Anyone who clicked on the Chinese Google site last Thursday was greeted with an unusual logo. The six Google letters were decorated with the symbols of "China's four great inventions," namely paper, gunpowder, the compass and printing.

With its respectful bow to Chinese culture, Google was apparently trying to point out that its threatened withdrawal from China was not directed at the Chinese people, but only at the government and its Internet censorship policies. But it's doubtful whether Google's charm offensive will do any good at this point.

Google's ultimatum is an open challenge to the Chinese regime. Last week, the Internet search engine giant publicly denounced deliberate spying on its users through hacker attacks. In doing so, it revealed what Western companies and governments, eager to do business in China, tend to gloss over: the twin facts that China deliberately uses the Internet to spy on companies, and that an online company can only do business in the country if it is prepared to set aside its notions of freedom of speech and human rights.

In a posting on Google's official blog, the company's chief legal officer David Drummond admitted that Chinese hackers had managed to illegally gain access to data relating to various Gmail accounts. Drummond also made it clear that Google "is no longer willing to continue censoring our results on Google.cn," even if that resulted in its pulling out of the Chinese market.

But is Google powerful enough to pick a fight with the Chinese leadership? And can the company really afford to abandon a growing market, with its roughly 350 million Internet users?

Flowers and Nightly Vigils

The challenge is a test of both the global corporation's self-confidence and its ability to deal with a public relations crisis. It has triggered a discussion within the Internet community over the company's bold political act. Sympathizers placed flowers in front of Google's Beijing offices, held nightly vigils and wrote tens of thousands of messages of support on Internet forums around the world. Even US Secretary of State Hillary Clinton has demanded explanations from the Chinese government.

The security problem that led to the breaches of the Gmail accounts has faded into the background. The question as to how the successful attack could have happened in the first place is of greater interest to experts than to the public.

The attack was not to be underestimated, as London-based Google online security expert Alma Whitten concedes. "I have been working for Google since 2003, and we are regularly exposed to attacks," says Whitten. "But this one, in terms of its scope and the way it was done, is definitely one of the most sophisticated I've ever seen."

Google has been relatively quiet about the attack itself, and for good reason. Upon closer inspection, the incident raises troubling questions. For instance, the company admits that in the targeted attack on Google servers, information relating to the email accounts of two Chinese dissidents was accessed. The compromised information apparently included login times and subject lines, but not the content of the activists' emails.

Stealing the Crown Jewels

It appears that Google employees who analyzed this targeted attack on the infrastructure of the search engine giant discovered a second, far more comprehensive attack that not only affects Google, but more than 30 other major companies, like Adobe, Yahoo, Dow Chemical and Symantec. Cyber-security experts have even come up with a name for the attack: Operation Aurora.

The sophisticated cyber attack apparently involved individual users unknowingly download malicious software known as spyware onto their computers. Spyware enables a third party to access passwords and other sensitive information, allowing them to take control of email accounts and even bank accounts.

Last Thursday George Kurtz, the chief technology officer of Internet security company McAfee, wrote in his blog that the "targeted attacks" took advantage of a previously unknown security vulnerability, enabling the attackers "to quietly suck the crown jewels out of many companies while people were off enjoying their December holidays."

Operation Aurora "is changing the cyberthreat landscape once again," Kurtz added, noting that what he called "advanced persistent threats" have become part of a new reality. It appears that the attackers even had access to highly sensitive areas within the targeted companies. Google's only response to Kurtz's remarks was that the company's "intellectual property" had been stolen in the attack.

Online Spies

Operation Aurora is only the most recent and technically most advanced attack coming from China. As far back as the mid-1990s, companies and government agencies around the world noticed cyber offensives which they believed originated in China. Last year, Canadian researchers exposed the so-called Ghostnet cyber spying operation, which had infiltrated more than 1,200 computers worldwide. The attackers were particularly interested in the Dalai Lama, his China policy and the Free Tibet movement.

The German Chancellery and Foreign Ministry are also regular targets of cyber attacks. In one such attack, which preceded Chancellor Angela Merkel's summer 2007 trip to China, the online spies were particularly interested in the issues the chancellor intended to address during her visit.

While such attacks are nothing new, Google's reaction to the latest onslaught is. "We have concrete evidence that the attacks are coming from China," said Google Germany spokesman Kay Oberbeck. This claim is supported by the fact that the attackers were not only interested in the dissidents, but also in the Free Tibet movement. One of the Gmail accounts they hacked into was that of a 20-year-old female student at Stanford University who comes from Tibet and is involved in the movement.

Google's counterattack initially took the communist leaders in Beijing by surprise. But then Beijing sharpened its tone. A cover story in the party newspaper Huanqiu Shibao was headlined "World Surprised by Google's Challenge to China." And Jin Canrong, a prominent expert on the United States at the Chinese People's University, writing in the same publication, asked: "What on earth does Google want?" The US corporation, Jin continued, is making a mistake if it "is trying to influence Chinese politics and social reform." Chinese society, he added, "must stand united against Google's threat."

Search Terms and State Secrets

Nevertheless, many things have changed in China, where the fronts between the persecuted and the hunted have been reversed. Only a few days before the cyber attack, Google was forced to apologize to authorities for having scanned books by Chinese authors without their permission. The media applauded, as if the apology represented a collective victory over America.

