Yahoo In China: An Unfair Attack

There has been much coverage this week on the Congressional hearing into Yahoo’s disclosure of information to the Chinese Government.

For those who missed it, in short Yahoo was attacked by both sides of politics for complying with a request under Chinese law, in China, to provide information on a political dissident.

The rhetoric was raw; San Mateo Democrat Chairman Tom Lantos called Yahoo moral pygmies, and Rep. Chris Smith, R-N.J., compared Yahoo’s cooperation with the Chinese government to companies that cooperated with Nazi Germany during World War II.

When it comes to China there are very few who will come to the defense of those who deal with the Chinese Government.

Yahoo’s actions might have been in part wrong morally, but legally they have done nothing wrong, and in a global economy this is even more true.

Consider what Yahoo has done. Yahoo China (which I’d note is only 40% owned by Yahoo) received a “subpoena-like document” that requested information from a sovereign nation. Yahoo General Counsel Michael Callahan contended that Yahoo employees in China had little choice but to comply with the government’s demands. “I cannot ask our local employees to resist lawful demands and put their own freedom at risk, even if, in my personal view, the local laws are overbroad,” he said.

For this, Yahoo has been called moral pygmies and been compared to a company trading with Nazi Germany. Lets flip this around: does the committee, or for that matter the American Government believe that companies trading in the United States should ignore local laws if and when they find them morally repugnant? I doubt they would, but this is the crux of what they are suggesting, unless of course they may be so arrogant to believe that US law should be the supreme law of the entire planet. Consider if Baidu set up an American subsidiary, and the FBI subpoenaed them trying to find information on a terrorist. Would they not expect Baidu to comply with the request? If Baidu failed to comply would the Committee and US Government support them in their refusal to comply?

I’m not suggesting that the Chinese political dissident in this case was a terrorist, but understand that some one advocating the overthrow of the Chinese Government is not dissimilar to some one doing the same thing in the United States, even if the two nations would disagree on categorization based on the means advocated.

Foreign and US companies trading in the United States are expected to comply with local laws, even those that many would now consider to be morally and legally indefensible. It was Google who refused to comply with subpoenas from the Justice Department in 2005, where as Yahoo complied. Other actions of the United States Government raise eyebrows world wide: the suspension of Habeas Corpus comes to mind.

China is not like Nazi Germany, even if I don’t agree with some of what the Government does there, and to suggest that it is like Nazi Germany is an insult to the victims of WW2 as well as the Chinese people. Presuming China is Nazi Germany, why is it that the United States is importing approx $280 billion of Chinese goods every year? If this committee is seriously anti-China, and this reflects the will of the Government, why does trade continue? why are Chinese companies allowed to trade in the United States and conversely US companies in China? This can be stopped: look at the current sanctions on Iran for an example.

Ultimately, Yahoo has been made a scapegoat for the flaws of US foreign policy. If the US Government is as serious as the rhetoric of this committee would suggest, they’d stop trade with China tomorrow, but that’s not going to happen, is it. The executive team at Yahoo may be on shaky moral ground, but legally they have done nothing more than be a good corporate citizen, no matter which country they operate in.