The New York Times reported Tuesday that Google has stated it would stop cooperating with Chinese Internet censorship and consider shutting down its operations in the country altogether, citing assaults from hackers on its computer systems and China’s attempts to “limit free speech on the Web.”
This stance taken by Google is a bold move.
Google has been in China since around 2006. China has always been a challenge to penetrate for Google. Unlike the U.S. and U.K. and many other parts of the world, Google only reaches about 30% of the Chinese market; in China, Baidu is the dominant player. All indications were that business from Google was moving forward in China, all be it perhaps more slowly.
A pull out of China would have great implications on Google’s long-term business plans as China is still a growth market for them — and potentially a very lucrative one. To consider pulling out of one of the largest potential-growth markets in the world must have required a decision made at the highest level. Even if Google only reaches 30% of the market, it still translates to more than 100 million users and a tremendous revenue growth opportunity. The search engine market in China was worth more than $1 billion in 2009, with analysts expecting Google to make about $600 million from China in 2010 (Source: BBC).
A pull out by Google would also mean a less-competitive search marketplace from a media perspective, with really only 1 key player – Baidu. The need for healthy competition is always important to deliver product innovation and provide a choice for advertisers.
How talks will go with the Chinese government? We’ll need to wait and see.
The official announcement from the engine can be found on the Google Blog.
Rosemary Lising is Managing Director, GroupM Search – Asia Pacific
What intrigues me more than simply the business implications Google may face is the larger issue of human rights and the notion Google has chosen to take a stance against (likely) the Chinese government.
The challenge is the “hackers” were likely members of the Chinese government in some form or fashion as the accounts hacked spanned several verticals (finance, media & technology…among others) but specifically targeted human rights activists.
So, as Google, what do you do? As the powerhouse of the digital era the first thing you do is step back and examine the implications of this issue from all angles.
Since launching Google in China in 2006, Google has agreed to censor the search results served on Google.cn. Example: Search results for “Tiananman Square” previously only resulted in images of the landmark itself, further illustrating Google’s cooperation with censorship.
Now that accounts have been hacked and intellectual property stolen, Google now has the opportunity to make a statement about human rights in China. My question and I’m curious to hear other thoughts, is this an entirely noble gesture by Google? Or is this a great opportunity to seek goodwill among other potentially profitable nations?
Domestically, Google has a reputation for taking a social stance. It is an interesting and highly visible move to be doing so with a country, like China, who receives so much attention and scrutiny for the Government, human rights and its ways. One could scrutinize or applaud their efforts. However, I sense that consumers at large feel the Internet — and specifically, search engines — are like public libraries – an open source of information with doors open for all to use. It’s easy to forget that afterall, search engines are businesses, too. Enough might be enough for Google with the cencorship and now targeted cyber hacking potentially driven by the government.
@Valerie, you raise an interesting question about whether Google’s threat to challenge the government’s policies and pull operations out of China have a bigger business purpose behind it. With Google having a weaker market share almost everywhere else outside of the U.S., will this visible issue with China mean something to investors, advertisers and consumers in countries where human rights is an important, supported issue — hus create a perception, and maybe, a behaviour change where Google gains preference and share?
It will be tough to see the competition with Baidu decrease and the variatey of products and offerings in the search space diminish. However, I think it will be many months, if not years, before Google walks away from the revenue, potential market and the forward-thinking technology landscape China has to offer. After all, Google’s always loved a good challenge.
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