Until now, it has seemed that roles were clearly assigned in the People's Republic. To even be allowed access to China's enormous market, American IT companies collectively submitted to the rules imposed by communist censors. Companies like Google, Microsoft and Yahoo submissively filtered politically sensitive words and expressions out of their Web sites, terms like "democracy," "human rights," "Dalai Lama" and "Tiananmen uprising."

A few years ago, Yahoo even disclosed personal details about one of its users, journalist Shi Tao, to the Chinese authorities. He was subsequently arrested and sentenced to 10 years in prison for betrayal of state secrets.

But their eagerness to cooperate with the Chinese government didn't do the IT giants much good. In fact, the authorities began tightening their control over the Internet more and more. But now it has become clear that the approach taken by the rising superpower is not just intended to suppress individual freedom of speech, a consequence many a Western corporate executive has been all too willing to accept. Beijing's all-encompassing dictatorship over the Internet also challenges the head start enjoyed by America's important media and information technology industries.

Busting the Green Dam

An example of the battle of the giants is the "Green Dam Youth Escort," the name given to an official content-control software intended to prevent China's Internet users from visiting pornographic Web sites and other sites that are deemed politically unacceptable. The software also filters out key words that are considered inappropriate, such as references to the 1989 Tiananmen Square massacre or to Tibet.

Beijing originally ordered all computer makers to install the censorship software onto computers that are sold to Chinese customers. Although domestic manufacturers like Lenovo quickly agreed to set up the Green Dam in cooperation with Beijing, Western computer makers like Hewlett-Packard and Dell, fearing the adverse effects on their image at home, were less than enthusiastic. In the end, Beijing was forced to abandon the plan and postpone the introduction of the content-control software indefinitely.

One of the loudest objections came from California-based Solid Oak Software, which publishes programs that enable parents to monitor their children's Internet use. The company claims that the Chinese illegally copied significant portions of the code used in its CyberSitter software for use in its Green Dam software. Solid Oak has filed a copyright infringement lawsuit against the Chinese government.

'Abnormal Relationships'

At about the same time last year, Beijing unleashed a smear campaign against Google. In the past, the Chinese censors had periodically blocked the search engine and Google's email service, Gmail, but this time the state television network CCTV bolstered the censor's actions with a documentary claiming that Google promoted the spread of pornographic content.

The Chinese strategy was aimed primarily at the Google feature which suggests additional word combinations to users when they type in a particular search term. For instance, according to the CCTV documentary, someone who entered the Chinese word for "son" would receive suggestions from Google that included obscene combinations like: "abnormal relationship between son and mother."

Even Chinese bloggers perceived the attacks as grotesque, and some speculated that government censors themselves had seen to it that such word associations would appear with greater frequency on the Google search engine.

Legitimate or not, the Chinese campaign pushed Google dangerously close to charges of illegal activity. "Google is an Internet company that offers its services within Chinese borders," Foreign Ministry spokesman Qin Gang said in Beijing in June 2009, "and it should conscientiously abide by China's laws and regulations." The Chinese search engine Baidu, which with an estimated 60 percent market share represents Google's main competitor in China, stood to benefit from the official smear campaign.

Patriotic Surfers

In its crusade against pornography, China also incites its own population to engage in acts of denunciation -- by offering a handsome reward to those who report offensive Web sites. A student from the northern province of Shanxi recently collected a reward of 10,000 Yuan (around €1,000), which is roughly 10 months' pay for a factory worker. The patriotic Web surfer had reported 32 sites with "pornographic" content to the government morality watchdogs.

At the end of last year, Beijing systematically expanded its censorship to include Internet services for telephone users. As part of the campaign, state television broadcasts interviews with concerned parents and teachers as they effusively thank the government for protecting young people from online filth.

In light of this most recent campaign, Google can expect to be limited to marketing only a castrated version of its new Android mobile phone in the People's Republic. Apple can only sell its iPhone in China without one of its key functions, namely Wi-Fi access. As a result, many iPhones are sold on the black market in China.

Beijing has increasingly restricted market access for foreign Internet companies in recent months. The Communist Party blocks access to social networks like Facebook and Twitter, and the Google-owned video service YouTube has been blocked since March 2009. This distorts competition in favor of domestic companies like Tudou and Ku6, which have their servers in China and thus can be more easily monitored by censors.

Getting to the Source

Last year Beijing tried to force foreign manufacturers to allow the government access to their source code. Beijing threatened that if the companies refused, it would deny them its official security seal, without which they could not sell their products in China. But that attempt failed in the face of resistance from electronics companies in Europe, the United States and Japan, and the Chinese shelved their plans.

In the most recent case, however, Western corporations have not pulled together, and expressions of solidarity with Google have been muted. Microsoft CEO Steve Ballmer, for example, described the dispute as "the Google problem," while Hewlett-Packard CEO Mark Hurd downplayed the issue, saying: "I'd hate to run off on this one example and say it's a threat to the evolution of the IT industry."

Google's fight will hardly trigger a mass movement among American companies to fight China's domineering behavior in the future, says management professor Michael Cusumano of the Massachusetts Institute of Technology. "I believe that the promise of big profits will deter other companies from following suit."

Translated from the German by Christopher Sultan