I Love the Game Google is Playing

January 13, 2010 |  by  |  Economics and Finance  |  Share
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Photo by "rustybrick"

Photo by "rustybrick"

This column is provides an alternative speculation as to why Google might be leaving China.

The New York Times reported that Google plans to shut down all operations in China due to assaults from hackers, as well as, China’s attempts to limit free speech online [1].  Although this makes Google sound heroic, it hardly sounds like the truth in its totality.  Google is a multinational corporation that has to cater to shareholders, so financial straits are most likely the real reason for the anticipated departure.

Google has been cooperating with the Chinese government’s demands for internet censorship for years.  In fact, Phillip Lenssen’s blog, blogoscoped, provides some shocking screenshots of how the censorship materializes itself on Google’s China based search engine [2].  After viewing Lenssen’s blog post, it is clear that search engine censorship is probably the least important reason why Google is planning to leave China.  With over 1.3 billion people to capitalize off of, there is no reason why human rights trump the prospect of profit.

The real reason why Google is leaving China is most likely because it has failed to effectively capture China’s search engine market.  Baidu, which is China’s leading internet search engine, has 77% of the market share, according to Jennifer Li, who is the company’s chief financial officer [3].  Google may be king in the United States, but it is just a pauper in China. An article on Digital East Asia, by Doug Herman, sheds light on why Google may have lost to Baidu.  Some of them seem like silly reasons, but after much thought, appear tangible.  For instance, the word “Baidu” is an actual Chinese word that is associated with achieving one’s dreams.  On the other hand, the word “Google” is just gibberish to the Chinese.  Another major reason why Baidu beat out Google was because it was able to better personalize the search experience with the average Chinese user. Given that Baidu was built at home, they were able to overcome the language barrier that Google originally stumbled over.  Also, Baidu apparently recognized that the Chinese love to illegally download music.  Herman writes that one “of the leading uses of Baidu and other Chinese search engines is music search. The music files that Baidu points to in its results are overwhelmingly unlicensed but the company has never felt obligated to observe international copyright laws. Google on the other hand has always made an effort to comply with copyright laws and therefore has ceded a tremendous amount of search traffic to its less law-abiding competitors” Most importantly, Baidu is a local champion, so it probably enjoys first-class treatment from the Chinese government.  That pretty much kills any prospect of Google getting back on the horse.  The dragon has knocked Google down, and it will probably not get back up.

Even though Google is leaving the world’s largest market of internet users, it is still making a clever exit.  Imagine a worker who hates his job because his boss is the world’s biggest jerk, but stays because he needs the money.  One day the worker receives a massive pay cut, and the worker is steamed about it.  So, the worker decides that the new salary is not enough to keep him from dealing with the aggravation the boss gives him every day of his life.   Thus, the worker quits.  However, the worker doesn’t just quit.  He quits and goes to the boss’ wife and tells the boss’ wife that the boss is cheating on her with the secretary.  The worker also goes to the boss’ competitors and divulges all company secrets.  Lastly, the worker goes to the media and reports that his former boss evades taxes and embezzles company funds.  Obviously, this “worker” is Google, and the “boss” is China.  China has been messing with Google for years.  Now Google is paying China back in its own coin, and making the dragon appear to be a demon.

Works Cited

[4] Herman, Doug. “Can Google Beat Baidu In China? Why It Remains #2 and How It’s Trying To Become The Leader.” Web log post. Digital East Asia. 28 Sept. 2009. Web. 13 Jan. 2010. http://www.digitaleastasia.com/2009/09/28/can-google-beat-baidu-in-china-why-it-remains-2-and-how-its-trying-to-become-the-leader/

[1] Jacobs, Andrew. “Google, Citing Attack, Threatens to Exit China.” New York Times. Arthur Ochs Sulzberger, Jr., 12 Jan. 2010. Web. 13 Jan. 2010. http://www.nytimes.com/2010/01/13/world/asia/13beijing.html

[2] Lenssen, Phillip. “Sites Google Agreed to Censor in China.” Web log post. Blogoscoped. 26 Jan. 2006. Web. 13 Jan. 2010. http://blogoscoped.com/censored/

[3] Mehta, Stephanie N. “Google v. Baidu: Which company will win China?” Web log post. Fortuna Brainstrom Tech. Time Warner, 28 Dec. 2009. Web. 13 Jan. 2010. http://brainstormtech.blogs.fortune.cnn.com/2009/12/28/google-v-baidu-which-company-will-win-china/

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130 Comments


  1. from what we know, and we know very little about what goes on inside google head office, i agree with you. the first thought that came into my head when i read about them leaving China’s web search engines over human rights issues was the fact that they didn’t have any moral/ethical problems for the past two years in actively agreeing to censor websites.

    many of the problems google faced were solvable ones. for example, their name can easily be changed. they could create a search engine specifically geared towards Chinese internet users instead of superimposing their existing model on an unwilling group of consumers.

    but there were many problems which were much more difficult to navigate around. at the end of the day, google made a business decision. However, that does not mean that they haven’t gone back and weighed the implications of their previous agreement of censorship. it could very well have played a role in the discussions behind closed doors.

    on a side note, LUC just did an interview with Chris Brown, who is an expert on alternate energy in China. he had some interesting comments on this topic. we are currently in the editing process, but the video should be up in a few weeks.

  2. Google.cn will no longer exist because Google is operating in a hostile environment in China. Google.cn cannot compete with the state-sponsored Baidu, which has a disregard for international law and fair competition. Secondly, Google wants to protect its intellectual property and avoid the high level security breaches coming straight from the Chinese government. Google is ready to lose its 30% market share and $600 million in revenue. You simply cannot compete in a country when that country’s government is out to get you, and also use you for its own unethical actions.

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