McCain Embarrassed by Yahoo’s Actions in China; Also Calls Google To The Mat

Next up in our series of interviews with 2008 presidential candidates: Senator John McCain. The recording is below and is also available at TalkCrunch.

McCain’s campaign made no stipulations on the questions I could ask (and they didn’t even hold this against us). He spoke frankly and clearly outlined his position on a number of key technology issues: China, H-1B Visas, Net Neutrality, Internet Taxes, Identity Theft and other topics. The conversation lasted for just over 22 minutes. The full transcript of the podcast is below.

McCain’s position on a number of issues was surprising. For example, he lambasted Yahoo over their recent Congressional testimony (their actions resulted in imprisonment of a Chinese journalist), saying:

Well, obviously, it was an unacceptable act. And then apparently they tried to cover it up some time ago. Yahoo is a great, great corporation. They have contributed so much. And it’s embarrassing, and it’s frustrating…I think they should know better.

McCain also criticizes Google for “making a [search] deal with China.”

I’ve highlighted other key areas of the transcript below. In general, he’s in favor of a wait and see approach to net neutrality, and says that while he is in favor of H-1B visas, the issue is lumped together with border security issues in the American population and has become collateral damage.

On a lighter note, you’ll hear an interesting discussion of the fate of the people who once stole McCain’s identity, and hear what’s currently on his iPod. And just for the record, McCain denies ever having downloaded any music illegally.

At the end of the interview I mention a video that was forwarded to me that talks about McCain’s experience as a POW in Vietnam. You can see the video here. Also, at one point I mention that I’d heard that there are 30,000 Internet police in China. See this article for more on that.

Hopefully we’ll have Senator Edwards written Q&A published later this week. You can hear our podcast with Mitt Romney here.

Thank you to Senator McCain and his staff for taking the time to talk with me. And thanks again to BitGravity, a content delivery network that specializes in rich media, for hosting the file for us once again. Thanks to them, the file should stream quickly and smoothly.


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Note: some text is bolded to highlight key statements.

Michael Arrington: Hello this is Mike Arrington from TechCrunch. Today I have a few minutes to talk with presidential candidate John McCain about his position on a number of technology-related issues. Senator McCain, thank you for your time, and welcome to TechCrunch.

Senator John McCain: I’m ready my friend, and thank you for having me on.

MA: Let’s start off with a broad question on technology leadership. The US technology industry, of course, has been a world leader, if not the world leader over the decades, and we’ve grown quite a bit through international markets. As president, what would you do to advance these efforts?

JM: One thing I would do is make sure we have free trade agreements, so that every market in the world is open to our products and our innovation, in which we lead the world. Obviously, education reform has to be a part of any agenda so we have a trained and capable workforce. I continue to fight against internet taxes, and I’m glad that we just expanded that ban for seven years.

MA: Do you think the ban should have been permanent?

JM: I have always supported, and, in fact, have taken the lead on making the ban permanent. I’ll tell you why they don’t want to do it – it’s because they want to keep coming back to you for contributions, and tell you that we need to make it permanent. It’s the same way with the R&D tax credits – one of the great shakedowns in American history. But, at least getting seven years was better than the last time when we only got four years. Look, globalization is the answer. It’s not something to be feared, it’s something to be exploited. Ninety-five percent of the world’s customers are outside of the United States of America. So getting access to those markets through free trade agreements, and expanded trade, and adequate measures for full protection of intellectual property – I understand that China violates people’s intellectual property rights all the time, and I’ll take them to the WTO. I’ll put pressure on them to stop it. But, I’ll tell you – a developed Chinese economy, where they want their intellectual property rights respected, is probably one of the best ways to encourage them to respect intellectual property rights. You’ll never find anyone who comes on this blog that is more of a free-trader than I am, and I think the lessons of history are that if we resort to protectionism, as we did prior to World War II, and other times in America’s history, we pay a very hefty price for it. And I’m worried, frankly, about the rise of protectionism in America.

MA: You mentioned China a few times there, and the next question actually is specifically about China. Silicon Valley, in particular – the main topic of conversation this week is what happened with Yahoo-founder Jerry Yang, and also their General Counsel Mike Callahan, testifying before Congress, I think a subcommittee, earlier this week. I’m sure you’re completely up-to-speed on this issue. In 2004, they handed over information about a journalist to the Chinese internet police, which, by the way, I’ve heard they’re like 30,000 internet police in China. I don’t have a citation for that, but it sounds crazy. The journalist was sentenced to a 10-year prison sentence. A couple of representatives compared Yahoo – I think Representative Chris Smith compared Yahoo to Nazi collaborators in World War II. Tom Lantos, who I think is our representative here in Silicon Valley, said morally they are pygmies. What’s your opinion on this issue? Specifically with what Yahoo did, but, more generally, just with the idea of American corporations working with China in ways that perpetuate human rights violations.

