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When Google (Nasdaq: GOOG ) agreed to censor its search results in China in order to comply with stifling local regulations, some said that the company had finally turned evil. Now Google is threatening to pull out of China because of human-rights problems -- and the critics are essentially calling Google stupid for risking a lucrative market.
So is Google evil or stupid? Naysayers can't have it both ways.
The reality is that Google is worth nothing without its users. Stop clicking on Google's ads, and the money is gone. If Google were to lose the trust of the general public, for whatever silly reason, the cash cow would run out of milk very quickly as Google users flocked en masse to Baidu (Nasdaq: BIDU ) , Microsoft's (Nasdaq: MSFT ) Bing, Yahoo! (Nasdaq: YHOO ) Search, InterActiveCorp's (Nasdaq: IACI ) Ask.com, and other search providers.
Google isn't the only game in Cybertown, and the company relies on its brand name much the same way that Coca-Cola (NYSE: KO ) and Apple (Nasdaq: AAPL ) do. I personally use Google every day, even if the search results aren't materially different from or better than the competition. But I'd be gone in a heartbeat if I thought I was supporting some heinous cause, and so would you. How many people do you know who have sworn off Citgo gas or Nestle baby formula?
For these reasons, quite besides its whole corporate mission and "don't be evil" public stance, Google can't afford to be evil or stupid. The company has to walk a fine line in tricky situations like the Chinese dilemma. It made sense to agree to Chinese demands for a while because of the immense promise of that market. But taking a firm position against inhumane and unethical practices like persecuting human-rights activists through cyberspace is the only option that makes any sense for Google now.
Stop crying about the opportunity cost of losing the Chinese market. Google would lose far more if it didn't stick to its principled guns, now that push has come to shove. One can only hope that the Chinese government will buckle under the international scrutiny brought on by this brouhaha, but I'm not holding my breath.