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Do you Yahoo? Meet Shi Tao ...

Over the weekend, I posted this item on my personal blog, after reading in Sunday's Washington Post that Yahoo founder Jerry Yang had defended Yahoo's decision to turn over information to Chinese security forces that helped a Chinese reporter get 10 years in prison. If you use a Yahoo e-mail account and are not familiar with the case of Chinese journalist Shi Tao, then I suggest you read this article by Julian Pain of Reporters Without Borders: "Shame on Yahoo: Information provided by Yahoo helped journalist Shi Tao get 10 years in prison." (Note: It's the second story on the page). 

Shi's crime? Here's a one-sentence summary of what happened, courtesy of The Christian Science Monitor: Shi was "convicted for e-mailing comments made in a newspaper staff meeting to a democracy group in New York, and whose IP Internet address was given to Chinese officials by Yahoo."

Yahoo founder Yang's answers, provided during an internet forum in Hangzhou, are cold comfort to Yahoo e-mail users who live within China -- and to the consciences of those who live without the threat of Chinese security forces reading their e-mails. Here's a taster from the Post:

"Speaking at an Internet conference in this eastern Chinese city, Yahoo's co-founder, Jerry Yang, said his company had no choice but to cooperate with the authorities. "To be doing business in China, or anywhere else in the world, we have to comply with local law," Yang said, responding to a question about his company's role in the case. "We don't know what they want that information for, we're not told what they look for. If they give us the proper documentation and court orders, we give them things that satisfy both our privacy policy and the local rules. "I do not like the outcome of what happens with these things," Yang added. "But we have to follow the law."

Reporters Without Borders (an international group devoted to the freedom of the press) appealed to former President Bill Clinton with this letter, but I see from The AP's story by Elaine Kurtenbach, courtesy of BusinessWeek Online, that it had little effect:

"New York-based Human Rights in China and the Paris-based international media watchdog Reporters Without Borders sent an open letter addressed to former U.S. President Bill Clinton, who was a keynote speaker at the Internet forum, urging him to bring up Shi's case during his visit to China. But Clinton only alluded to the risks faced by Internet users targeted by the authorities for whatever reason. 'The Internet, no matter what political system a country has, and our political system is different from yours, the Internet is having significant political and social consequences and they cannot be erased,' he said. 'The political system's limits on freedom of speech ... have not seemed to have any adverse consequences on e-commerce," he said. "It's something you'll all have to watch and see your way through,' he said."

As always in the case of China, I looked to Rebecca MacKinnon who has, or course, been following Shi's case. On Wednesday, MacKinnon essentially called for a boycott, and then Thursday she fingered (some of the) business decisions Yahoo and others have made that paint them into a corner:

"In Shi Tao's case, Yahoo had to be evil in order to be legal.

"But as the discussion on my last post reveals, Yahoo had a choice. It chose to provide an e-mail service hosted on servers based inside China, making itself subject to Chinese legal jurisdiction. It didn't have to do that. It could have provided a service hosted offshore only. If Shi Tao's e-mail account had been hosted on servers outside of China, Yahoo wouldn't have been legally obligated to hand over his information. 

"When providing information and communications services in countries where political dissent is illegal, companies like Yahoo need to ask themselves tough questions about whether they can realistically operate 'within the laws, regulations and customs of the country in which they are based' while still upholding their ethical values. Assuming they have some. Even if they don't, they must recognize that helping put dissidents in jail is pretty bad for the corporate image. Is the damage to Yahoo's reputation, credibility, and consumer trust really worth whatever money they're making on that Chinese-language e-mail service? 

"I don't think so."

Other bloggers -- such as EastSouthWestNorth obviously disagree with MacKinnon.

My question yesterday was when, whether and how American e-mail consumers will respond to the case of Shi Tao. Will Yahoo's reputation, credibility and consumer trust truly be damaged, a la Nike after the Vietnam sweat-shop debacle? Will we see a global community coalesce around privacy rights and freedom of speech for individual e-mail users in the next decade, particularly as Chinese Internet consumers gain numbers and, hopefully, power? Will the American privacy movement continue to gain momentum or stall, now that both the House and Senate have renewed a version of The Patriot Act? Or will each individual Web consumer have to reinvent the value (of) online privacy for themselves -- tantamount to child care for working parents?

We know how well that worked.

My question today is whether Chinese Law Prof Donald Clarke is correct that Yahoo's China service is based in Hong Kong (Hat-tip: Peking Duck). Clarke writes,

"If Yahoo HK were a wholly owned subsidiary of a PRC-domiciled company (let's call it "Yahoo China Parent"), then there would be a plausible case for saying that Yahoo China Parent could be required by the Chinese government to cause its wholly owned HK subsidiary to do certain things. But since Yahoo HK is listed as a subsidiary of Yahoo Inc., the U.S. parent, in the latter's most recent Form 10-K (Annual Report for 2004, dated March 11, 2005), then it seems that no entity in the chain of control is under PRC jurisdiction and required to comply with PRC law. Whether or not to comply with a request or demand for information becomes just a business decision. The facts here are complicated and I may have got some wrong. I am opening this post to comments if anyone can add more factual details or legal analysis ..."

However, his reader "dawanr" says Yahoo is in a box -- albeit one of its own devising, to MacKinnon's point -- and writes:

"SAIC Website registration for clearly shows that the site is operated by "Beijing Yahoo Network Consulting Services Company Limited". Most likely that this is a "WFOE" wholly owned by Yahoo Holdings (Hong Kong) Limited. The WFOE is a company incorporated in the PRC and so is subject to PRC law.

"Yahoo HK is certainly not subject to PRC law; but it's subsidiary Yahoo Beijing is, and the PRC authorities no doubt made it clear (either explicitly or subtly) that if Yahoo HK did not chose to comply with their "request", they would make like rather difficult for Yahoo Beijing."

I have not read the SAIC reg, but I do see that Yahoo's Aug. 11 press release announcing "YAHOO! AND ALIBABA.COM FORM STRATEGIC PARTNERSHIP IN CHINA: Combination Creates One of the Largest and Most Comprehensive Internet Companies in China," is datelined in Sunnyvale, Calif., and Beijing, China.

What do you think Yahoo should have done? And does the case of Shi Tao affect what you will do?

Related stories:

Angry Chinese Blogger has links to Chinese and English versions of the verdict and the document Tao was convicted for transmitting. Hat-tip: Rconversations, EastSouthNorthWest, GlobalVoices, others.

Posted by Product Team on September 12, 2005 at 03:57 PM | Permalink | TrackBack (0)


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