Invite colleagues
Like most Internet workers in China, I spend a good few hours discussing the ramifications of Google's actions on Wednesday. For those living in a cave and don't know the Google gossip .... here is a summary; following a cyber attack, Google said it would stop censoring its search results. The company added it may also pull out of China completely...
So, over the past 48 hours there has been intense speculation over what is happening in both Mountain View (HQ, for Google) and here in Beijing within the Government officers. For all the publicity of the blog post, it appears too contract dramatically with the silence from both sides today. My personal perspective (uninformed as it is) may differ from mainstream media but I suggest that there was a clear plan by the exec's of Google in trying to embarrass the Chinese Government.
So, here is my naive assessment of the situation.
Facts: Google has been in country since 2000 (although only with a google.cn since 2006). In this time they have developed a 22-30% (depending on the research you are reading) search market share ... clearly, a great effort but for Google to move past Baidu into first place would appear unlikely. Google's revenue (from search ads) comes both from Adwords (ads on the search results page) and from Adsence (ads on non Google websites). According to estimates by J.P. Morgan, about $600 million in 2010 revenues.
Speculation: Shutting down China would be a strategic loss for Google as China is one of the largest and the fastest growing online markets in the world- already the largest in terms of Internet users (338 million) The company’s inability to participate in China’s growth will be seen as a long-term negative. So what is the middle ground, if any?
Firstly, I am not sure the cyberhack would have been the only trigger. I find it hard to imagine this is the first time Google or other multinational firms have been attacked. So what is different about this one? I doubt this is a politically motivated move (although many with other agenda's are jumping on this bandwagon)... I believe this is strictly a commercially motivated move- What's there left to loose? Google can't seem to get traction in the search world (PC based search) with the given status quo. So should Google leave China .. they would definitely loose their Adwords revenue but does rule out Google maintaining an Adsence business? No... therefore it is arguable that the revenues in 2010 are not all lost ... just majorly impacted.
What if the middle ground is to close the google.cn search engine... which wins major support from the free speech advocates and other anti-China groups. But Google maintains an operation to support Chinese services such as gmail, gtalk, google maps, analytics etc? This gives Google China local netizen support and moreover given google.com will also be most likely blocked (I don't believe the Chinese Government will allow a censorship-free search engine to be accessed in China)
Therefore, is it a big leap to see Google (without the tension of censoring search information) being able to remain in China but positioned as a different type of company; maybe one that is a mobile software vendor or a services company. What do you think? Please log in and write a comment...
Written on Friday, 15 January 2010 20:47 by Matt McDougall