Google’s brave decision in the World’s biggest internet market

Photo credit: j_philipp

Since the news broke that Google are considering pulling out of China I’ve heard a lot of cynics saying that the company is only doing so because they are not doing well in China. Robert Scoble explains much better than I why that is nonsense in his post entitled, “Why now Google?“.

if that was how business decisions got done than Microsoft would have pulled out of the search business long ago

I wanted to back this up with some facts, to quantify this situation.

While Google is the market leading search engine is most countries around the world there are some notable exceptions:

  • China 27%
  • Czech Republic 35%
  • Hong Kong 26%
  • Japan 38%
  • Russia 32%
  • South Korea 3%
  • Taiwan 18%

Is Google pulling out of these countries too? Of course not. As long as they can operate freely they will continue to operate in any country around the world. Things can change. Once upon a time the browser war was a lost cause, Internet Explorer completely dominated and it seemed utterly impossible anything would change that. Now IE’s market share is rapidly declining and stands at 63%. Things change.

Back to China. These stats say Google has a 27% market share in China, and this makes it the number two provider behind home-grown competitor Baidu.

There are 338 million internet users in China, take 27% of those, and Google has perhaps 89 million regular users in China. That means that there are more Google users in China than in the UK, even with Google’s 90% share of the UK search market! This is even more startling when you consider that only 1 in 4 Chinese are online at the moment compared to 3 in 4 British.

Google is giving up approximately $250M in annual revenue and a significant challenger position in what is already the World’s largest internet market, a market which still has a lot of future growth left in it.

Google’s move is bold, brave and worthy of respect.

Sources:

UPDATE: 22nd March – Google is effectively closing its mainland Chinese service and instead redirecting users to its uncensored Hong Kong site. More: Google blog posting.

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3 Responses to Google’s brave decision in the World’s biggest internet market

  1. Hi Scott, I agree the move is bold … But I still feel their reasons for exiting are not simply related to a “moral compass” and have more to do with the combination of lack of market share (which is declining) -and- the security vulnerabilities they may feel exposed to as a result of operating search within the Chinese firewall. To that first point, I saw that your stats are from October 2008 (iResarch). More recent data shows significantly less share of 20.9% (Q1 2009) http://bit.ly/5yHOWq and 19.8% (Q2 2009) http://bit.ly/65FzyM also from iResearch. Thanks for the post, Eileen!

    • I really struggled to find accurate market share stats for China, thanks for these links. A Google spokesman told Scoble they’ve just had their best ever quarter in the country, but perhaps other services are growing at a faster pace, and that accounts for the apparent decline in market share.

      • “best quarter ever” is probably with respect to revenue, i.e. “Google took 32.8% of search revenues, up from 29.8% in Q4 and 25.8% a year ago, according to iResearch” from the Q1 figures/report and article. Thanks again for the post and forum for discussion!

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