In The Plex

by Steve Levy

  In this sowing season Google takes the name Valley (grain) Song. Using the grain as a song, it is a song of sowing and expectation. It’s also a song of harvesting with joy. Welcome to GuGe. Let’s search for you, let’s harvest for you.

  The video only vaguely referred to Google’s algorithms, nothing too technical: “It is our expectation to put a very big server on the boat and just let the ever-flowing water be the energy to drive the integration of information. It seems like a beautiful and romantic picture, but it shows our drive to pursue our ideals day and night.”

  The name “Valley Song” didn’t please everybody. In a poll conducted by the popular Sina portal, 85 percent of respondents thought GuGe was a bad idea. A website called NoGuGe.com, supposedly consisting of Chinese Google fans unhappy with the new name, collected thousands of signatures protesting the change. Commentators charged that Valley Song was a weird, unsophisticated, and embarrassingly clueless effort to evoke China’s rural past to embody an exciting futuristic venture.

  But GuGe it was. To celebrate the new name, Eric Schmidt and other executives went to China in April, and the Google CEO defended its policy. Schmidt was perhaps the most enthusiastic supporter of the company’s China strategy. “I think it’s arrogant for us to walk into a country where we are just beginning to operate and tell that country how to operate,” Schmidt said to reporters at the event. Later that year in business meetings, he framed a more poetic promise: “We will take a long-term view to win in China,” he said. “The Chinese have five thousand years of history. Google has five thousand years of patience in China.”

  A few months later, Google moved into its new offices. It occupied several floors of a gleaming building that appeared as if it were made out of giant white Lego blocks and glass. It was one of several similar structures in the Tsinghua Science Park on Zhongguancun East Road in the Hardan District of north Beijing. Close to two top universities—Beijing and Tsinghua—the district was known as China’s Silicon Valley. Google shared the development with other high-tech firms, and there was even a Starbucks around the corner. Occupying several floors of the high-rise, Google’s headquarters was outfitted with the usual frills: physio balls, foosball tables, a fully equipped gym, a small massage room, and (in a nod to local recreational activities) a karaoke room and a Dance Dance Revolution video game. As with other Google offices, the centerpiece was a huge cafeteria with free meals. Kai-Fu Lee was a notorious foodie and took as much care in hiring a chef as the original Googlers had devoted to choosing Charlie Ayers. “I’m a demanding taster,” he admits. After several weeks of competition, the winner was a Shanghai chef, Rohnsin Xue. Lee made him go through numerous iterations of a recipe for beef noodle soup that Lee’s mother used to cook. Ultimately, he would declare that Xue’s beef noodle soup was superior to his mother’s. “It’s been served to the president of Taiwan,” he would boast.

  Kai-Fu Lee had been busy. For several months, the restrictions of the Microsoft suit had prevented him from engaging in product strategy, but, as he told the landing team already in place in Beijing, his priority was recruiting. Finding applicants wasn’t a challenge. As soon as the news broke that Lee would be heading Google China, résumés began arriving by the hundreds. The best incentive was Lee himself. He went on a recruiting trip that had aspects of a rock-and-roll tour. Students were actually bootlegging counterfeit tickets. Alan Eustace accompanied him on one trip and couldn’t get over how people mobbed Lee. It was like some weird Asian form of Beatlemania. “He’d give a talk at a university, and it would be like a basketball game, two thousand people in the audience,” he says. “He would be surrounded by literally hundreds of students. People would get close to him, just to touch him.”

  Kai-Fu Lee’s celebrity status had a downside. He became as much a part of the rumor mill as the celebrity female pop singers who dominated bulletin board discussions. Every time Google had a setback, word would appear that his departure was imminent. The Chinese press would often slam Google by going negative on Lee. At one point, reports spread that Lee was a tax evader. “That was completely personal, even though there was no tax issue,” Lee says. “The company pays my Chinese taxes.”

