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>Maybe but they'll lose the productivity gains from networked organizations and communities

Absolutely but the effect will be not be huge in my opinion because of the language differences. All my Chinese friends here in the EU still use mainly Chinese language website, most of which are based in China, especially the social networking ones.

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Companies aren't going to manage inventory, customer relations or finance over open channels. So they'd reduce the gains from networking their own internal communications.

They could try to mitigate by rationing secure channels, or allowing them with backdoors, but this still sacrifices the spontaneous creativity of a truly open system.

You make a good point. It certainly would discourage or kill small businesses but, as you suggest, I'm sure larger more powerful ones will get special treatment (native ones particularly so). Considering China was willing to let Google leave the country it appears that the balance of power is shifting already.

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