Now you know a less-spoken reason why Google has gone to the mattresses over Chinese hacking. Always in the cards, since the birth of the Web, was the possibility that some great Internet business—a Yahoo or Google or Amazon or Facebook—would be destroyed overnight by a cataclysmic loss of trust in its protection of consumer data.

We haven't seen this phenomenon yet, but it has seemed almost inevitable that sooner or later we will.

Google's response to the discovery that Chinese hackers—likely government hackers—had tried to ransack its servers has been both energetic and obfuscating. "We love China and the Chinese people," said CEO Eric Schmidt. "This is not about them. It's about our unwillingness to participate in censorship."

This was good PR—changing the subject from the very touchy one of data security. It may also have been good strategy, putting China on the defensive about blocking its own citizens' access to information. Your move, Beijing.

It was also brave in a way other businesses in China haven't been brave, and perhaps can't afford to be. Hard to imagine, after all, is the cream of Chinese youth, the hope of its future, laying flowers of solidarity on the doorstep of, say, Northrop Grumman.

But one thing Google's response wasn't was entirely straightforward. The issue isn't censorship but data security. Google may deserve every salaam for its willingness to go to war with China over its users' data privacy, but it has been careful not to advertise that that's what the showdown is really about. Ditto the Obama administration, which has taken up the censorship theme but has no answer for what really happened in the Google hack, which included breaking into individual email accounts.

You can understand their delicacy. Refusing to comply with China's censorship directives, as Google is now doing, doesn't actually make anyone's data safer. Even pulling down its Chinese search engine altogether, as Google says it's prepared to do, wouldn't make Google's servers in the U.S. or anywhere else more secure from determined hackers sponsored by the Chinese government.

Nobody wants to talk about this, because nobody has an answer for it. Even less given the stampede of businesses large and small to entrust their propriety data to "the cloud." But let's face it: If you are among the millions of users of Google's many services, which includes a lot more than typing your perhaps not always creditable whims into its search engine, by now on some gloomy afternoon you have already involuntarily paused and wondered what exactly Google makes of all your information.

It doesn't take much to trip the anxiety switch even without worrying about data leakage to outsiders. In the near future, because you once typed in a search for hemorrhoid creams, will you see hemorrhoid ads flashing on electronic billboards as your car passes by? Will your Thanksgiving football fest with the in-laws be interrupted with TV commercials for hemorrhoid creams unless you take yourself out of the room? (Microsoft already is developing for its xBox game and video machine a capacity to watch who's watching).

The Chinese government may not have anything to gain by embarrassing you in front of your children or employer, but state-sponsored hacking can potentially serve many purposes, from espionage and economic sabotage to blackmail and short-selling opportunities.

Even more likely, hacking could be Beijing's way of extorting corporate compliance with its other goals. That's why Google's tactic of thumbing its nose at China's censorship rules is at least inspired gamesmanship. Message to China: You have something to lose too.

It's also why the response of other companies has been worrisome in its wussiness. Motorola is widely named in the press as having been hacked by Chinese operatives in the same incident as Google. Motorola's response? "Motorola is committed to offering the most innovative mobile products and experiences in China."

If China's hacking is essentially a power play, silence is the wrong answer. In the early 1990s, the world studiously ignored evidence that China's military was behind much of the piracy in the vital trade lanes of the South China Sea. The parallel is a close one, because China's motive appeared to be an assertion of sovereignty as much as a grab for booty.

Hong Kong, still a British possession at the time, bravely collected the evidence, including serial numbers of Chinese patrol boats involved in the attacks. But it was allowed to present its findings only orally to the U.N. International Maritime Organization—because a written report would have required the agency to acknowledge the information and act on it.

Nobody wanted to know because nobody knew how to do deal with Chinese state-sponsored piracy, though it turned out the best way to deal with it was simply to advertise what was known about China's participation in piracy.

http://online.wsj.com/article/SB40001424052748703699204575016801501346056.html#printMode