August 2, 2005 4:00 AM PDT
Who in the world is Kai-Fu Lee?
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work with regard to emerging technologies that will improve search for audio and video files."
In addition, the representative said, Lee took part in "high-level" strategy meetings at which the company's "most sensitive and strategic business secrets relating to search technologies were discussed."
Matt Rosoff, an analyst with the independent research firm Directions on Microsoft, suggested the different views of Lee held by Microsoft and Google have something to do with Microsoft's broad definition of computer search.
"Kai-Fu Lee's main area of interest was probably not search as we think about it--not Internet search," Rosoff said. "It was how people interact with computers today and how they will interact tomorrow, and search is one aspect."
Key to China
Google hired Lee to lead a new research and development center in China and serve as president of its Chinese operations. The executive has experience and knowledge of the country's tech scene, thanks to his years at the Microsoft lab.
China is a potentially massive market and source of talent that both Microsoft and Google seem itching to tap. The country has an estimated 100 million people with an Internet connection, and analysts predict that that penetration will increase greatly over the next five years. Piper Jaffray forecasts that Chinese interactive sales, including online advertising, e-commerce, games and wireless, will reach $1.38 billion in 2005.
Danny Sullivan, editor of trade publication Search Engine Watch, said Lee's potential to succeed in China in the search business is key to why Google offered him the job. "Google's statements lead me to think that they hired Lee for his leadership qualities, rather than for any search research abilities he's bringing to the lab," he said.
Sullivan said he was not aware of any work done by Lee in the field of computer search.
The two sides tell radically divergent stories about Lee's importance to Microsoft's business in China. Microsoft claims Lee is "one of the main architects of Microsoft's business strategies in China." Google and Lee say he's had "only limited involvement in Microsoft's China operations."
Google argues, however, that Lee's qualifications and experience aren't the point in Microsoft's action. They say that Microsoft is trying to make an example out of the executive. Lee claims Microsoft Chairman Bill Gates told him in a July 15 meeting that CEO Steve Ballmer had been waiting for such a resignation. "(Ballmer) is definitely going to sue you and Google over this. He has been looking for something just like this, someone at a VP level to go to Google. We need to do this to stop Google," Gates reportedly said to Lee, according to a court filing.
The Microsoft representative would not comment on the remarks, but did say: "The fact that Google is a direct competitor is one of the primary reasons we took this action."
Google's contention that Microsoft is looking to deter potential defectors comes as the software giant tries to deal with an attrition rate that has been rising in recent years and to combat a reputation for arrogance in hiring. Microsoft had also reportedly acknowledged losing talent to Google, which is seen by some as the top place to work in tech these days--despite some black eyes.
Rosoff, however, said he believes the issue for Microsoft is not general but is genuinely focused on Lee and his talents. "I don't think this is necessarily about Google per se," he said. "It's about losing an important person to a competitor."
In the end, a Washington state court will settle the matter of which portrait of Lee is the most accurate. But a war over courtroom jurisdiction could loom. Google and Lee have asked a California court to declare Microsoft's noncompete provision invalid.
In the near term, the question of Lee's experience and what it's worth could be thorny one for Google--more so than for Microsoft, suggests Sullivan of Search Engine Watch. Until at least September, Lee cannot perform work at Google that competes with what he did at Microsoft--including planning for the Chinese search market, a judge ruled last week.
As Sullivan sees it, the search giant may be asking whether Lee could be replaced, at least temporarily, as the person who leads a new research center in China and serves as president of Google's Chinese operations.
"I can see them saying, 'China's important, and we can't have this uncertainty about when we can move forward with you,'" Sullivan said.
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