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Yahoo in China A Case Solution

Solution Id Length Case Author Case Publisher
2816 1450 Words (7 Pages) Sandra J. Sucher, Daniel Baer Harvard Business School : 609051
This solution includes: A Word File A Word File

The Yahoo! in China case involved the aftermath of the imprisonment of journalist Shi Tao, who had used his personal Yahoo! email account to send a document discussing media restrictions in China to a pro-democracy website based in New York. Yahoo! provided the Chinese government with Shi Tao's IP address, which they used to track and arrest him. The controversy raised questions regarding the responsibility of multinational corporations when operating in countries with different political and social systems, along with the tension transnational companies face between complying with local regulations and upholding human rights and freedom. The case looks at Yahoo’s actions and responses leading to Shi Tao’s imprisonment and after. The key protagonists of the case are Jerry Yang, CEO of Yahoo!, and Michael Callahan, Jerry’s general counsel. The case ended with Jerry Wang awaiting trial after Michael Callahan allegedly provided false information to a previous testimony regarding Shi Tao’s imprisonment.

Following questions are answered in this case study solution

  1. What moral questions does this controversy raise? What obligations should Yahoo have?

  2. In your view, was Yahoo right or wrong to assist Chinese authorities? What would you have done if you were in charge of Yahoo?

  3. Was Jerry Yang correct that the company had “no choice”? Assuming that Yahoo was legally required to do what it did, does that justify its conduct morally? 

  4. Assess the actions of Yahoo, and Microsoft, Google, and Cisco from a corporate social responsibility viewpoint. What view of corporate social responsibility do you think these companies hold? Do you think they see themselves acting in a morally legitimate and socially responsible way?

Case Analysis for Yahoo in China A Case Solution

1. What moral questions does this controversy raise? What obligations should Yahoo have?

The controversy in the Yahoo in China case revolves around balancing compliance with local laws and regulations with the responsibility to uphold human rights and freedom of expression. Yahoo faced criticism for providing information that led to the arrest and imprisonment of journalist Shi Tao. Although Yahoo claimed that it was only following Chinese law, the incident raised ethical concerns, such as:

  • Should large companies comply with government policies if it means denying the rights of their customer base?

  • Do profit-seeking organizations have an obligation to advocate for human rights?

  • Should companies be involved in any political affairs?

Some argue that Yahoo had a moral obligation to use its power to advocate for human rights and freedom of expression, while others believe that corporations should only focus on maximizing shareholder profits and not get involved in political issues. It can be inferred from the case that, like Google, Yahoo must maintain transparency with its users.

According to the UN Norms on the Responsibilities of MNCs, under category E, Yahoo has an obligation to refrain from any activities that support or encourage States and other entities to abuse human rights. Additionally, under Category C, Yahoo also had a responsibility to not engage in any violations of humanitarian law. Finally, under Category E, Yahoo has an obligation to refrain from actions that impede the realization of human rights, such as freedom of opinion and expression. According to Yahoo’s beliefs, they are committed to maintaining their customer’s trust and claim to take their user’s privacy very seriously. However, their actions in China not only contradict these statements but also violate Yahoo’s duty to maintain user privacy as a search engine. Finally, Yahoo had an obligation, to be honest about its actions. While Michael Callahan denied knowledge of the nature of China's investigation, later investigations found it to be untrue.

In conclusion, while multinational companies have a legal obligation to follow local laws and regulations, they also have a moral responsibility to uphold human rights and democratic values. 

2. In your view, was Yahoo right or wrong to assist Chinese authorities? What would you have done if you were in charge of Yahoo?

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