JM: Well, obviously, it was an unacceptable act. And then apparently they tried to cover it up some time ago. Yahoo is a great, great corporation. They have contributed so much. And it’s embarrassing, and it’s frustrating. But could I also say that part of the problem lies with China, in that they have the kind of a government that remains oppressive, repressive. They select their leaders at a seaside resort in secret. And it argues for us pressing, not only that Yahoo never do such a thing again, but that we have more human rights, more democracy, more progress in China itself. By the way, as you know, Google made a deal with China, where if you google “tiananmen square” in China, you’ll see a very peaceful scene, but if you google it outside of China, you see the young Chinese man standing in front of a tank. So, Yahoo isn’t the only one that’s guilty here. My message to people in Silicon Valley, in high-tech, and people who do business in China, is you’d better not accede to assisting that government in maintaining an oppressive and repressive society. It doesn’t pay dividends in the long run. It harms the image of American corporations. And, very frankly, it confirms the suspicions of some Americans that, for the sake of profit, major corporations in America will do most anything. So, look, I regret it. I don’t think it was Nazi Germany and a lot of the overheated rhetoric that we have a tendency to hear at Congressional hearings. But, I do think it should be a shot across our bow, in recognizing that we’ve got to stand for what America is all about. And, many years ago, when we passed a law that said we couldn’t bribe foreign countries in return for doing business, everybody said “Oh, this will make it an uneven playing field. We’ve got to bribe as others do.” But, the fact is, we didn’t have to because we provide the best and most advanced technology in the world.

MA: So, I’m not 100% sure on your position. You mentioned that Google has also done some things, and so has Microsoft. Skype, which is owned by eBay, reportedly helps the Chinese government monitor and send through text messages. Again, these are all allegations that have been made. I don’t have any evidence. Cisco supposedly sells hardware to the Chinese government that helps them monitor the population. Do you think that US corporations should be banned from doing business with China in a way that perpetuates human rights abuses, or do you think that they should just know better on their own?

JM: Well, one, I think they should know better. Two, the exposure that they will get sooner or later if they are doing things that are in violation of the fundamentals we believe in, then action can be taken one way or another. But, as you well know, it’s not as simple as some would describe. For example, so-called dual-use technology. There are many products that come out of Silicon Valley that can be used for the greatest good, and can be used for the worst way – invasion of privacy, checking up on people, surveillance, and all that. I’d love for it to be black and white, but some of it is gray. But, at the same time, we have to do everything in our power to maintain the integrity of America and our commitment that all of us are created equal and endowed by their creator with certain inalienable rights. That’s all of us, including people who happen to be citizens of China. I’m not prepared to quote punish these corporations yet, but I think they ought to know exactly what public reaction will be if they engage in those activities that cause abuses of human rights.

MA: I think you carry so much moral authority on this issue, in particular, that it’s good to see that you have a measured response.

JM: Thank you.

MA: And also, Yahoo’s stock price dropped about seven percent the day after those Congressional hearings, suggesting that society isn’t going to put up with that, and it will punish companies who do business with China in this way.

JM: And the other thing that happens whenever Congress passes a law – well, there’s intended consequences and unintended consequences. A good example is Sarbanes-Oxley.

MA: Oh, yeah. That’s one that we particularly don’t like in Silicon Valley.

JM: [laughs] I don’t blame them.

MA: Let’s talk about net neutrality. It’s probably the most important issue in Silicon Valley, and yet it rarely makes its way to Washington-level consciousness. Barack Obama recently came out saying that he would promise to make it a priority if he became president. What is your position on the net neutrality issue?

