Moral 'Pygmies'

China is nothing to Yahoo about

Craig Matsumoto, Editor-in-Chief, Light Reading

November 7, 2007

2 Min Read
Moral 'Pygmies'

3:10 PM -- Headlines since yesterday have been all over the lambasting Yahoo Inc. (Nasdaq: YHOO) got from Congress over the jailing of Chinese dissidents. The 24-hour news networks got their sound bite of the week with Rep. Tom Lantos telling Yahoo, "Morally, you are pygmies."

The contrarian in me can't help finding some truth in Yahoo's point of view. To resist demands from the Chinese government is to invite having one's own employees in China sent to jail -- not a much better feeling than helping dissidents get jailed. Once you're playing the game, you're bound by the rules, and that means if a company like Yahoo or Google (Nasdaq: GOOG) wants to serve China, it's going to be complicit in some repression.

One way to avoid that dilemma is to not do business in China in the first place. But in earnings-per-share circles, that's suicide. In fact, shareholders would tell Yahoo -- or any major tech company -- that it's got a moral obligation to maximize returns, and hence, to do business in China. Ironic.

Because I find the latter argument ridiculous, it's easy for me to say that if I ran Yahoo, I wouldn't have done business in China in the first place. But it's not that simple. China can build its own routers and search engines. If they're pressed into doing that, China could become more cloistered, further reducing the chances of democracy there.

That's sort of the argument Cisco Systems Inc. (Nasdaq: CSCO) uses when it declines to more deeply examine its role in aiding nondemocratic governments. (More on that later.) Yahoo, like Cisco, seems to be saying that the best path to democracy is to continue supplying China, and the magic of the Internet will do the rest.

To me, that's either a cynical rationalization for making more money, or just naive. Coincidentally, it might turn out to be correct, but as the Yahoo case shows, that day remains a long way off.

— Craig Matsumoto, West Coast Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

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