Google Said to Have Tried to Get Support Over Attack (Update2)

Jan. 15 (Bloomberg) -- Google Inc. approached other companies to seek their help drawing attention to a cyber attack from China last month and was frustrated by their reluctance to come forward, according to a person familiar with the matter.
Google announced this week that it was one of at least 20 companies targeted in a “highly sophisticated” computer attack and wanted others to talk about the incident, the person said. The companies refused, and Google made the announcement by itself, the person said.
Since then, three other companies, Adobe Systems Inc., Juniper Networks Inc. and Rackspace Hosting Inc., have said they were targeted by cyber attacks. The reluctance of companies to join Google in its initial announcement illustrates the pressure on them to protect their business in China, the world’s third- largest economy, said Barry James, who helps manage $2 billion at James Investment Research in Xenia, Ohio.
“Companies are not going to be cutting off their nose to spite their face,” James said. “It’s an underlying problem that exists in terms of dealing with a country where they don’t necessarily follow all the same rules that we do. More experienced firms have a better grip on how to navigate that.”
In disclosing the attacks, Google said it plans to stop censoring Web-search results in China, a move that may lead to the closing of its Chinese site and offices in the country. Mountain View, California-based Google said the attacks were directed at e-mail accounts of human-rights activists.
Jill Hazelbaker, a spokeswoman for Google, declined to comment on how the company handled the matter.
China Revenue
Google probably can afford to leave China, said Marshall Meyer, a professor of management at the University of Pennsylvania’s Wharton School.
“If they were making a lot of money, I don’t think they’d do this,” said Meyer, who teaches an MBA course on how companies operate in China. “You have to cultivate good relationships with the government -- no way around it.”
Less than 2 percent of Google’s $21.8 billion in revenue came from China last year, according to Jefferies & Co. By comparison, China accounted for 13 percent of Intel Corp.’s sales in 2008, the last time the company disclosed results from the country. Cisco Systems Inc. made 11 percent of its revenue from the Asia Pacific region, excluding Japan, in the most recent quarter.
Google rose $1.87 to $591.72 at 9:32 a.m. New York time on the Nasdaq Stock Market. The stock has almost doubled in the past year.
‘All About Profit’
Dan Slane, chairman of the U.S.-China Economic and Security Review Commission, a federal agency, said he was surprised more companies aren’t standing up with Google.
“It’s all about profit, and I understand where the silence is coming from, but they are missing the long-term picture,” Slane said in an interview. Chinese leaders’ “end game is to extract as much technology out of American companies as they can, transfer that to their own companies and, when they feel those companies have reached a level of technical maturity, show the American companies the door.”
Google co-founder Sergey Brin pushed the company’s executives to take a stand against the attacks and end its censorship of Web-search results in China, according to another person familiar with the matter. As part of the discussion, Google executives analyzed the financial effect of the company leaving China, the person said.
Yahoo! Inc., the second most used U.S. search engine, was also among the companies targeted by the attack in China, a person familiar with the matter said this week. Yahoo, which said it “stands aligned” with Google in condemning Chinese cyber attacks on users, said that it doesn’t generally disclose attacks on its computer systems.
Microsoft’s Stance
Technology companies such as Microsoft Corp. and Intel have spent years building businesses in China, the world’s largest Internet and mobile-phone market.
Microsoft Chief Executive Officer Steve Ballmer said yesterday in an interview with Bloomberg Television that his company intends to stay in China and wants to be “part of the solution” in the country.
Intel, the world’s biggest chipmaker, said there is no change in its view of the Chinese market and it hadn’t seen evidence of a “broad-based attack” on its systems.
“We have nothing to say concerning other companies’ views” of the Chinese market, said Chuck Mulloy, a spokesman for the Santa Clara, California-based company.
Cisco, the world’s largest maker of networking equipment, said it’s closely following discussions of censorship in China.
“As Cisco is not a service or content provider and doesn’t participate in the censorship of information by any government, we cannot comment regarding the specifics of any of our industry peers,” the San Jose, California-based company said in a statement.
To contact the reporters on this story: Brian Womack in San Francisco at; Rochelle Garner in San Francisco at; Ari Levy in San Francisco at

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