In a surprising turn, GoDaddy.com, the world's largest seller of Internet domains, today announced it would no longer be registered names in China due to the "chilling" new requirements imposed by Chinese authorities.

Among the new regulations: requiring domain registrars like GoDaddy to turn over to the government a color image of ID documents, photo headshots, a business license and a signed physical contract for each registered domain. Citing concerns for the privacy and security of individual customers, GoDaddy has decided to cease registering “.cn” domains and in effect, scaling back its business significantly.

All of this comes on the heels of Google’s highly publicized move to shutter its Google.cn search engine citing its unwillingness to self-censor its search results in accordance with Chinese regulations.

Together, it's a stunning series of events. Two of the world's largest Internet companies are essentially walking away from the world's largest online population (over 400 million users in China and growing) and the long-term opportunities that it promised.

There are two arguments to be made here. The first argument, one being made by the Chinese government, is that companies must respect the sovereignty of the nations in which they do business, which includes adhering to national laws and regulations. Yet the argument being made by Google and now GoDaddy is that as leading global organizations, they have a responsibility not only for their own bottom lines but for the societal impact they have on the world. In this case, censorship and privacy (for Google and GoDaddy, respectively) were ethical and social values that each company was no longer willing to compromise.

There is a broader trend in play. The recent backroom dealings of Wall Street institutions notwithstanding, we are living in an era of tremendous corporate transparency. Aided by the democratization of information on the Internet, brand stakeholders today — not just consumers but also media, employees, investors, and activists — have unprecedented access to the actions, behaviors and performance of any given public company at any given time.

In turn, brands today are under greater pressure to stay true to their core values and the standards demanded of them by their constituents, as every action is quickly identified, analyzed and discussed. Brands are no longer simply evaluated by their financial impact but by their social and ethical impact as well, and every high-profile action a brand takes must take into consideration all three.

Google and GoDaddy looked at the China market and ultimately decided they could no longer effectively address all three factors (finance, social, ethical) while staying true to their brands and stakeholders, and so here we are today.

This is far from over. The actions of Google and GoDaddy will now cast a light on the hundreds of other leading global brands doing business in China who are in all likelihood struggling with similar issues, as here censorship, privacy concerns, and loose IP laws are often everyday business realities.

Which organizations will continue to do business in China at a potential risk to the perceptions of their brand and corporate values? Will other organizations be as bold as to withdraw from such a fast-growing and promising market? And how does China, a nation so eager to prove to the world that it is ready to take its place among the developed elite, react in the face of a direct challenge from such an esteemed global brand?

Eric Lin is the general manager for the Siegel+Gale Shanghai office.