If you grew up in the US reading Marvel Comics you may remember the old What If? series. In What If?, the fates of Marvel superheroes were projected into alternate realities. It made for some pretty good stories as the conventions attached to characters you knew and loved were overturned.

I thought it might be fun to play this game with Yahoo, which has paid the worst price in terms of PR and brand damage for its association with China and willingness to censor Chinese search returns. Yahoo has been repeatedly vilified for its conduct in China, taking it on the chin from New York Times columnist Nicholas Kristof (via Peking Duck), power blogger and Global Voices supremo Rebecca MacKinnon in one of her angriest posts ever, and others.

Or should it be a "?"

Like all the major Internet companies that have been caught in this scandal --Google and Microsoft included-- Yahoo's response has been wholly inadequate to the challenge. All of the American companies involved have concentrated on legal defenses and studiously ignored the question of values. That is a mistake that their critics, such as Reporters Sans Frontiers (RSF), are not making. Just last week, RSF administered another slapping with a scathing announcement (proxy link), based upon a modest research project:

Yahoo! clear worst offender in censorship tests on search engines

Reporters Without Borders said it found Yahoo! to be the clear worst offender in censorship tests the organization carried out on Chinese versions of Internet search engines Yahoo!, Google, MSN as well as their local competitor Baidu.

The accompanying spreadsheet can be downloaded from RSF here.

Naturally, RSF's study, cursory though it was, has been widely reported upon in the mainstream media, along with RSF's sharp messages. Wired News carried the following money quotes from Julien Pain, RSF's "Internet Freedom desk chief":

"We simply found out that Yahoo was even worse than its local competitors," [said Pain]. "Google.cn is censored, but it's far less than what Yahoo does."

"Yahoo has absolutely no respect for freedom of information," Pain said.

Ouch. In fact, that's probably not true. The guys at Yahoo probably have a lot of respect for freedom of information, and they're probably wondering how they, a bunch of well-meaning California nerds and one ex-Hollywood mogul, got themselves into this situation and how they can get themselves out of it with minimal damage.

Just because RSF's study is cursory doesn't necessarily mean it is wrong. MacKinnon has done a long and interesting post examining RSF's results and attempting, with some success, to replicate them. She supports RSF's overall conclusions, and makes an important point which strikes at the justification that the US Internet companies and even I have wielded in support of their continued presence in China:

This issue of who is responsible for the loss of service problem, however, does not detract from RSF's clear and in my view correct point, which is that the Chinese user is probably no better off with Yahoo! being in China than if it ceased operating there.

If Yahoo! is going to keep on like this, they might as well just change the name of their Chinese service to that of their Chinese partner Alibaba, which now runs Yahoo! China anyway. Then at least they'd be a bit more honest with Chinese users about what they really are.

The emphasis above is mine. As compelling as Rebecca's point is, there is a weakness in suggesting that the main competitive benefit that overseas search engines offer Chinese users is access to controversial information censored by the Chinese Government. That is counter to how the vast majority of Chinese surfers will use these services. It also assumes that the search engines are equal in all other respects, which is, as any user of search engines knows, simply not the case.

Rebecca is, however, bang on in suggesting that Yahoo China might be more honest if they changed their name to Alibaba Search. This cuts to the heart of Yahoo's problem in China: It doesn't actually own or control Yahoo China. Rather, it owns 40 percent of Chinese Internet company Alibaba which it bought as part of a deal widely interpreted as paying Alibaba to take the failing Yahoo China portal off their hands.

There's nothing wrong with Alibaba. It's a perfectly fine Chinese technology company run by a flamboyant Chinese entrepreneur Jack Ma. Although it is now based in Hong Kong, it was founded in Hangzhou. Ma is Chinese and its pedigree remains thoroughly Chinese. Alibaba operates like any Chinese company would: With respect for the requirements of the Chinese Government.

Yahoo Corp owns 40 percent of Alibaba, with 35 percent voting rights, and one of four board seats, against two from Alibaba and one from Softbank. Essentially, they've surrendered management of their brand in China to an organization over which they have little control, and which has little stake in what happens to the Yahoo brand everywhere else in the world. An acquaintance of mine, a seasoned Chinese PR pro with long experience in the China technology industry, summed up the situation thus: "Jack Ma's baby is Alibaba. He doesn't give a **** about Yahoo's problems in the United States." It's hard to know how true that is without being able to peer into Ma's skull (a privilege I've not been afforded), but it's certainly believable.

The average western Internet user doesn't know or care about the ownership and control structure of Yahoo China. For them, as for RSF, the Yahoo brand is monolithic. Yahoo's transgressions in China are Yahoo's troubles globally.

So what is Yahoo to do?

What if?
What if Yahoo simply kissed off China? Yahoo would have to divest itself completely of its stake in Alibaba, or announce its intentions to do so within the limits of its contractual obligations. Alibaba isn't publicly traded, so this will will mean finding private-equity buyers willing to spend probably less than what Yahoo paid to take the stake off its hands (it'd smell a distressed sale). Alibaba itself might not be able to buy the stake back unless it took on debt to do it. Yahoo's ability to sell on its Alibaba stake may also be subject to the approval of Alibaba's majority shareholders, which could complicate things. But an announcement of intent could be the first step, even if the details took time to iron out.

Part of the deal would have to be that Alibaba drop the "Yahoo" brand name from its China search engine. Since, despite its struggles in the China market, there is perceived value to the Yahoo name it would probably be able to wring some extra concessions from Yahoo (a new report lists Yahoo China as number two in the market with half the share of leader Baidu, and Google third). Yahoo would officially withdraw from China and close any remaining China rep office. It would maintain Yahoo Hong Kong and a simplified Chinese site hosted offshore and carrying the full contents of Yahoo's index. If the Chinese Government chooses to block it, so be it.

Yahoo's management--by which I mean the founders and the CEO--would also have to publicly explain their decision in terms of values, and what role they see for Yahoo and the Internet in society. They would also have to review their operating policies in less visible cases of censorship around the world (although a quick glance at the map shows few other Yahoo locations likely to be as problematic as China). They could also create and publicize a clear manifesto of what conditions Yahoo will operate and offer its services under, and what position it will take with regard to Internet censorship. Ideally, these would be clear and uncompromising. At the moment, there is nothing of the sort on Yahoo's "core values" statement.

The payoff would be an end to these brand-scarring attacks from RSF and other NGOs, a chance to climb back on the moral high horse and claim to have set an example for other Internet firms. A chance to remind everyone, under the banner of the Yahoo brand, of what is best about the Internet and what it can bring to people. A chance to show that there are limits to the compromises it is willing to make. A chance to take back control of this issue and make Yahoo the visible advocate for an uncensored Internet.

Would it be worth it? It depends on what Yahoo's brand is worth, and how much damage its custodians are willing to endure.

Note: This is an edited version of a longer post that appeared on my Imagethief blog.

Disclosure
I do not service any American Internet firms that operate in China.

I have generally been a supporter of US Internet firms entering China, even considering the compromises they have to make. I do review that stance from time to time.