Brent Kearney

Technology news has been abuzz for the past couple of days, following Google’s dramatic announcement that it will no longer comply with the Chinese government’s demands to censor their citizen’s web searches, and if necessary, will leave China altogether. In other words, Google is leaving China. The decision follows the discovery that Google’s e-mail servers were subject to a sophisticated security break-in that appears to have been carried out by the Chinese government. The primary target of the attack was the e-mail accounts of Chinese human rights activists.

The confrontational announcement was posted on Google’s Blog at the end of the day, Jan 12th. By the morning, their stock had dipped 2%, but its already on the rebound.

There are 300 million Internet users in China, and three quarters of their population is not yet online. A sizable market indeed. However, as Businessweek points out, Google China was set to make only $600 million in 2010, a fraction of Google’s overall $26 billion yearly revenue. The loss is not a big one, and they reap the benefits of increased “brand equity” as Internet users everywhere revel in Google’s famous corporate motto, Don’t be Evil.

How this so-called brand equity will translate into real dollars is impossible to predict. Nevertheless, I’m sure that it was part of Google’s calculation. Many observers in the IT industry are predicting that cloud computing is positioning to become a de-facto standard for both personal and enterprise IT in the coming years. Google is probably the biggest player in cloud computing.

If I were an IT manager who is considering moving services into the cloud instead of upgrading in-house servers, which I am — even though I know that Google’s leaving China may be financially justifiable — the fact that they seem to take their security and their founding principles seriously enough to make such a bold move stands out. It makes them seem more trustworthy. Some people are even calling them heroic.

Can any amount of marketing achieve that kind of respect for a company?

In the end, decisions to move enterprise IT services to the cloud will be made by people, and Google’s China move has earned them a lot of credibility. Hearts & minds, as they say.