JM: In general, I think we need to move to a different model for thinking about the FCC. I think it should focus on policing clearly anti-competitive behavior and consumer predators. But, frankly, until some foul has been committed, I don’t think it should be interfering in the market, and probably shouldn’t be trying to micromanage American business and innovation. This is a very tough issue, because if you look at the extremes of it, then, obviously it has significant consequences – you can’t restrain the market, you can’t say that people can’t make a living or a profit off of the Internet. That obviously is not the intent of why the Internet was invented, and the reason why it has flourished. So what I would like to do is keep an eye on what goes on with the Internet, whether people are taking unfair advantage of it, whether people are being ripped off, and how this thing progresses. The great thing about the Internet is that it has enjoyed, to a large degree, immunity from federal interference and federal regulation. So, I have a tendency to say, look, let’s see how this thing all turns out, rather than anticipate something that, a problem that so far has not arisen in any significant way. I know that sounds a little bit equivocal, but it has a lot to do with my reluctance to use, my inclination to use government intervention only when it’s absolutely necessary.

MA: I think that the pro-market approach is something that I personally agree with, but in the case of Internet broadband access, most consumers and businesses have very few choices, sometimes one, sometimes two. With the cartel or monopoly approach, even if abuse isn’t occurring now, you can see it down the road as almost inevitable. That doesn’t change your position at all, sort of taking a proactive approach to forcing companies…?

JM: Well, what we really need to do is see what’s going on now, what the leading experts in America think, some, at least from academia and others, and have hearings about what exactly the dimensions of the problem are, and what the challenges are. Because, very frankly, it’s one of the few issues where I can see arguments on both sides depending on which direction it actually goes. If there’s clearly anti-competitive behavior, and consumer predators who are lurking around, then, you know, I think that’s pretty obvious. But, I think, with all due respect to those who are concerned, we have not seen very much of that yet.

MA: Well, here’s an area where we have seen some real problems – identity theft, and, in particular, with regard to the Internet as a place where people gather the information, and the government has to some extent taken a hands-off approach. There are plenty of criminal laws around this, but, for some reason, the problem just keeps growing. I think it’s $60 billion a year just in losses for those affected (again, just an estimate, no citation for that), $6,400 per victim. Can the government do anything else to protect our privacy online, or is privacy just a figment of our imagination at this point?

JM: I think identity theft is a real problem, invasion of privacy, there are so many aspects of it. With increasing technology, I think one of our problems is staying up with advances in technology which make this more and more possible, and I’ve had personal experience. Cindy and I had our identities stolen. The legislation –

MA: How long did it take you to clear it up?

JM: Not too long. It was kind of a rudimentary deal. The perpetrators of it are now guests of the state of Arizona. Anyway, I’ve taken the lead on legislation that would ensure that companies have in place general data security policies. Every company that has to have security policies to deal with the ID threat, and would provide notice to consumers when data breaches happen. I think the best solution is continued consumer education and business innovation to try come up with further safeguards. By the way, when that happened to me, as far as my wife’s and my identity theft is concerned, I was reminded of this story of a guy whose credit card was stolen but decided not to report it because the person who stole it was spending less money than his wife was. I had a similar motivation at the time.

MA: [laughs] That’s pretty funny.

JM: Good! Thanks.

MA: H-1B visas. We like them here in Silicon Valley. It brings the best and brightest here. And, the government for some reason brought back the quota to 65,000 a year the last two years, and I think there’s demand for at least 150,000 or 200,000 a year. What are your feelings on H-1Bs?

JM: I’ve always supported H-1B visas, and it’s been a source of much needed talent because of our lack in America of students in math, science, and engineering, but, I got to tell you, I’ve got to give you some straight talk, my friend. We failed on overall immigration reform. We failed. We failed, and expansion of H-1Bs was part of it. All of it failed because Americans have no trust in their government. Look, here’s the message I got from our failure: Americans want the borders secured. They want the borders secured first. I got the lesson. So, we’ve got to restore the trust in the government, and we’ve got to secure the borders. I will continue to support H-1B visas, but, I’m telling you, the American people’s priority is, either rightly or wrongly, and we live in a democracy, is that we secure the borders first.

MA: But isn’t the H-1B program almost collateral damage in the drive to secure the borders? We’re talking about people with college or higher-level degree, educated, very entrepreneurial, often. They come here and work for I think seven years. That’s a different issue than illegal aliens streaming across the border. It’s just a completely separate issue.

JM: Well, except that don’t you think that the agricultural sector in America is an innocent bystander, too? We’re going see lettuce rot in Yuma. We’re seeing melons not being harvested in California. The agricultural sector is hurting as well. So, yes, I think they’re collateral damage, and I’m sorry about it, and I worked for three years to try to get a comprehensive approach to immigration which included, of course H-1B visas, and a number of other aspects of trying to get highly skilled workers into America. But, I’m telling you, it was rejected, and it was rejected by the majority of the American people. We can still go onto it, but they have to be confident that our borders are secure.

