Will Congress Punish Yahoo, Google, Others for their Actions in China?

There's a very interesting dispute brewing between the House Foreign Affairs Committee and some of the world's leading technology companies. Let's start with legislation introduced by Congressman Chris Smith, which was recently approved by the committee. From Congressional Quarterly:

A House panel Tuesday approved legislation to punish U.S. Internet companies for sharing information with foreign governments that restrict access to the Internet.

The House Foreign Affairs Committee approved the measure by voice vote. The bill would make it illegal for U.S. companies hosting Internet content such as Web pages or e-mail to give users’ personal information to governments that restrict Internet access or cooperate in efforts to restrict access to U.S. government-supported Web content. Violators would be fined up to $2 million for businesses and up to $100,000 for individuals.

Countries restricting Internet freedom would be identified in an annual report to Congress from the president.

The bill is aimed at the actions of leading technology companies in China, including Google, Yahoo, Cisco and Microsoft. The firms have been criticized for sharing information with the Chinese government about the online activities of dissidents, as well as revising their search engines to censor some content for searches originating in China. In particular, Smith and the committee are angry with Yahoo, for allegedly having lied about their company's role in helping China develop evidence to jail dissident Shi Tao:

...At a 2006 hearing on the case, the company had assured Congress that it did not know about “the nature of the investigation” when it handed over the information.

Earlier this year, however, the San Francisco-based Dui Hua Foundation released documents disputing that assertion.

“Our committee has established that Yahoo! provided false information to Congress in early 2006,” Committee Chairman Tom Lantos (D-Calif.) said. “We want to clarify how that happened, and to hold the company to account for its actions both before and after its testimony proved untrue. And we want to examine what steps the company has taken since then to protect the privacy rights of its users in China.”

Yahoo spokeswoman Tracy Schmaler said the committee’s decision to single out the company was “grossly unfair and mischaracterizes the nature and intent of our past testimony.”

The hearing, to which Yahoo’s chief executive, Jerry Yang, and the company’s senior vice president and general counsel, Michael Callahan, have been summoned, is scheduled for Nov. 6.

“Last year, in sworn testimony before my subcommittee, a Yahoo! official testified that the company knew nothing ‘about the nature of the investigation’ into Shi Tao, a pro-democracy activist who is now serving 10 years on trumped-up charges,” Rep. Chris Smith (R-N.J.) said.

“We have now learned there is much more to the story than Yahoo let on, and a Chinese government document that Yahoo had in their possession at the time of the hearing left little doubt of the government’s intentions," Smith said. "U.S. companies must hold the line and not work hand in glove with the secret police.”

The companies also face an extremely challenging business climate in China, where they apparently confront anti-competitive practices in their efforts to gain market share against Chinese companies -- notably Baidu.com.

If American companies are forced to limit their operations in China, it will hurt the effort to promote western values there. At the same time, the idea that these companies would assist in government efforts to jail people for practicing what we recognize as free speech is distasteful -- even offensive. I think it's undeniable that Yahoo, Google, Microsoft and others must walk a very narrow line.

This debate is likely to get a lot more attention at the scheduled hearing on November 6. It could also wind up being another serious test of Speaker Pelosi's ability to navigate foreign policy debates. While the Chinese hasn't waded into this debate in any serious way before, they didn't have to as long as the bill wasn't going anywhere. If it looks like the House might actually vote on it, that could change. Given the way Pelosi mishandled her trip to Syria, and the debate over the Armenian genocide, she needs to get this one right.