Coping With Orkut

Fascinating article in today's Wall Street Journal regarding the social networking site Orkut, its parent Google, and the fiasco of dealing with Orkut's spectacular ascent in Brazilian society, and the ills it brought about.

It appears that Google paid little attention at first to dealing with Orkut's problems, reacted patronizingly once they had become aware of the problems, and in general have managed the entire imbroglio quite poorly.

There may be issues where Brazilians have to accept less-than-complete satisfaction, because of the interaction with U.S. laws and society. Nevertheless, there are many common grounds between our societies where Google shouldn't need subpoenas to spring into action, and where Google should be much more pro-active in addressing Brazilian concerns - because they are U.S. concerns as well!

Google has gotten in hot water over its Web site Orkut, which like other social-networking sites allows people to swap information and create personal Web pages. While many Americans have never heard of it, Orkut is a powerhouse overseas, with more than half its 25 million monthly visitors in Brazil. By some measures, it ranks among the top 10 sites on the Web in popularity, alongside other heavily used social-networking sites such as News Corp.'s MySpace and Facebook Inc.

...Then, when Google tried putting ads on the site, it ran into trouble. Critics in Brazil released a report showing advertisements on Orkut alongside pictures of naked children and abused animals. Google immediately suspended the ads, but the Mountain View, Calif., company is still grappling with the fallout from critics' Orkut campaign.

The head of Google's Brazilian operation is facing criminal contempt charges for refusing to turn Orkut users' data over to police. And next month there is a hearing in a case brought by a São Paulo prosecutor threatening daily fines of $100,000 or the shuttering of Google's Brazil office. "We have won," says Thiago Tavares Nunes de Oliveira, a 28-year-old Brazilian law professor who wrote the graphic report and has crisscrossed Brazil making the case that Google allowed Orkut to become a redoubt of criminal activity, including child pornography and racist speech.

...Google also acknowledges the company made mistakes by not devoting enough resources to understanding a culture and country where its site had become popular. "We'd do it differently today," says Alexandre Hohagen, the head of Google's Brazil office, who is facing contempt charges. "The product grew faster than the support. That is a fact."

...How to make money from Orkut -- and keep increasing revenue from outside the U.S. -- are strategic questions for Google. In the third quarter of this year, 48% of Google's revenue came from outside the U.S., up from 43% in 2006 and 39% in 2005. Thanks partly to the fact that Brazilians are some of the most active Internet users in the world, Orkut now has about as much global overall traffic, or "page views," as Google's top-ranked search engine, according to data from comScore Inc.

Google released Orkut -- named after creator Orkut Büyükkökten, a Google software engineer -- in 2004. It became a surprise hit in Brazil, where it quickly won millions of users.

Hewing to its usual strategy, the Internet giant didn't immediately try to make money from the site. As recently as the middle of 2005, Google had just three employees in Brazil. Google's low investment in Orkut contrasted sharply with its growing importance in Latin America's largest country. Orkut has become a major center of Brazilian social life, with two-thirds of all Internet surfers using the service, many of them children.

The site rapidly became a reflection of the good and bad of Brazilian society, a country famed for its fun-loving spirit as well as slum violence. Communities were built around such themes as soccer, love and overcoming injustice. Almost 400,000 people joined discussions in a group called "My mother is the best on Earth," Google says.

Criminal elements also connected with each other and recruited sympathizers on the site, including neo-Nazis, organized gangs and pedophiles. Mr. Tavares says in one year he recorded thousands of pages related to pedophilia. Other communities boasted names like "Black: the inferior race" and "I'm a Nazi, so what?" "It was like there were two Orkuts. A normal Orkut and a pornographic Orkut, living in parallel," says Irineu de Carli Jr., a Brazilian software consultant.

Orkut's dark side drew the interest of Mr. Tavares, a solemn man who became the second-ever youngest professor at his school, the Catholic University of Salvador. In 2004, Mr. Tavares received a small grant to track human-rights violations on the Internet. He says he soon discovered that while Internet use is exploding in Latin America, the region has few laws and limited resources to govern the rapid growth.

In December of 2005, Mr. Tavares set up a nonprofit group called SaferNet. Modeled on U.S. organizations, the site allows users to report online crimes via its Web site. Within weeks, he says, the site was receiving hundreds of complaints. More than 90% were about Orkut.

Mr. Tavares began pointing out problems to Internet companies. He says Yahoo of Sunnyvale, Calif., and Microsoft of Redmond, Wash., promptly removed material he flagged as offensive and promised to hold copies for authorities. Microsoft invited Mr. Tavares to a meeting with its top Brazilian executive.

But the young lawyer says Google gave him the brush-off. He says Mr. Hohagen, the head of Google's Brazil operation, didn't reply to several requests for meetings. In early 2006, Mr. Tavares gave a Google press officer a CD containing 220 pages of evidence of alleged Orkut crimes. He never heard back.

...But Google faced a growing wave of complaints, many instigated by Mr. Tavares. Sérgio Gardenghi Suiama, a federal prosecutor in São Paulo in charge of human rights, began flooding the company's Brazil office with subpoenas seeking identifying information, such as email addresses, of Orkut users accused of committing crimes online.

...Under direction from Google's U.S. headquarters, Mr. Hohagen refused to accept the subpoenas. Google's chief legal officer, David Drummond, traveled to Brazil to explain the situation. In April 2006, Mr. Drummond testified at a congressional hearing requested by Mr. Tavares. He said Google wished to assist authorities, but Orkut data were all stored on computer servers located in the U.S. Therefore, he said, the data were subject to U.S. laws, not Brazilian ones.

Those laws include strict protections on users' private data and typically don't allow Google to reveal private communications without a user's express consent, except under very limited conditions and when ordered by a U.S. judge. And some crimes being investigated by Brazilian authorities -- like racist speech -- aren't crimes in the U.S. If Google met Brazilian demands, what would it do if Saudi Arabia, where homosexuality is a crime, began asking it to unmask gay users?

...Google took other steps that angered local officials. The company gave responsibility for handling its Brazilian legal crisis to an outside lawyer, Durval de Noronha Goyos Jr., head of one of Brazil's largest law firms. Mr. Noronha criticized the prosecutor, Mr. Suiama, for presenting "inept" judicial demands to Google's Brazil subsidiary rather than its headquarters in California, where the company wished to handle them. Mr. Suiama, he said, was more interested in "exhibitionism in the media" than in solving problems.

The approach backfired. In August of 2006, Mr. Suiama requested a police investigation of Mr. Hohagen for disobeying judicial orders and filed a lawsuit threatening Google with heavy fines unless it complied with his requests. That case is scheduled to go to an arbitration hearing next month. "If they want to do business in Brazil, they must obey the laws here," Mr. Suiama says.

By early this year, Mr. Hohagen says Google was already looking to shift strategies. It sent Orkut's creator, Mr. Büyükkökten, on a three-week tour through Brazil where he was mobbed by fans for autographs. During the tour Google announced that a test of Orkut advertising, which had started in India and the U.S. last year, would be extended to Brazil.

...In late September, Mr. Hohagen called Mr. Tavares and the pair sat down for a five-hour meeting. They discussed steps the company could take to improve Orkut. "It was obvious that they could only commercialize Orkut after they proved to everyone they had solved the problem," Mr. Tavares says.