  At Microsoft, the hiring had focused on experienced computer scientists. But at Google, Lee wanted young graduates. “He was worried that once people worked for a Chinese company, it would be hard to culturally fit into Google,” says Ben Luk, a Hong Kong–born Google engineering director who began working in China in 2005. Lee said at the time that Google China’s atmosphere would be exactly as it was in the United States.

  While appreciating the difficulties censorship posed for the company, Lee believed that inside the walls of Google China, the filtering question wasn’t all that important. The Chinese people themselves didn’t see censorship as something so onerous. Some of the smartest people in China had confided in him that in a time of dramatic economic change, it made sense to keep some control over society. In any case, it was not an issue that engineers should be involved with, in his view. “We’re technologists,” he said. “We’re not politicians. We don’t care about all this mumbo-jumbo.” Most of the Chinese engineers he spoke to were hardly aware how controversial the matter was. When they heard that it was a big issue, they would say, “Oh, is that how Americans think?”

  The young Chinese engineers were to be augmented, and generally led, by experienced Googlers. Lee was looking for a Google variation on sea turtles.

  Typical of those who heeded his call was Xuemei Gu. A Beijing native, she’d graduated from Tsinghua University and, like many of the top graduates, had gone to the United States to attend graduate school at Carnegie Mellon—Kai-Fu Lee’s alma mater, where his name was still invoked with awe. After her doctorate, she went to Silicon Valley to work for Inktomi, a company that handled web infrastructure. When her part of the company was acquired by AOL, she jumped to Google. Hearing about Google’s new venture in her hometown stirred conflicting emotions. She still had deep ties to China and had watched its economic transformation over the last decade feeling very much like an athlete relegated to the sidelines. On the other hand, she enjoyed life in California. She and her husband had a one-year-old son. She had just bought a BMW. “A lot of Chinese engineers were very excited, but I didn’t think many of them would have the determination to come back. They have everything already set up in the U.S.—house, kids, and all,” she says.

  Yet she went to China. She later recounted her thought process: “If I stay in the U.S., what’s my future? I’ll probably become a better engineer, doing more complicated work, but my life will be the same every day—very peaceful life, go shopping on the weekend, go hiking. That’s not what I was looking for. I was just thirty-three then. I needed some change.”

  Another Googler who joined the China team was Wesley Chan, straight from his triumphs with Google Toolbar and Google Analytics. Soon after arriving, he sensed there would be trouble. “I’m really blunt, and that’s not the norm there,” he says. He felt that Chinese citizens were suspicious of people like him, who came from headquarters. “Everybody saw me as a spy from Mountain View, so I couldn’t be successful there.” Though Chan got along with Kai-Fu Lee personally, he felt that something very un-Googley was happening in Beijing: “A bunch of people built a cult of personality [around Lee],” says Chan. According to Chan, at one meeting a number of people Lee hired in China began squabbling about what their titles should be. “Your title,” Chan told them, “is product manager.” They objected that in China no one knew what that meant, and they preferred the official appellation of “special assistant to Kai-Fu Lee,” so everyone would know that they had the ear of the esteemed leader of Google China. Chan almost fell over. “This isn’t the White House!” he told them. “Our job is to be focused on users, not Kai-Fu.” But they insisted and told him that it was important for them to sit within a hundred feet of Lee, a geographic honor that would cement their status as special assistants. Worst of all, he says, “It was this w
eird culture of kiss up or kiss down, and I really don’t do that. So I said, ‘Okay, I’m done.’” Besides, the air pollution in Beijing was killing him.

  He left expecting little to come from Google’s great experiment in China. “We’d get these edicts from the Ministry of Information every day about what thing we had to remove every day, and I had to sit there. We hired some of the smartest people in China, but between the leadership issues and the government Wild West situation of all that arbitrariness, it was really difficult to operate,” he says.

  Lee considered his role as navigating his team through a landscape full of treacherous conflicts—Chinese law and Google morality, Chinese culture and Google hubris, Chinese nationalism and Google’s disruptive ambition. He believed that his celebrity could help. “I felt that if I put my reputation behind Google, it was good for Google and I did that,” he says.

