioner Viviane Reding, who once supported the idea of creating a European – and more importantly non-American - search giant, has come out favoring Google’s plan for digitizing books. Sometimes it’s better not to reinvent the wheel.

President Sarkozy recently asked competition authorities to determine whether or not Google had a “dominant market position” in internet advertising, presumably to attract DG Competition’s attention. While the French government can do whatever it – or President Sarkozy – likes, the European Commission takes a neutral position on big, market dominant companies unless they abuse that position. Market distortion more often comes from State aid to declining industry sectors.

What will attract the European Commission’s attention, particularly with Commissioner Viviane Reding taking over the DG Justice portfolio, is Mr. Sarkozy’s beloved Hadopi Law, designed to toss unrepentant downloaders into internet limbo. The Hadopi Law gives the French government powers only the Chinese could love.

A Google France spokesperson said he hoped the French government would find a more constructive solution. Arguably, Google’s ad revenue in France is significant but probably not life-threatening. Unintended consequences often escape politicians; imagine the outrage if Google simply shut-off France.

That would not benefit Brand France. Et Voila!

See also in ftm Knowledge

Google Is...

Google's leaders say their goal is to change the world. And they have. Far more than a search engine, Google has impact over every media sector and beyond, from consumer behavior to broadcasting and advertising to newspapers. That impact is detailed in this ftm Knowledge file. 63 pages PDF (February 2010)

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