While I too hope that Google stands firmly on its principles (see Kathy's 1/13/10 post: Google and China: a study in integrity and business ethics), I'm not so sure that Google's threatened pull out from China has much to do at all about ethics or about standing on principles. Actually, I think it IS all about protecting their shareholders' investments in the company.

First, a little background.

Back in the good-old days of personal computers, you bought a software program, installed it on your computer, and there it sat -- pretty much invulnerable to attack from hackers. However, as we all got connected to the Web, we opened up a big, fat gateway into our computers -- practically putting out the welcome mat and inviting hackers to come in, have a look around, and stay awhile.

And they did. In droves. My own computers have been hacked on at least three separate occasions, picking up viruses and trojan horses from infected files emailed to me by people who were unknowingly helping hackers do their job.

According to Bill Roper, former CEO of Verisign, Internet cyberattacks are widespread, and remarkably frequent. Says Roper, “VeriSign’s network—just the segment of the Internet that VeriSign runs—sustains more than 2 million attacks a day. It’s the most attacked network on the face of the globe. It’s a huge scale of attacks, and they’re growing. They are attacking the network itself, attacking websites, attacking companies, attacking governments, and attacking anything that is visible. They do this in some cases for economic gain, in some cases for political embarrassment, and in some cases just because it’s there.”

So here's Google's REAL problem with China. As Kathy pointed out, Google didn't give leaving the country serious consideration until the company experienced a "highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property." If Google ultimately decides to pull out of China, I am convinced it will be because of the very real threat to the integrity of its many different Web-based products (Gmail, AdWords, Google Maps, etc.) and the considerable revenue that they generate for the company, and not because of ethical concerns.

For the most part, Google's products live on the Web -- they are part of the cloud. As such, they are potentially vulnerable to a hacker's concerted efforts to gain access and compromise them. As people continue to migrate from the old paradigm of having key software applications resident on their own computers (for example, Microsoft Word, Excel, and Outlook) to moving them to Google's Web servers (for example, Google Docs and Gmail), they do so because they TRUST that Google (and other providers of cloud computing services) will protect the integrity of their data. But, as the massive attack on Google's corporate infrastructure originating in China clearly demonstrated, the company's servers and products are being targeted in an organized and concerted way, and they may eventually be hacked and their 3rd-party data compromised.

Long story short, if your company has been moving your applications to the Web -- and, particularly, to Google's Web-based products -- the China story should give you pause. And if it does give you pause, then THAT is what Google is worried about. Because, ultimately, if people can't trust their valuable information to Google, then they will look for alternatives. And Google's shareholders will be the ones who suffer.