  Others weren’t so sure. Xuemei Gu recalls a remark by an executive visiting from Mountain View. Gu asked him what he thought the biggest difference was between Beijing and the other international engineering centers he had visited. “Other offices think they are Google,” he told her. “The Beijing office thinks it’s Google China.”

  Kai-Fu Lee was gratified that China’s top students strove to win posts at Google. But winning consumers was another matter. “Google is clearly number one with computer science students,” he said in early 2006. “But if you go out on the street and say, ‘Who makes a good search engine?’ most people will tell you, ‘Baidu.’ They’ve done a good job of marketing.”

  Baidu ruled search in China. It was founded by Robin Li—the Chinese native who had discovered the power of web links in Internet search at the same time that Larry Page and Jon Kleinberg had. He had left the United States in 2000. “I didn’t have a Stanford degree, and I didn’t know many VCs at the time, so I went back to China and started to develop our own search technology,” he says. (Despite this, his new company was funded by Silicon Valley VC money.) Working out of a hotel room that overlooked Beijing University, he began Baidu. Its name was drawn from the first words of a Chinese poem that translates as: “Hundreds and thousands of times, for her I searched in chaos; suddenly I turned by chance to where the lights were waning, and there she stood.” Originally, Li found users for Baidu by licensing his technology to the big Internet portals in China. But he quickly found that they were not willing to pay him enough to maintain the high level of technological effort he wanted. So Baidu decided to put its efforts into its own website.

  Some Googlers believed that Baidu shamelessly borrowed from Google’s interface; on its debut in September 2001, it looked like a Chinese-language version of Brin and Page’s search engine. (“If you find similarities between Baidu and Google that means the market demands the same things,” Li would later explain.) And its search results sometimes included links that it served not because of their relevance but because of fees paid by advertisers. (A search for “cancer” delivered top results not for information on the disease but for hospitals eager for patients.) But it also took advantage of a freedom that Google did not have, particularly in flouting copyright regulations. A significant percentage of its searches were for music, and the links that came up on results connected users directly to free downloads of songs. It was such a dominant music distribution tool that Chinese people call MP3 players “Baidu devices.” And because, unlike Google, Baidu did not have objections to turning over the names of users to the Chinese government, it could run services that let Chinese citizens express themselves. Its bulletin boards promulgated discussion of popular cultural issues. Items on Chinese celebrities would commonly generate more than a million comments.

  Also, Baidu had none of the moral qualms about censorship suffered by Google or the U.S. Congress. In 2001, when the Chinese government had informed Robin Li that Baidu had to filter results, he was at first shocked. “I didn’t understand—we’re a search engine, we don’t create content, we shouldn’t be responsible for what’s on the web,” he later recalled. “But we were told we were the entry point.” Li spent a sleepless night considering whether he should move the service to Hong Kong. His objections were not moral, but practical. “It’s a cost issue,” he says, noting the drain in resources it would take to implement such a system. “I thought, if the servers are in Hong Kong, then it’s not subject to Chinese law and we can save this kind of cost.” In the light of morning, he realized that as a Chinese citizen, he had no choice, and from that point he implemented the government’s request without complaint. “It’s not an issue to me,” he says. “It’s just Chinese law. I’m not in politics. I’m not in a position to judge what’s right and wrong.”

  When the Chinese government first blocked Google’s search engine for a period in 2002, Baidu had only a single-digit market share. But in the ensuing years it grew to over half the market. (Google sold its $5 million investment in Baidu in 2006. The 2.6 percent stake was worth $60 million by then.) Generally, Google was the favorite of English-speaking, highly educated Chinese consumers; the newly wired, less educated consumer class in China was less familiar with Google. “When I first told my family I am going to come to China and work for Google, they asked, ‘What is Google?’” says Mark Li, a Chinese-born, schooled-in-America engineer hired by Kai-Fu Lee who had previously worked at Oracle. “It’s Baidu’s competitor,” he told them, and only then did they understand.

