Dispatch

Germany Has a Gay Minister -- Yäwn!

Guido Westerwelle, Germany's new vice-chancellor and foreign minister, is very popular and openly gay. And nobody in Germany cares.

For more than 50 years, the tabloid daily Bild -- currently Europe's best-selling newspaper -- has served as both a reliable barometer of Germany's conservative movement and a steady vent of its populist id. The editors have never felt compelled to question their winning formula: The conservative parties' current talking points go above the fold, the naked "Page One Girl" below it. The self-appointed guarantors of all that is traditionally Deutsch aren't much interested in the finer points of sensitivity training.

And in that way, the tabloid might have been expected at some point this week to express ambivalence, if not disapproval, of the fact that the country's newly elected vice-chancellor and foreign minister, Guido Westerwelle, is gay. Instead, though, Bild waved a white flag on one of the fronts of the country's decades-long culture war. As part of its gleeful coverage of the victory of the country's two main conservative parties in Sunday's election, the newspaper paid its respect to Westerwelle in the form of a sentimental page-one profile of his boyfriend, complete with a trashy headline: "His Boyfriend Makes Him Strong!"

Taking its cues from voters, Bild's editors didn't wring their hands over Westerwelle's sexual orientation, nor did they sensationalize it as a novelty. For one thing, it wasn't news: The chairman of the FDP, the free market Free Democratic Party, hadn't hidden his sexual orientation during the campaign -- his partner, event manager Michael Mronz, was often on stage with him at his rallies -- and no one he encountered on the trail seemed inclined to make an issue of it. Being a gay politician in Germany, it seems, is well on its way to being utterly normal, even banal.

Germany's ready public acceptance of homosexuality is the product of recent sea changes both in the character of society and in the letter of national law. For much of western Germany's history, neither the CDU, the Catholic-dominated Christian Democratic Union, nor the opposition Social Democratic Party (SPD), with its focus on the industrial working class, had much interest in setting up protections for gays. In eastern Germany, the ruling communist party dismissed homosexuality as "contrary to the healthy mores of the people." Nazi-era laws that criminalized homosexuality remained in force in East Germany until 1958 and in West Germany until as late as 1969.

Change didn't come easy. The gay-rights movement that began organizing in earnest in West Germany in the 1960s -- part of the student-driven backlash that wanted to interrogate and overcome the country's Nazi past -- elicited strong conservative resistance. For decades, the polarized camps faced off in homes, universities, and city streets in a tense stalemate. When Helmut Kohl took office as chancellor in 1982 at the head of a "black-yellow" coalition between the CDU and the FDP, he promised a "moral-spiritual revolution" that would return the country to its traditional understanding of public morality and decorum. What that amounted to, during his 16 years at the head of German government, was periodic populist agitation against politically correct cultural liberals in the arts and academia. Certainly, it was unthinkable that a gay man would gain a major portfolio in the Kohl-led coalition that governed until 1998. (Westerwelle, as a high-ranking FDP official, was involved in the Kohl government, but didn't come out of the closet until 2004.)

How, then, has the tide turned so dramatically in Germany in favor of acceptance of homosexuality? On the legal and political side, the gay-rights movement was fortunate to have found an amenable political home in the late 1970s in the fledgling Green Party. Although dismissed by the establishment in their early years, the Greens came into power in 1999, together with the SPD, with a clear and focused agenda to update German law to better reflect society's present-day values.

In addition to reform of immigration and citizenship statutes, the Greens pushed through a law recognizing same-sex partnerships and also rooted out the final remnants of legalized discrimination against gays in the German military. These efforts were passed with the support of the left-leaning SPD and Westerwelle's free market, culturally liberal FDP. Westerwelle, for his part, blasted the Catholic Church for its "19th-century worldview" in response to a call by the Vatican to campaign against the gay-marriage law.

Germany's religious landscape also factors into the relative serenity with which its society addresses homosexuality. In a country where 30 percent of the population considers itself atheist, it is hard to drum up fervor against sexual orientation: To that extent, reunification with East Germany -- which was predominantly atheist, according to communist ideology -- has made the country, as a whole, a friendlier place for gays. Moreover, Germany's institutionalized Lutheran Protestant church, to which another 30 percent of the country adheres, is considerably more liberal than most evangelical Protestant denominations in the United States. Germany's Lutheran church allows gays to become priests, and in some instances, blesses same-sex marriages.

Even the CDU, the traditionally Catholic mainstay of conservative West Germany, isn't as obeisant to Rome as it once was. Chancellor Angela Merkel -- head of the CDU, albeit one who was raised by a Protestant pastor in East Germany -- did not hesitate to criticize German-born Pope Benedict XVI when he reinstated excommunicated bishops who had denied the Holocaust. No one in the CDU felt inclined to agitate against fellow party member Ole von Beust when he outed himself during his first term as mayor of Hamburg. And the last CDU candidate to run for mayor of Cologne saw no contradiction in referring to himself both as a gay man and a "serious Catholic."

