Google has denied allegations that it is close to a launch of a Chinese search pilot, despite numerous leaks indicating it has development underway.
Alphabet, Inc.'s (GOOGL) rumored plans to jump back into China drew a rebuke from U.S. Senator Maggie Hassan, a Democrat from New Hampshire, during a hearing Wednesday before the U.S. Senate Committee on Commerce, Science, and Transportation.
The potential new program to re-enter China since Google's exit in 2010 over censorship concerns, codenamed "Dragonfly" in leaked documents, has received press, regulator, activist, and even employee outcry in recent months.
The government compliant search engine that has been documented would store personal phone numbers, user searches, and work towards denoting social credit scores for individuals living under Xi Jinping's rule.
Hassan called the potential project a "tool to suppress human rights." She is hardly the first to decry the company's reported interest in the market.
Enright Eschews Plans
Despite the heated questioning, Google chief privacy officer Keith Enright denied that the company is close to a Chinese launch.
"I stand by Google's record on human rights," he said in response to Hassan's pointed questioning. "My understanding is that we are not close to launching a search product in China."
When asked by Hassan in a follow-up where leaks, reports, and letters are coming from, Enright declined to offer an explanation.
"I wouldn't speculate, senator." he answered.
If the project does move forward, it could create a PR firestorm and lead to the company losing some of its key people, who have threatened to resign over the project.
Regulators' Warnings
Wednesday's meeting was focused on data privacy for consumers, which is certainly a problem if the company is to enter a nation that practices large scale data mining and algorithmic surveillance on the online activity of its citizens.
This is especially concerning if the new Dragonfly project forces searchers to log in and have their location tracked, eliminating any chance of privacy.
Texas Congressman Will Hurd, chairman of the Oversight and Government Reform Subcommittee on Information and Technology, told CNBC this morning that Google risks breaking its principles on privacy.
"The Chinese do not care about things like privacy," he said.
As such, the search engine potentially kowtowing to Chinese government policy would erode any believability in the company's stated commitment to frameworks protecting transparency and privacy.
However, more importantly to Hurd, Google risks giving away key information to the Chinese government if Dragonfly takes off.
The Chinese government has intensified its focus on AI and high-tech industries in recent years, targeting proprietary secrets of companies that want to enter the consumer-rich countries.
"Trade secrets remain one of the most vulnerable forms of IP in China, in part because Chinese government authorities jeopardize the value of trade secrets by demanding unnecessary disclosure of confidential information for product approvals," the American Chamber of Commerce in China explained in a 2017 report.
The sharing of all-important proprietary information has come to be seen as a "price of entry."
Hurd warned that this is a way for China to work toward replacing the U.S. as the world's main superpower.
"The quickest way to get there is what they've been doing; stealing our technology" he explained.
Academics and activists have been forthright with the moral and ethical problems they see with the inroads the company is making.
"We are extremely concerned by reports that Google is developing a new censored search engine app for the Chinese market," an open letter signed by 14 separate human rights organizations and four professors reads. "The Chinese government extensively violates the rights to freedom of expression and privacy; by accommodating the Chinese authorities' repression of dissent, Google would be actively participating in those violations for millions of internet users in China."
Even within Google's own ranks, the decision to re-enter China is a serious concern and has led to organizational disconnect from executives.
"Currently we do not have the information required to make ethically-informed decisions about our work, our projects, and our employment," an employee letter obtained by The Intercept states.
The letter goes on to demand transparency from the company as it built its clandestine Chinese engine.
"That the decision to build Dragonfly was made in secret, and progressed with the [artificial intelligence] Principles in place, makes clear that the Principles alone are not enough," the letter does on to say. "We urgently need more transparency, a seat at the table, and a commitment to clear and open processes: Google employees need to know what we're building."
Bottom Line
If Google is in fact launching a Chinese product as the leaks have suggested, it would destroy company credibility with the government and likely with its users as well. That being the case, investors will certainly hope that Enright's understanding is correct.
