Friday, January 22, 2010

Clinton Puts Internet Companies on Notice

Secretary of State Hillary Clinton has essentially put American internet companies on notice in their dealings with China. Clinton has stated that she hopes U.S. companies will follow Google's lead, putting an end to the censorship of the internet.

Although she did not outright propose regulations the stronge urgings for this type of action and her praise of the Global Network Initiative, a consortium of companies and organizations that is designed to provide guidelines for operating in countries with authoritarian governments founded by Google, Microsoft and Yahoo; tells enough of how the U.S. government may react to companies that do not comply with her urgings.

This of course leads to a dilmenia for the U.S. based companies as voluntarily adhering to Clinton's standards will require corporations to do decrease revenue, increase costs, and reduce profits. In the case of China, this could mean a lot of profits as China already has the most internet users in the world, despite the fact that only 25% of the population are online and are thus a huge source of potential growth; however, not complying with Clinton's standards could lead to less government contracting and possible future taxes.

Though I doubt that many companies will be detracted from doing work in such a large market it will be interesting to see how companies will react.

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