Indeed, once politicians come out of the closet, German voters tend to be concerned less about their private lives than about their other personal qualities. It's no coincidence that those who have unabashedly staked claim to their sexual preferences have usually earned bonus points among the public. "When a politician deals openly with his homosexuality, he comes across as more authentic," says Werner Patzelt, a political science professor at Dresden Technical University.

There's still a city-country divide in Germany when it comes to acceptance of homosexuality. Gays still have a harder time in Bavaria, where traditional adherence to the Catholic Church in small towns is very strong. It's not surprising then that the first major public official to come out of the closet was Klaus Wowereit, the mayor of Berlin, the city where Germany's live-and-let-live ethos is strongest. Wowereit didn't mince words in his unabashed 2001 coming out. "I'm gay," he declared, "and that's a good thing!" He has also earned admirers for the way he has managed to fend off political rivals who have tried to make an issue of his homosexuality. When his latest CDU challenger, Friedbert Pflüger, suggested Berlin deserves to have "a first lady," Wowereit shot back that at least he was in a steady relationship, whereas Pflüger was in the midst of a divorce.

It's not for nothing that, after charming the capital city, Wowereit is being handled as the potential next chancellor candidate from the SPD. Bild, of course, likely won't be extending him an endorsement. But, it won't be his sexual orientation that's standing in the way -- just the fact that he's a Social Democrat.

Joern Pollex/Getty Images

Dispatch

Where Google Loses

Baidu is the dominant search engine in the world's biggest (and fastest-growing) Internet market -- China. But how did it outsmart Google? 

Besides a cloud of smoke, sticky keyboards, and the incessant sound of noodle-slurping, nearly every Internet cafe in China has one thing in common: All home pages are set to Baidu.com, China's dominant search engine. It's not a coincidence, or even a matter of preference. Back in 2005, when Baidu was just a start-up, company representatives traveled through China persuading Internet cafe owners from Beijing to Kunming to install its toolbar and home page. In addition, it set up alliances with dozens of Internet directory sites, where most first-time Internet users in China start surfing. Now, the vast majority of the online population uses Internet cafes -- and the vast majority of searches go through Baidu. Simply put, Baidu knows China. And Google can't seem to catch up or catch on.

Baidu's overwhelming dominance comes down to Google's woeful ineptness at adjusting to Chinese market realities. Google entered the Chinese market and treated it like any other. But, from the beginning, Baidu operated as a Chinese company, using Chinese strategies and tailoring itself for Chinese needs. Thus, in terms of dealing with the government, popularizing the brand, making sales, and offering the masses what they want, Baidu bests Google.

The Beijing-based search engine (whose name means "hundreds of times," after a line in an 800-year-old poem) maintains an astounding 70 percent market share. California-based Google trails far behind, with only about 25 percent. As China now has the world's largest (and fastest-growing) Internet community, with 338 million users, market dominance means a whole lot of profit, both now and in the future.

The business world has cottoned on. Baidu's price-to-earnings ratio, a good way to gauge investors' expectations for growth, is double Google's. (Baidu has been listed on the NASDAQ stock exchange since August 2005.) This is in part because China's Internet saturation is only about 25 percent, compared with more than 75 percent on average in OECD countries, like the United States. Meanwhile, Baidu's net income is increasing wildly: 40 percent year-on-year, compared with 18 percent for Google. Every indication points to fast growth and lucrative profit.

The secret to Baidu's success -- and Google's failure -- is largely positioning. First, Baidu has managed to win Beijing's favor, a trump card in this command economy. The government controls the Internet and appreciates loyal partners. Baidu understands that it operates under the good graces of the Chinese Communist Party, and continues to show it. As Robin Li, the company's chief executive, said in an interview with the Guardian, "As a locally operated company we need to obey the Chinese law. If the law determines that certain information is illegal, we need to remove it from our index."

Google also allows its content to be censored. But it does so reluctantly and poorly, compared with Baidu and its army of Chinese programmers. From a Chinese Internet cafe, a search for "Tiananmen June 4" written in Chinese characters -- perhaps the most taboo combination one could create -- yields 915,000 results on Google China. It gets just 11,300 results, 99 percent less, on Baidu. Type in "harmonious society," a government catchphrase, and Google gets just over 10 million results. Baidu gets 18 million.

Deference has certainly helped Baidu. Earlier this year, Chinese authorities temporarily blocked Google because it allowed through some pornographic search results. But many of these same results were also available on Baidu -- and in fact an industry insider told me that the large majority of traffic to Baidu's new Japan site comes from mainland users searching for pornography. The implication is that the government has Baidu's back.