  Kai-Fu Lee felt strongly that Google’s underlying technology could whip Baidu’s in a head-to-head competition. But Baidu was not a pushover. Robin Li was a smart computer scientist, and he had hired a thousand engineers to work solely on Chinese search. He professed that he was not threatened by Google’s new rock-star hire. “Kai-Fu is very smart and probably the best that Google could find at that time,” says Li. “But Google understands search, and Kai-Fu did not.” (Lee disputes that, writing in his book that he thought about search every waking hour.) The Baidu founder was particularly unimpressed with Kai-Fu Lee’s recruiting strategy. “I had been very afraid of Google hiring away my engineers by doubling or tripling their salaries. Instead, they hired a lot of fresh graduates and brought Chinese engineers from Mountain View to train them. That gave me some relief,” he says.

  Google China’s top engineer—hired from Microsoft, where he’d worked with Lee in the Beijing research center—was a scientist named Jun Liu. He arrived at Google’s office in June 2006 and conducted a comparative study of the competitors. To his horror, “we realized that even on the technology part, we were actually behind, though publicly we didn’t want to admit that. I was a bit shocked by how advanced their systems were.” The difference lay in one of the key components of search: freshness. In a study of top-rising queries, the ones that included new names and phenomena, Google lost. Once those new terms were around for a couple of days, Google’s other signals, including PageRank, handled them effectively; for familiar queries, Google’s quality surpassed Baidu’s. But by that time people had lost interest in the rising queries. “For the first eight days [of a rising query], our search quality was worse than Baidu,” Liu says.

  “It was so obvious that there was something wrong that we spent one and a half years basically fixing our entire infrastructure,” says Liu. “We initially devoted 80 percent of the energy of our entire office to fixing search problems.” (Google search in general benefited from this work, as some of the ideas found their way into Google’s next general update of its indexing system.) Eventually Google’s studies showed that the company had caught up to and passed Baidu. By the time it introduced new improvements such as Universal Search, Google was confident that its superiority was obvious.

  But by then the comparison in the minds of Chinese consumers was seriously clouded. Baidu had succeeded in transforming the competition into a test of patriotism. Its message was that Baidu, being local, understood China and Google did not. Its nationalistic campaign was embodied in a television commercial that defined the two companies for many Chinese. A tall, bearde
d American in a top hat, accompanied by an Asian woman in a wedding gown, squares off in a knowledge contest against a young Chinese man dressed in bright yellow traditional garb. While the Chinese man is glib and brainy, the American’s grasp of Chinese is halting, and he butchers his pronunciation. A group of spectators gleefully taunts the American greenhorn. His bride bolts and joins the Chinese man. The American is last seen spitting up blood. “It was very unprofessional, but very funny, so it caught on,” says Kai-Fu Lee.

  But Baidu’s biggest boost came from the Chinese government. The government would often slow or block Google’s service and at one point even redirected Google traffic to Baidu. An apparent whispering campaign attributed the problem to Google’s alleged ineptness in serving China. The most charitable fiction was that an undersea cable had broken, cutting off service from the United States.

  Google had hoped that its decision to create a search engine in the .cn domain—one that followed government rules of censorship—would lead to a level playing field. But even as Google had rolled out its .cn web address, there were indications that its compromise would not satisfy the Chinese government. Unexplained outages still occurred. And not long after Google got its operating license in December 2005, the Chinese declared that the license was no longer valid, charging that it wasn’t clear whether Google’s activities made it an Internet service or a news portal (foreigners could not operate the latter). Google then began a year-and-a-half-long negotiation to restore the license.

  On the one hand, Lee saw the episode as a positive sign—since the government did not go public and announce a crackdown, that meant that the bureaucrats Google were dealing with had a certain degree of trust in the company. On the other, Google had two strikes against it. The government was giving it the benefit of the doubt but also signaling that if anything went wrong, China would not protect it.