Global Economics

Amnesty Intl. Sees Red over Yahoo China


Amnesty International is turning up the pressure on Yahoo! (YHOO) to change directions in China. Amnesty International USA, the American branch of the international human rights group, is sending an official to Yahoo's annual shareholder meeting on May 25 at the Santa Clara Convention Center in Silicon Valley. Anthony Cruz, the San Francisco-based Amnesty official who plans to speak at the meeting, intends to use the meeting as a platform to demand action from Yahoo executives. "We're calling on them to take a stand against China," says Cruz.

The human rights group has purchased shares in Yahoo "so we can have a say in the company's human rights policy," Cruz says. It's not just Yahoo that is coming under scrutiny from the group. Earlier this month, Cruz showed up at Google's (GOOG) shareholder meeting thanks to Amnesty's ownership of some of that Internet search company's shares. Cruz says that at the Yahoo meeting he'll call on the company to take action to win the release of political prisoners in China.

This will be just the latest bout of unfavorable publicity that Yahoo executives have had to endure regarding Yahoo China. Over the past few months, the Internet outfit has been subjected to withering criticism from activists and lawmakers in the U.S. for censoring its Chinese Web site and cooperating with security officials in China investigating dissidents who used Yahoo's e-mail service.

SENSE OF OBLIGATION. For instance, during congressional hearings in February, Rep. Tom Lantos, a Democrat from California and survivor of the Holocaust, compared the behavior of Yahoo and others in China to that of companies cooperating with the Nazis under Hitler.

Yahoo critics are particularly incensed by the case of Shi Tao, a Chinese journalist now in prison thanks in part to evidence that Yahoo China supplied to police. Yahoo has long contended that its Chinese arm had no choice but to provide the information, since the company has to comply with local laws. Cruz says that the explanation isn't satisfactory. "You should have some obligation to not immediately give out the information," he says. "They gave it so quickly without even looking into it."

Yahoo no longer owns Yahoo China, having sold the company last year to Chinese e-commerce specialist Alibaba. However, Yahoo now owns 40% of Alibaba, making it the largest shareholder in the company. Yahoo has one seat on the Alibaba board, with Japanese Internet powerhouse Softbank (SFTBF) holding another, and Alibaba itself holding the remaining two.

DOING GOOD? For its part, Alibaba says that critics like Amnesty's Cruz don't understand the good that Yahoo China is doing inside the country. "What should not be lost in the debate is the fact that the Internet and the Internet companies in China are having an overwhelmingly positive impact on the lives of ordinary Chinese," says Porter Erisman, an Alibaba spokesman based in Hong Kong.

Erisman points to the way the Chinese use Yahoo China to get information, learn about the rest of the world, and communicate with people outside China. "If [Yahoo's critics] see what is really happening on the ground in China and the amount of openness and social liberties being created by the Internet, they would realize that pursuing profits and helping China become more open are not mutually exclusive," he says. "What we see on the ground every day is that China is changing very quickly."

REMAINING AWARE. While Alibaba encourages people to focus on the big picture, Amnesty wants the spotlight on the human rights cases. Cruz says that he's going to call on Yahoo to demand the release of journalist Shi as well as Li Zhi, jailed for eight years in 2003 after posting comments online that criticized government corruption. Cruz knows that the chances of Yahoo doing what Amnesty wants are quite slim.

But he says that's not the point. "It's important to continue to put pressure on companies and make shareholders aware that this is happening," he says. "That's the important thing, to get exposure on the issue."

China's Internet market is already the world's second largest, and it's only going to get larger in the years ahead. At the same time, calls from activists like Cruz in the West are probably going to get louder. For Yahoo, this is one headache that's not going away.


Steve Ballmer, Power Forward
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