MA: So you’re saying the H-1B program can’t be taken on its own, it has to be looked at as part of the larger picture, mostly because the US population demands that?

JM: Well, we live in a democracy. The will of the people prevails. Sometimes in our history the will of people hasn’t been good for America. Democracy is the worst form of government, only a better one hasn’t been invented, as Mr. Churchill said. I want H-1B visas. I want highly skilled workers. I want all those things. But, the American people are saying, in the messages, secure our borders, because they have no trust or confidence in government. Because in 1986 we said we would secure the borders, and we gave amnesty to a couple million people. And, guess what, we gave the amnesty, we didn’t secure the borders, and we’ve got 12 million people here illegally. And you and I know that 40% of the people who are here illegally, are illegal because their visas have expired, and not because they crossed the border. But, I’m telling you, I’ve gone the width and breadth of this country, and I’ve been involved in the most bitter debate and discussion I’ve been involved in on any issue in twenty-four years in the United States Congress, and I’m telling you, people want the borders secured.

MA: We’re running out of time, so – you’ve given some great answers, you’ve really been very forthcoming, and I appreciate it. I guess the most important questions are still to come, though. Are you a Mac or a PC guy?

JM: [laughs] I am illiterate.

MA: Oh no.

JM: Yes.

MA: You do have an iPod, though?

JM: Oh yes, I have an iPod with Beach Boys, Roy Orbison – I have a varied taste in music between very good music and not so good music, but most of my advancement in music appreciation stopped the day I was shot down in October of 1967.

MA: When you download music, do you do it legally through iTunes, or do you get it off of the illegal sites, like BitTorrent and those types of sites?

JM: No, we do it legally. If I did something illegal, I would get famous. [laughs]

MA: When you were shot down, why did that stop your love of music?

JM: It didn’t stop my love of music – it stopped my advancement in appreciation of music. I didn’t hear any music for five and a half years. Oh, I did hear some music. I heard a number of anti war songs, that I enjoyed hearing.

MA: I saw a video of you last night, it was forwarded to me, where you were telling an audience about a guard when you were in prison that loosened your ropes overnight while he was on duty. And he drew a cross in the sand on Christmas day for you, and how much that affected you. It was actually a very touching story, and we don’t have time to go into that, but I just wanted to tell you that, as an American, I appreciate your service to this country, and I’m a big fan of yours –

JM: Thank you. And I appreciate it. Could I make one more comment?

MA: Of course.

JM: I am a free trader. I will do everything in my power as president of the United States to protect intellectual property, but, far more important, to open every market in the world through free trade. For the products of the most innovative, most productive, greatest exporter, greatest source of America’s economy on earth, and responsible for the greatest revolution that we’ve experienced since the industrial revolution. And my job also is, and we need people in the high-tech community to think about this, we’re leaving a lot of workers behind. I am in Michigan right now. We have got to design education and training programs so that people can take part in this marvelous, new technology revolution that we’re going through, so I enlist the help of the smartest people in America to help in that effort to design education and training programs so that we can take care of these displaced workers, particularly as our economy slows down in the next year or so.

MA: Yeah, we didn’t have time to talk about the digital divide, and it was a question I had about the Erate program, and how effective you think it is. I’m sure you could speak for half an hour on that, but it’s good to hear at least your broad opinions. The last question I have, though, is, in protecting intellectual property rights, and this is a touchy question, does that include putting people in jail for downloading songs?

JM: I’m a cruel, inhumane, and indecent person in many respects, but I can’t see myself doing that, unless of course they listen to some of the abominable music that tops the charts today. If they do that, whether they are listening to it on an iPod, or downloading it illegally, they should go to jail anyway. [laughs]

MA: I never understood a different generation’s opinion on the younger generation’s music, until I listened to some of the music that our interns listen to. I’m thirty-seven now, and these guys are twenty, and I feel the same way. I mean it’s absolutely ridiculous. I think music peaked sometime around the time that I was in high school, and it’s gone downhill ever since. [laughs]

JM: It’s an assault on the senses, my friend. Thanks again.

MA: Senator McCain, thank you very much for your time.

JM: Good to be with you.

MA: Good luck in the race.

JM: Thanks. Bye.

MA: Bye.