Like picking a fight with the biggest kid at school, Google has threatened to pull out of the Chinese market. China is the worlds largest internet market and there are now concerns that the companies’ statements could affect their bottom line, not to mention adding fuel to an already tense relationship between the US and China. The possibility of leaving China came about after Google suffered a cyber-attack that resulted in the theft of some intellectual property. However we don’t know exactly who is to blame for the theft or what exactly was stolen.
Google entered the market with a Chinese language search engine in 2006 and an agreement that they would censor their own searches as long as they were able to disclose that those searches were in fact being censored. Since that time their market share has been slowly growing in the country but they are still in the number two spot, next to Baidu (a home-grown Chinese search engine). Compared to Google’s global penetration of 90% market share, the 43% that they currently have in China is slightly lagging.
The move to publicly denounce Chinese censorship and the alleged cyber attacks has been considered a bold one. In fact it may have left a lasting impression if China decides that it doesn’t want Google’s business any longer. It’s a bad idea to hurt the old boy’s feelings. If that turns out to be the case, there will be little to discuss. China tends to play by its own rules because…well, they can.
So maybe Google is making good on its slogan “Don’t Be Evil†by not participating in censorship (anymore) or maybe the risk to intellectual property was not worth their 45% market share in China. Whatever the reason….was it a good move? Most would say “probably notâ€, at least not in a business sense. There are already concerns about damaged relationships with advertisers. China’s population combined with its rise to affluence has made it a magnet for corporate investment but Google seems to be “too cool for schoolâ€. Then again who can put a price on freedom of speech?
However this game plays out, we do know that Google has said that it will no longer filter content on its www.google.cn site. China has since downplayed the statements made by Google but stands firm that all foreign companies must abide by Chinese law. Next up…they will hold talks. And I guess we’ll have to stay tuned to see what the verdict is. Personally, I don’t care either way.
