While we wait for next move in the standoff between Google and China, the most profound impact of the Google incident may have little to do with Internet censorship. Rather it is likely to change the shape and speed of technological development in the information technology sector. The announcement that the search engine giant was hacked in China highlights two emerging tensions between a globalized model of innovation and security of companies that should lead them to pause the pace of change to better accommodate security and reliability.
The first tension is geographic. Over the last two decades, multinationals have globalized innovation by setting up research centers in many corners of the world and linking R&D, manufacturing, and supply chains in dispersed markets. Massive information and communication technology networks allow a project, whether developing new software or designing the next generation of microprocessor, to be worked on almost continuously as daylight moves from Oregon to India and then to Israel and Ireland and back to Oregon. As the Internet remains the main vehicle of this global cooperation, each link in that chain introduces vulnerabilities that can be exploited by criminals as well as "patriotic hackers" - private individuals or groups who, with tacit or direct government support, steal valuable intellectual property on the behalf of that government. According to the security firm Netwitness, over the last eighteen months hackers in China and Eastern Europe broke into over 2,500 computers in companies and government agencies in order to steal personal and corporate data.
Moreover, actually moving production and R&D, not just connecting them virtually, can have a negative impact on security. Geography still matters since physical supply chains that involve sharing of components themselves are vulnerable as intelligence agencies insert spyware into chips and other hardware at the point of manufacture. The fact that counterfeit Cisco routers - a critical component in Internet transmission - have already showed up in the networks of major technology companies and defense contractors demonstrates how porous supply chains are.