Microsoft CEO Steve Ballmer issued a fairly impassioned statement a few weeks back, regarding the company’s unwitting involvement in a gay rights legislation controversy in its home state of Washington. (http://dotnet.sys-con.com/read/83257.htm)

Steve Ballmer

First accused of selling out to liberal leftists pursuing a flawed agenda, reversing course, then accused of selling out to right-wing religious conservatives by withdrawing support of pending pro-gay rights legislation, the company reversed course again just as the legislation was failing, and promised to support it in the future.
 

Ralph Reed

Well-known religious right figure Ralph Reed was coincidentally let go from his consulting role at the company when his contract expired.

Now Redmond finds itself in the midst of a censorship controversy in China, that emerging economic and military behemoth that is both loved and feared by U.S. companies and the U.S. government.

Such is life in an era of globalization. Multi-national companies such as Microsoft absolutely must participate as fully as possible in all regions of the world, if they want to see their stock prices remain healthy. Key IT providers such as Microsoft are doubly behooved to participate globally, as we live these days in a world being continuously tightened by ubiquitous communications via the Internet and Worldwide Web.

Ballmer, in his e-mail to employees regarding the gay rights controversy, pointedly noted that he would not be discussing this issue in countries other than the U.S. The world’s cultures are literally all over the map with respect to their gay rights support or lack thereof, and Ballmer clearly did not want to step in anything accidentally and hurt business in the process.

But the world is not a simple place, and now the issue of free speech has arisen. China is still ruled by the Communist Party, and is not known for its support of a Western-style free and open debate. There’s no Speaker’s Corner in Beijing and no First Amendment in the country’s constitution.

The censorship debate has occurred over Microsoft MSN’s practice of not allowing users in China to post words such as "democracy" and "freedom," according to published reports. The company has acknowledged that it is working with China’s authorities to censor MSN Spaces users. Although there has been no official pronouncement from Redmond about this practice, other than to note that it "abides by the laws, regulations and norms of each country in which it operates."

It would be easy enough to gather quotes from any number of sources lambasting Microsoft for this practice. But the overriding issue simply reflects current U.S. ambivalence to China. Staunch trading ally, alleged friends since Richard Nixon’s 1972 journey there, strong partner in attempted multi-national talks regarding North Korea, China is hardly considered an enemy of the U.S.

Yet the U.S. feels compelled now and then to demonstrate its military commitment to Taiwan, and Secretary of State Rumsfeld very recently expressed alarm at the growing size of China’s military budget. Meanwhile, China continues to be a major source of new American immigrants, and remains a big prize for companies wishing to help it along with building a more capitalistic society.

The U.S. ambivalence was expressed to this reporter a few years back by very liberal Wisconsin Sen. Russ Feingold, who told of his allegiance regarding China with the very conservative Sen. Jesse Helms, noting, “Well, I don’t like China’s human rights policies one bit, and Sen. Helms simply hates what he still calls Commies, so he and I are in total alignment regarding China.”

Russ Feingold      Jesse Helms               Richard Nixon

Chinese Premier
Wen Jiabao

Microsoft is a big target, easy to hit. It’s become an iconic American company, with iconic leadership. Its management would, most likely, simply like to sell its software and embrace and extend as many markets as possible.

Microsoft doesn’t go looking for political fights. But the reality is that it will continue to find them. Companies today must do business throughout the world, but in doing so they must also realize they will find the occasional metaphorical land mine. In China, Microsoft must, like all other companies, meet with the approval of Premier Wen Jiabao and other Party leaders if it expects to do business there.

It's not as if China is the only country in which Microsoft  has faced controversy. The Clinton-era Justice Department certainly went after the company aggressively (triggering the dot-com bubbleburst in the process), and  Microsoft is currently embroiled in major disputes with the European Union over its business practices.

Is there a way for Microsoft in particular, and global businesses in general, to avoid this sort of controversy? Can they stay agnostic regarding specific political issues, domestic and international? In particular, is Microsoft somehow morally failing in China, or simply taking the heat for practices that any smart businesspeople would be following as well?