Rumors that Google may pull out of China has thrown the state of the Chinese Internet into sharp focus. It says much about the disconnect between the idealism of the Internet pioneers and the reality of how the Internet is utilized in undemocratic states.

During the 1990s, we were told that the Internet was going to single-handedly topple totalitarianism throughout the globe. Regimes would no longer be able to control the free global flow of information to repressed citizens, and knowledge would be power enough to squeeze the dictators out. Everything the optimists said about the Internet is true: unfettered access does have the power to liberalize less than undemocratic public spheres. But it's getting to that free and unfettered version of the Internet that's the problem these days. And the authoritarians -- most notably China and Iran, but others too, like Vietnam -- have been amazingly adept at filtering out what they don't want people to hear. Normally we don't think of business interests in China overlapping with human rights, but in the case of American technology companies, the two camps are, and will continue to be, more closely aligned than we might think. (Read more after the jump)

The Chinese Internet exists as a kind of parallel universe. Despite being a dominant number one in the rest of the world, Google is second in China, far behind the Chinese search giant Baidu. China's number one video site isn't YouTube but TuDou. Social networking happens on Renren.com, not Facebook. The censorship situation in China privileges the Chinese versions of popular sites in use throughout the rest of the world. In fact, as of October 2009, there were just 14,000 Facebook users in China. There are officially more Facebook users at Arizona State University than in the whole of China. This makes sense: Facebook has endured multiple shut downs in the past couple of years.

Every time there's a sensitive political anniversary like the anniversary of the Tibetan protests of 2008, or the anniversary of the Tiananmen Square Massacre in 1989, the Chinese government blocks foreign-owned sites like Gmail, YouTube, and Facebook more vigorously than their Chinese counterparts. If you're a Chinese Internet user, of course you're going to be pissed off when you can't access your Facebook profile every time the government gets skittish about something. The vast majority of social networking use is exactly that -- social.

When users can't socialize on one platform with the regularity they expect, they'll naturally switch to the place where they're most likely to be able to gain consistent access, and that tendency has overwhelmingly favored the social networking sites of the parallel Chinese Internet. Effectively that means that foreign firms like Google are bending over backwards to go against their core brand values and censor themselves, and for what? They're still getting the run around. Chinese technology companies don't like the situation either. In addition to the so-called "Great Firewall" through which the government blocks sensitive foreign content, China's regulations are set up such that the central government lays out the guiding principles of what it deems unacceptable, and leaves it to the individual companies to expend the effort to police potentially offensive content -- or face being shut down. This set-up explains why you'll see different search results in Baidu vs. other Chinese search products, or why you'll see blog posts mentioning the words "Dalai Lama" on one blogging platform but not another.

American technology companies like Google have been going out of their way to "comply with local laws" in China, censoring search results (Google, Microsoft, Yahoo!) and omitting books from their stores (Amazon). Google's global currency is the free and unfettered access to all kinds of information. But if you're inside China without access to a proxy server and want to know more about what happened on June 4, 1989, for example, you can't just "google it" like the rest of the world. You might get a few touristy pictures of Tiananmen Square and some information about the official flag-raising, but you're unlikely to find any information about the protests and subsequent massacre that occurred there in 1989. And if you "baidu it," you're likely to get even less information.

Google enjoys over 30 percent market share in China today, a distant second after Baidu but much higher than that of rivals Bing and Yahoo. During the four years it's been in China, Google has been steadily chomping away at Bing and Yahoo's market share, and building customer loyalty and brand awareness in the process. The problem is that Google's brand promise to "do no harm" -- a critical key to their success all over the world -- does not apply in China.

Google founder Sergey Brin was even quoted (via TED) "Perhaps people don't believe this, but all throughout the discussion of originally entering China in 2006 as we did, and the announcement last month, our focus has really been what's best for the Chinese people. It's not been about our particular revenue or profit or whatnot."

Through its actions of the past few weeks, Google has drawn a line in the sand, and now other companies are going to have to declare their loyalties as well. Motorola didn't wait for Google's final decision before issuing a cynical statement sure to please the censors: they won't be offering Google search on their phones in China in the name of promoting "consumer choice." Rather, Android phones will be packaged with Bing (Microsoft has so far complied with government censorship), and allow users to switch to Baidu if they choose. All the Chinese government needs to do is block Bing once or twice in the name of "cracking down on pornography" or some such nonsense and most Droid users will probably switch permanently to Baidu.

This is possibly the moment we've all been waiting for: today there is a real convergence of interests between American technology companies, free speech advocates, and China's netizens. At its core, the Chinese government's decision to randomly block web-based email and social networking sites is deeply anti-competitive and puts American-owned firms at a substantial disadvantage to their Chinese counterparts. But companies like Google have a real opportunity to affect positive change. Internet censorship is deeply unpopular in China. China's "Great Firewall" is the object of constant derision, even by those who consider themselves to be politically at odds with free speech advocates abroad. American companies, eager to get a piece of the ever-expanding Chinese market (now home to over 384 million Internet users at last count), need to be able to offer products and services that aren't subject to constant interruption and government interference. And free speech advocates want to see the Internet do what we were promised it would -- connect people, serve as a check against abusive governments, and ultimately serve as a democratizing force throughout the world.