Google Looks To Shutter China Search Operation As Talks With Government Reach “An Impasse”
Mar 13, 2010 at 1:55pm ET by Greg Sterling
Yesterday I speculated about whether Google would be able to have it both ways: to remain in the Chinese search market and still live up to its bold proclamation that it would no longer comply with Chinese government censorship rules. The Chinese, all along, have given no indication that they intend to change their hard-line position on censorship or budge to keep Google in the country.
Today the Financial Times is reporting that Google is in fact about to pull out of the Chinese search market as talks have reached an apparent “impasse”:
Google has drawn up detailed plans for the closure of its Chinese search engine and is now “99.9 per cent” certain to go ahead as talks over censorship with the Chinese authorities have reached an apparent impasse, according to a person familiar with the company’s thinking.
In a hardening of positions on both sides, the Chinese government also on Friday threw down a direct public challenge to the US search company, with a warning that it was not prepared to compromise on internet censorship to stop Google leaving.
The signs that Google was on the brink of closing Google.cn, its local search service in China, came two months after it promised to stop bowing to censorship there. But while a decision could be made very soon, the company is likely to take some time to follow through with the plan as it seeks an orderly closure and takes steps to protect local employees from retaliation by the authorities, the person familiar with its position said.
Google will likely have other operations (e.g., research) still in China on a smaller scale. And the closure of Google.cn will not affect Android or its presence in the world’s largest mobile market. Motorola previously said that it would put Bing on its Chinese Android phones. Baidu, the leading Chinese search engine, is also a choice of course. Presumably Apple will do something similar with the iPhone which is reportedly selling reasonably well in China.
Google will likely still have some search visibility in China as people find ways around Chinese government filters to gain access to Google.com and maybe even Google.cn if that domain continues to operate for Chinese language speakers.
Even though this is not the outcome that many wanted, I believe Google should be congratulated, assuming this story is correct, for taking a bold and uncompromising public position and sticking with it. Chinese government censorship is “evil” and Google has clearly lived up to its mantra in this case.
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Andrew McLaughlin is a sharp guy, no doubt about that. He had a good handle on the Google-China situation as far back as http://googleblog.blogspot.com/2006/01/google-in-china.html when Google.cn was rolled out. I hope he has been keeping up with energy policy.
Google made a good opening move. Suggesting they would pull the plug on Google.cn. This shows good synergy with U.S. foreign policy. When combined with the U.S.’s current stance on Iran, it applies “good pressure” on China.
Twitter, Iran, Google, China, U.S.= That’s the players
The U.S. wants China to come closer to agreeing with sanctions on Iran. One problem. It’s huge. The Chinese rely on Iran for 15% of their oil imports. State-run Chinese oil firms are now thought to have deals worth over $100 billion with Iran. Turning off Iran’s oil(money) supply is a touchy subject that hits close to home.
On the other hand things have been going to great for China. If Goolge pulls the plug so to speak, they would be looking at the type of civilian unrest that occurred in Iran.
This one will take some time. Google is looking good right now on several levels. Human rights, censorship, …….
Is censorship “evil”? Yes.
Is it REALLY REALLY “evil”? Huhh, let me think about it.
Censorship literally exists almost everywhere on planet earth. Are you talking about Hitler, pedophilia, or Tiananmen Square? And what difference does it make here?
China’s censorship is generally regarded as an evil thing because International (read, Western) opinions only cares about the “hidden truth” they care about. It is always easier to take sides instead of thinking.
If Google decides to leave China, this is a sad thing. I respect Google’s courage for keeping its mantra but not necessarily agree with its reasoning. Google’s retreat tells one story and one story only: Google is an American company and will always be.
I honestly don’t think the absence of Google will bring a lot of harm to either China government or Chinese people. Face it, laymen doesn’t care about Google or censorship; elites who whines about Google’s leave are most likely to have access around Great Fire Wall. So, what changes after Google leave? Oh yes, Baidu will take over Google’s market share and ads revenue, but that is going to happen anyway…
It’s a calculated risk. Everyone keeps harping on the “biggest market in the world” bit, but if you look at the actual dollar figures, they suck. 300 million users and search is only a billion dollar industry? Why bother competing against Baidu’s government guanxi and total lack of morals, state sponsored hacking of your systems for anti-humanitarian and IP theft reasons, AND have to account for a government trying to whitewash their history for a tiny fraction of your bottom line revenue? Even with optimistic growth projections for China, it’s way more hassle than it’s worth. Better to just check out entirely and wait a decade or two for the government to resolve their insecurity issues.
Measuring value of the whole market is not as relevant when it comes to the specific business you are running. It is what you CAN get that matters.
A Chinese client that I used to manage has quadrupled their search spending in the past 2+ years with an improved ROI target. Half a million US$ monthly spending is certainly not a monster when comparing to US clients, but that is not bad either. And it is still growing like crazy.
But then Internet business relies so much on localization. Ebay failed, Expedia failed, Amazon failed, Newegg failed. Google is probably the only successful foreign player in China’s market, even though it is also taking some serious beat from Baidu. You don’t go into this market because it is huge or has a lot of potential, which probably has nothing to do with you. You think you have money? Chinese has more cash. You think you got a great brand? Sorry Chinese don’t know about brand. You think you have great technology? Well, that might be a good point, but then is it really useful in the market? Plus there are tons of brilliant young engineers in China and they are cheap. You see, even a vocational school who trains cooks and mechanics is able to initiate an attack on Gmail. Okay, that is a joke.
So my whole point is: if you are not ready to be localized, you don’t have a chance in China. Unfortunately, a lot of people don’t get it.