"You definitely get a feeling that the government would give Baidu a bit more time to fix a problem than they would give Google," explained Ian McGuinn, director at leading Chinese market research firm JLM Pacific Epoch. "It would be very interesting to see whether the government would try to keep Google from ever getting a majority of the market share. They've messed with Google before when they forbid it from having its servers in China. Searching on Google was incredibly slow, so nobody wanted to use it."

On one of the most contentious issues for search engines -- intellectual property rights and illegal downloading -- the government and Baidu are on the same page as well. Baidu connects users with sites through which they can illegally obtain music. It also allows users to search directly for and illicitly download MP3s.

The Chinese government sometimes gestures toward stopping the practice, but never really does. Recently, for instance, the Ministry of Culture released a circular on illegal downloading. But the document focused on regulations for music itself, requiring posted songs to receive approval and foreign lyrics to be translated into Chinese, for instance. Plus, the Ministry of Culture doesn't even deal with intellectual property protection.

May-seey Leong, Asia regional director for the worldwide music industry trade group International Federation of the Phonographic Industry, explained. "It's not even a regulation," she said. "It's just a lower-level circular and it principally seems to be trying to control content on digital platforms," i.e., so that the government can censor that content.

Simple hometown favoritism seems to have protected Baidu from copyright infringement lawsuits thus far. In 2005, several U.S.-based music companies sued Baidu, but inexplicably lost. In 2006, they sued Yahoo China, an American-based company, and won. (The verdicts were released on the same day.) And the record companies' current lawsuit against Baidu seems to be going nowhere. Leong complained that after nearly two years of legal battles, no verdict has been returned. Even if the lawsuit is somehow successful, the record companies are seeking only $9.7 million in damages, a drop in the bucket for Baidu.

Not that a shutdown of Baidu's MP3 search engine would make a big difference anyway -- it's not driving the company's revenue. Baidu puts banner ads only on its MP3 search, whereas according to its U.S. Securities and Exchange Commission filings, 99.8 percent of its advertising revenue comes from pay-for-placement ads, where advertisers bid for the right to present an advertisement next to specifically searched keywords.

The government allowed Baidu to operate its illegal music search just long enough to attract a huge user base. Now even if the MP3 search disappears, the users are likely to stay, along with the advertisers.

"Very early on, when Baidu was just starting as a search engine, they used music as a tool to gain market share," said T.R. Harrington, a partner at Darwin Marketing, a China-based firm that helps companies optimize their search engine marketing. "Now, they are making next to nothing on their music searches because advertisers realize that users are going only to download music, so not many people want to advertise on that part of the site. They are making almost all their money on keyword advertising, which is also the case for Google."

Also, Baidu is continually rolling out products that focus on creating a social community. Its new Baidu Zhidao ("Baidu Knows") service allows users to answer each other's questions about everything from restaurants to when track superstar Liu Xiang will finally recover from his injury. And Baidu Tieba, a kind of chat room, now accounts for 14 percent of the site's traffic.

Creating a social community is a way of ensuring Baidu's long-term dominance. Unlike in the United States, where people primarily use the Internet for gathering information, in China people first and foremost use the Internet as a social device.

"Two years ago, [music search] was where the business was, a lot more than where it is today," explained McGuinn at JLM Pacific Epoch. "In the past two years, Baidu has added a lot of products. People go to Baidu for a lot of other reasons than just music, and I doubt that is going to change anytime soon."

Indeed, Baidu's entire business strategy is tailored to Chinese governmental, legal, business, and social culture -- and that is what has set it apart from Google.

Take, for instance, advertising. "Once Baidu went public, they invested in brand advertising, something that Google has just been arrogant in their reluctance in a growing market to invest in any kind of advertising to increase their brand awareness," explained Harrington. "Baidu went into all the smaller cities and put up billboards, bus ads, and even commercials on [state television]."

In fact, analysts think that in smaller cities, Baidu's market share could be more than 90 percent. Although Google might be one of the most well-known brand names in the world, most people outside big cities like Beijing and Shanghai have never heard of it, let alone know how to spell it. (Google is apparently catching on -- it recently purchased www.g.cn and starting placing advertisements.)

The same goes for Baidu's sales force. The company has employed thousands of people throughout China to entice small and medium-sized companies to buy keywords. Google has only about 500 people doing the same in the entire billion-person country, and the Chinese sales force has little autonomy, despite many proclamations to the contrary. "The Google model has historically relied more on technology for sales. Having a large sales force has definitely helped Baidu a lot. They are getting people online for the first time," McGuinn said.

The combination of a great market strategy and government favoritism means that Baidu will likely not fall from the top, despite the potential loss of its music search site. This is especially true if Google keeps on quarterbacking from California, which is now even more likely since the surprise resignation of its powerful China president, Lee Kai-Fu.

Google might dominate almost everywhere else, but in China, Baidu is set to stay king.

MARK RALSTON/AFP/Getty Images