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

January 13, 2010

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.


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.

Google to stop censoring results in China; may close operations altogether

January 13, 2010

Photo credit: googlisti

This is the extraordinary and brave decision of Google, in reaction to hackers attacking both Google’s corporate infrastructure and attempts to access email accounts of Chinese human rights activists.

This is certainly the biggest tech story this year, and possibly of the millennium. Forget the iPhone, this is really important. This is about human rights, and putting beliefs ahead of commercial interests. As the story broke initial reaction from Asian stock markets hit Google’s share price – this was of course inevitable, their future growth and earnings could be severely restricted.

Why is this significant now? Google were heavily criticised four years ago when they launched a censored version of their search engine in China, but believed that the benefits of its presence in China outweighed the downside of being forced to censor some search results there, as it would provide more information and openness to Chinese citizens. Of course it was also clearly better for Google to operate in the country in a somewhat restricted way than not operate there at all.

However, things have now moved on significantly:

These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China.

Critics will point out that Google has “only” around a 30% market share, which is low, but they are the only real alternative to the market leader, Baidu, and as China has the most internet users of the world it’s still significant. For any public company to willingly exit the Chinese market is a bold step.

It really does appear that Google are staying true to their “don’t be evil” motto; they are putting their beliefs first and foremost:

This information goes to the heart of a much bigger global debate about freedom of speech

Indeed, and I can’t help thinking that perhaps Google, as one of the largest and most important global corporations can perhaps succeed here where Governments have failed? We’ve seen in recent years that foreign governments have little bargaining power in discussions with China. Can Google triumph here where entire countries have failed?

We have decided we are no longer willing to continue censoring our results on, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down, and potentially our offices in China.

It may not come to that of course, but it’s already aroused a huge amount of debate on Twitter and huge outpourings of support from people who frankly were beginning to think of Google as a corporate machine. In one fell swoop this announcement has made Google respectable and cool again in the rest of the world, certainly with customers and staff, if not investors.

Link: Full Google announcement.

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.

Reaction to the breaking news on Twitter:

@Scobleizer: This breaking Google story is the biggest thing to happen in tech in decades. Huge impact all over the world.

@amorganis This possible move by Google has changed my whole perception of the company. Go Page & Brin!

@huwbowen Google just got awesome again: unbelievably great!

@friendofasquid Google = Wow.

@kelvin8048 Corporate Bravery from Google

@markbao Google has won a lot of respect for me for standing up to the China situation.

@sacca Google isn’t above reproach. But their bold China stance is why I feel lucky & proud to have worked there

@Blader Wow. That’s… Wow.

@tom_watson Wow: A new approach to China. They’re stopping censorship. Google=heroic

@ahfeel Congratulations Google ! I’m so happy to read these lines… This is really a great step forward.