Google urges U.S. to treat Internet curbs as trade threat

A Chinese national flag sways in front of Google China's headquarters in Beijing in this January 14, 2010 file photo.

WASHINGTON (Reuters) - Google Inc urged Western nations on Monday to challenge restrictions in China and other countries on the free flow of information over the Internet as a threat to free trade and to negotiate new deals to protect U.S. commercial interests harmed by the practices.

"More than 40 governments now engage in broad-scale restriction of online information, a tenfold increase from just a decade ago," the search engine giant said in a policy brief that follows a censorship battle with China this year.

"These actions unnecessarily restrict trade, and left unchecked, they will almost certainly get worse."

With worldwide Internet commerce projected to reach $1 trillion soon, it is important to thousands of U.S. companies that China and other nations be allowed to censor or restrict information only in exceptional circumstances, Google said.

David Weller, a lawyer who helped Google prepare the paper, told Reuters the company hoped to get countries thinking about government restrictions on the Internet in economic as well as human rights terms.

An increasing number of companies rely on the ability "to move data around the world with a minimum of government restriction," so government curbs can quickly have a detrimental impact on their business, Weller said.

Bob Boorstin, a director of public policy at Google, said governments that restrict information flow might be more responsive to an economic argument than an appeal on human rights grounds.

"When you say to governments, 'You could lose foreign investments in your country if you don't allow the free flow of information,' you may be striking a chord that is more likely to resonate in that capital than, 'You will be looked down upon by the world for the way you treat your citizens,'" he said.

California-based Google, which earned more than half its revenues outside the United States in the first quarter of 2010, has had rocky relations with Chinese authorities since it announced in January it would no longer censor search results in mainland China.

It began rerouting visitors to its China website to a separate uncensored site in Hong Kong but eventually changed the setup so mainland China users had to click on a link to go to the Hong Kong site.

China is the world's largest Internet market with 420 million users.

Google had about 25 percent of the market in the third quarter, a distant second to Baidu, a Chinese company that had about 73 percent, according to technology research firm IResearch.

In its paper, Google argued that government restrictions on the free flow of information threatened a broad array of U.S. companies, including other well-known Internet names like Facebook, Twitter, eBay and Amazon.

It accused China of tilting the marketplace in favor of Baidu, and said governments like Vietnam, Turkey, Russia, Pakistan and others have used one or more of four basic strategies to control information on the Internet:

* Blocking access to a search engine or other Internet services or specific keywords, Web pages and domains;

* Using licensing requirements or other means to force companies to remove certain search results;

* Requiring certain websites to be removed or making whole domains invisible to users;

* Encouraging self-censorship through means "including surveillance and monitoring, threats of legal action and informal methods of intimidation."

Washington should insist regulation of the Internet follow basic principles of the World Trade Organization's services pact, which require rules be clearly stated, administered in a way that does not discriminate against foreign companies and that decisions can be reviewed, Google said.

Governments that invoke a "public order" exception for an Internet restriction should be pressed, consistent with WTO rules, to explain why the measure is necessary, Google said.

The company also urged the United States, the European Union and other governments to take "concrete steps to ensure that rules in the next generation of trade agreements reflect new challenges of Internet trade."

(Reporting by Doug Palmer; Editing by Eric Walsh and Bill Trott)