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Google vs. China — Who's Got the Most To Lose?
Barence writes "Google looks set to pull out of China, but who will suffer most? The search engine or China? At last week's South by Southwest conference, Kaiser Kuo, a former director of digital strategy for the Ogilvy & Mather advertising agency in China, gave an illuminating talk that examined the history of Google and other Western internet firms in China, their relationship with the Chinese Communist Party (CCP), and the likely outcomes of the current stalemate. Kuo explained that Google had earned the respect of the tech-savvy urban elite by protecting users, making censorship clear and by protecting its employees in China. That means Google is walking away from a 35% market share, which contains a far wealthier demographic than local provider Baidu. The Government, meanwhile, which has been very pro-competition, is about to hand a complete monopoly to Baidu, harm its international standing and the development of net technologies in the country. Is it a lose-lose situation?"
Hey, it turns out that there are stupid questions!
If you were blocking sigs, you wouldn't have to read this.
the Chinese people.
Google loses, Baidu wins, and China doesn't give a damn either way. All those Google China employees will likely just move their skills over to Baidu (assuming they were locals to begin with and probably many of the ex-pats as well) and take what they know with them when they do. Baidu gets an automatic monopoly, no matter what Google's current market share, and China, or specifically the CCP doesn't care because they still get what they want- the look of being the caring provider that "supports competition" while still controlling the flow of data.
"Growing old is inevitable; growing up is optional."
Without Google adds, how will the Chinese know that their penises are small much less that there's a cream to make them bigger which costs only $19.95!
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
Not even a link to a story yet, but the ticker on the BBC News home page is reporting that Google has announced that it has stopped censoring its search engine in China. Since China has already made her position clear on this eventuality I suppose this must mean that Google believes that it might as well be hanged for a wolf, than a lamb.
I'm nipping out for some popcorn; the next couple of days are going to be really interesting...
UNIX? They're not even circumcised! Savages!
I mean, without China, there's only 5.5 billion people left in the world to cater to. How can they possibly get by on such meager numbers?
Google is now redirecting to uncensored results via Google.hk, and they have a page showing what services China is blocking so they can track it in a transparent way. Take a look: http://www.google.com/prc/report.html#hl=en
That number sounds about right.. just google it.
Second result in google from over a year ago breaking 30%
~Mekkah
Yes, Google has to respect Chinese law if it wants to do business in China. As a result, it has decided not to do business in China. (Well, there are almost certainly other significant reasons as well, but the censorship laws are part of the reason).
Does a line appended to your comment give your post meaning in and of itself, or only in relation to those without?
It's not about business as much as it is about censorship. What you are forgetting is that the current group of Chinese students don't even know what tank man is, never mind what was happening in their own country when he stood in front of the tanks. Everyone seems to agree that Saddam Husein needed to be taken out because he was a bad man. The Chinese government is a bad government and everyone is politically dancing around this fact while trying to make money in China. Google is saying "hey, we have a motto and doing business with such a government is not in keeping with it". No matter who wins or loses, this stands to be a surrealistic highlight of the fact that there are bad people in the world, and the world is too small to allow them to corrupt such a large part of the world with censorship, secret police, and many other unsavory things. The mere existence of the Chinese government and who they will be supportive of creates a safe environment for more of the same to blossom in different places. It's not like the red scare or anything, but if they don't want to do business with anyone who will not also partake in ill treatment of their citizens, the world really needs to step up as a group and say NO, you're wrong and we won't play. That means that we should stop buying things made in China. period. If Google can say no, the rest of us should be saying no. If you want cheap goods, try another country of origin, just don't buy 'made in China' goods. Besides, your pets and children may live longer if you don't.
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Google is a business, like any other. Do you think that they haven't run a CBA on this move? While the Chinese population is large, the viable market for Google's products is not. How many people in China have regular internet access? How many of those have disposable income to spend on things they see in advertisements? How many Chinese companies that market locally are going to have their profitability affected by search engine advertisements? On the other hand, how much does it cost Google to protect against cyber-attacks from the government? How much does it cost them to lose their trade secrets and IP? How much does it cost them in goodwill elsewhere to remain in business in China, following those draconian laws?
Google is coming out ahead in this move; that's why they made it in the first place. The Chinese government comes out ahead as well, since they gain even greater control over the flow of information within their borders. The only ones who lose are the Chinese people.
There's pretty clear evidence that "Western" companies that hang around China long term tend to develop local competition. It may be that for the next year or two Google will make less profit, but quite likely, after that they will make more profit since the Chinese competition will find it more difficult to steal knowledge from Google if they aren't present in the country.
P.S. your implicit assumption that countries are simply successful in everything they choose to do is just wrong.
=~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
Google has the most to lose because they are a company and China is a country.
Google will make its profit, but not as much as if it would have if it stayed in China.
Of course Google also gets to look like the good guy... Tried to stand up for freedom and was smacked down by the mean ol' Chinese government... May actually get them some new customers that they might not have had before. At the very least all this press is good advertising.
You're probably right... They're losing access to a huge market... But it's still possible that Google will wind up doing pretty well after all this. Sure, they'll lose some income... But how much were they spending (not just in money) to keep things up and running in China? Obviously Google thinks the cost outweighs the benefit.
China will make itself whatever its government wants it to become where Google is around or not.
You seem to think that a government can miraculously transform itself into anything it wants, and automatically be successful. That is not true.
Sure, the Chinese government is pretty damn stable. It is unlikely to topple because of this Google thing. And they'll release plenty of propaganda that will likely make them look even better in the eyes of the Chinese public...
But this has to hurt their international image. They're so repressive that Google couldn't even do business with them. I'm sure plenty of other companies will think twice before opening offices in China.
There are probably plenty of citizens who've gotten used to Google, and will feel its absence as well. Not to mention the folks who were employed by Google.
I don't honestly believe that any of that will amount to a whole hell of a lot... Google's just a search engine, I doubt if they'll have that much of an impact... But there will be an impact. Both within China and without.
"Work is the curse of the drinking classes." -Oscar Wilde
The only part of Google's business that is leaving China is the search engine. Their other divisions (mobile phone with Android, advertising, etc) are staying put. They have a lot of avenues through which to offer their products to the Chinese. The search engine is their core tool, but it isn't their only one.