Baidu: China’s censorship of the Internet is now a capitalist issue. Baidu, the country’s biggest search engine, has been sued in a New York court for conspiring to censor pro-democracy speech. The lawsuit, brought by eight US-based “promoters of democracy”, looks a bit far-fetched, and the $16 million demanded is tiny for a company with a $50 billion market capitalisation. But it shows that free-speech tensions are spilling into the corporate world.
Internet companies in China are intimately involved with censorship: they have to enact it themselves based on instructions from several different ministries. Search engines like Baidu may just have to tweak an algorithm to weed out sensitive terms. Social networking sites rely on employees to scrutinise and delete. That system drove Google to withdraw from China a year ago. Whether Baidu will have to pay up for its role in blocking the eight activists remains to be seen. American courts are wary of extraterritorial thinking. Baidu’s revenue and assets in the United States are negligible. And the precedents are murky. Search engine Yahoo was ordered in 2000 by French courts to remove links to sites that auctioned race-hate memorabilia. Rather than plead the First Amendment, it simply wiped the offending items from its US servers.
Still, the timing is apt. Politicians in the United States, getting nowhere with berating China for its undervalued currency, have started taking up the free-speech cause instead. Secretary of State Hillary Clinton this month described clamping down on dissent as a “fool’s errand”, as the White House launched a campaign for global Internet openness.
All this will give Facebook, long banned from China but reportedly considering re-entry through a partnership with Baidu, food for thought. Until now, shareholders in web companies haven’t been worried about censorship. Quite the opposite: they seem to want their companies to play by the rules if that's what's needed to take part in China's growth. Since Google first threatened to quit China, its shares have fallen 12 per cent, while Baidu’s have more than tripled. But with US politicians on the warpath and lawsuits flying, that may no longer be the case.