How Microsoft Figures into the Google-China Dustup

Microsoft has yet to say whether it will follow Google in standing up to Chinese censorship, but a former top Microsoft executive played a key role in Google's Chinese business --- and his unexpectedly quitting Google last year may have signaled the impending cyberwar between Google and the Chinese government.

The one-time Microsoft executive Kai-Fu Lee had emigrated to the U.S. from Taiwan in 1973 as a child. After an academic career and several years at Apple and Silicon Graphics, he began working at Microsoft in 1998 and moved to China to establish a Microsoft Research division in Beijing. Then in 2000 he moved back to the U.S. to become Microsoft's vice president of interactive services.

In 2005 he was hired away from Microsoft by Google, and became the center of a lawsuit filed by Microsoft, claiming that by going to Google he violated a non-compete clause he had signed with Microsoft. Legal wrangling went on for six months, and Google and Microsoft reached a confidentail settlement allowing Lee to work at Google.

He founded Google China and was an early defender of Google's staying in China, despite the censorship laws. The relationship between Google and China was rocky from the beginning. According to the Chinese blogger Keso, Kai-Fu Lee was constantly serving as a go-between. A translation of one of Keso's posts says:

"There has always been the possibility of Google leaving China, Kai-Fu, like a fireman, has been shuttling back and forth and mediating many times."

According to the site iStockAnalyst, Another Keso post claimed that two years ago Google was planning to exit China, but Kai-Fu Lee sought the help of Gary Locke to keep Google in China. At the time, the Chinese-American Locke was in the China and governmental-relations practice group of the international law firm Davis Wright Tremaine LLP. Locke is currently the U.S. Secretary of Commerce.

Then last September, Kai-Fu Lee abruptly quit Google to start his own venture capital fund. That sent the rumor grapevine abuzz; speculation was that it meant Google would quit China. Back in December, author and journalist Rebecca Fannin had this to say about Lee's departure on Forbes:

"Rumors have been flying about Google's future in China ever since the company's China head, Kai-Fu Lee, resigned in early September to start an incubator lab in Beijing. His departure seemed awfully abrupt.

"Lee scurried to set up an office for his incubator, raise a fund and assemble a team from thousands of job seekers. Lee's PR reps in China and the Valley hyped his new project as his fulfillment of a dream to coach young Chinese entrepreneurs and support their best start-up ideas.

"My venture investing sources in Beijing and Shanghai suspected then that there was more to Lee's departure than was being told. Maybe Larry Page and Sergey Brin want to exit China and Lee knew this, my sources speculated. Certainly, the rush to the exit door by Google staff in Beijing since September suggests that."

Fannin got it exactly right.

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