November 14, 2007 | By Danny O'Brien

Undermining Freedoms in China: Yahoo! Learns the Cost of Facilitating Human Rights Abuses

Yesterday, Yahoo! settled a US lawsuit with Shi Tao and Wang Xiaoning, two of the Chinese journalists who were imprisoned and tortured after their identities were handed over by Yahoo! to the Chinese authorities.

"It was clear to me what we had to do to make this right for them", said Jerry Yang in a statement today.

The terms of the settlement are secret, but the drubbing Yahoo! has received over this case has been excruciatingly public for the company. Few CEOs want to be described as representative of "moral pygmies" in a Congressional committee room.

Hopefully Yahoo!'s officers have learnt their lesson. Privacy and free expression should never be seen as something that can quietly be brushed aside when doing business in repressive regimes. We certainly hope, however, that Yahoo doesn't just view this as something they needed to "make right" once and that this spurs a broader movement by them and others to resist efforts to turn them into the handmaidens of oppression around the world.

Playing up to dictators can impose real costs on a Net company. If foreign Internet companies are to have any edge over local firms in these high risk markets, it is because the offer the possibility that they will not capitulate to the authorities, and will not bend to vague demands to restrict, or filter, or spy on their users for the local state. A defense of user privacy and free speech is, in the words of the marketplace, a "unique selling point" for US Internet companies in these markets, and they should trade on that fact, and design their technology to support these rights, not remove them.

The alternative - handing over data on political speakers, developing pro-active filtering tools and aggressively complying with the vague hints of the ruling bodies - opens companies up to the risk of lawsuits over here, and a swift race to the bottom with their domestic competition over there.

As companies like Google and Yahoo! have learned by hard experience, the bad publicity alone from facilitating human rights abuses is profoundly damaging to their global reputations.

But when seeking to prevent such behavior, it's important to remember that bad publicity can only have an effect on companies when there is publicity. It took a great deal of detective work to uncover what happened in the cases of Shi Tao and Wang Xiaoning. We do not know how many other dissidents have suffered in the same way from American online businesses choosing to ignore international human rights law. And in the rush to spotlight the failings of household brands here, the misbehavior of less well known Chinese giants, like Baidu.com, are often overlooked in the public policy debate - even when those companies benefit from domestic US capital markets like the NASDAQ.

Yahoo!'s decision to do the right thing by the families and friends of these imprisoned journalists should only be a start for that company. Hopefully, it will spur them to move from the back of the pack and become a leader among net companies of developing policies and practices that protect their users' worldwide.

EFF long ago proposed some basic principles for Congress to consider when drafting legislation to help companies doing business in repressive regimes to say "no" to human rights abuses. Maybe it's time to revisit them, and to urge Yahoo and others to take them on themselves, and for American investors to require that Chinese companies who want access to our capital markets comply as well.


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