Last October, News Corp media baron Rupert Murdoch, the proud owner of social networking gorilla MySpace, announced that he was planning to develop MySpace China. Anyone who has studied the fates of American Internet companies in the Mainland can be forgiven for reacting to this bold pronouncement with a weary shudder. Yahoo and eBay have already run aground on the harsh rocks of the Chinese Internet market, and Google is sailing storm-tossed seas.

Having beaten that metaphor to death, I was interested to see an article in the Wall Street Journal a few days ago in which journalists Jason Dean and Geoffrey Fowler explored the likely management structure for MySpace China. It's a ways from launch, but I can already see signs of MySpace's future problems in China.

Dean and Fowler write:

As News Corp.'s social-networking Web site MySpace tries to steer its way into China's challenging Internet market, it may find that it has to let someone else do the driving.

MySpace has been in talks with a former Microsoft Corp. executive named Luo Chuan who, until December, ran the US software giant's MSN online services operation in China. The 38-year-old has started his own company and says he is in negotiations to team up with MySpace, along with additional partners including International Data Group's Chinese venture arm and China Broadband Capital Partners LP, the investment company of former China Netcom Group Corp. chief executive Edward Tian.

Unique for such an Internet deal, Luo said he expects his management team to retain control of any resulting venture.

As has been pointed out in various places, including by author and China business guru James McGregor in a recent interesting podcast on Danwei.org, the failings of Yahoo and eBay are rooted more in management fundamentals than the idiosyncrasies of the China market. Among other things, these firms tried to shove successful Western models and approaches down the throats of the Chinese market.

They would have done better by giving their original Chinese partners (3721 in the case of Yahoo and Eachnet in the case of eBay) access to their powerful tools and technology and the freedom to incorporate them into the promising existing Chinese Internet properties.

Both Yahoo and eBay have since surrendered control of their brands in China to Chinese partners, Alibaba and Tom.com, respectively. But it's awfully late in the day for strategic reversals and their fortunes remain cloudy. There have already been rumblings of conflict between Yahoo's US management and the Chinese team that now controls Yahoo China.

If Murdoch's intention is to avoid repeating the mistakes of those who have come before, then he is to be applauded for giving experienced Chinese Internet entrepreneurs the freedom to develop MySpace China into something that can succeed here. But giving Chinese management leeway and surrendering control are two different things. This is the paragraph that presages trouble:

The bottom line," [said Luo] in an interview, is that "the management team will need to have control over this venture in order to make sure that it will comply with the regulations", and "to ensure that we will have the power to customize and optimize the services to the Chinese audience".

It's not the customizing and optimizing that are the problem. It's the compliance with regulations. Of course, MySpace China needs to comply with Chinese regulations to do business in the Mainland. The problem is that MySpace, like other Internet media companies before it, is a powerful tool for mass communication and organization. As such it will have to adhere to the same censorship and management regime that caused such grief for Microsoft, Google and Yahoo last year, when they were pilloried in the American and European press and dragged into hearings by US Representative Chris Smith.

Murdoch is a great pragmatist and has done business in China for many years. But he needs to start thinking now about what he'll do if MySpace China starts running into the kind of censorship controversy that other US Internet companies have faced. The real problem will come when that independent Chinese management team starts making decisions in its own interests that have the potential to cause backlash in the US or Europe, or that tarnish the MySpace brand overseas. Murdoch may be a pragmatist, but MySpace's youthful, American and European users probably run more toward idealism (or apathy, in which case it may not matter).

It's early days yet, and we don't really know what final form MySpace China will take. But if he wants to avoid another unpleasant fate that has been visited upon American Internet companies in China, Murdoch will think carefully about how much control he gives up.