Things are getting interesting over in the Chinese internet search market with developments following the attack on Google gmail accounts recently reported in much of the press, with the company now threatening to pull out of the Chinese market entirely if they are not allowed to operate on the same terms as they do elsewhere in the world (i.e. uncensored search services – unlike what has been provided so far since Google entered the market in 2006 with an agreement to assist in state media censorship).
What makes this situation fascinating is the fact that, unlike anywhere else in the world, Google is not the super-size search giant of China – instead it occupies only just under a third of the market, with over 60% taken by domestic engine Baidu (the content of which is controlled by the Chinese government). Put simply, Google’s threat just doesn’t seem that scary to Chinese authorities since, even if the unlikely pull-out does materialise, Baidu will simply fill the void and thus tighten the censorship regime of China’s internet access.
However, in terms of international image, China will have been rejected very, very publicly with its reputation tarnished in spheres beyond its direct media control (i.e. outside its own borders).
This is the real weapon of Google’s threat to pull out: it is not to leave a hole in the Chinese search market, but to very publicly condemn China’s media censorship regime. And this certainly is something that would be taken seriously by Chinese authorities, at least more so than the problem of temporarily de-stabilising their web search market.
The issue is always one of how far you are prepared to go before you draw the line in dealing with such a government’s demands – Google is finding that it’s actually not able to get the same degree of market domination in China as it has elsewhere, precisely because it doesn’t go quite as far or submit quite as much as Baidu, which is totally under the government’s control (and therefore receives official support).
Of course the further Google goes in terms of co-operation with Chinese state censorship, the more flak it draws elsewhere from both assorted online and print sources, and its own workforce – only the shareholders are seemingly happy to acquiesce unquestioningly – unsurprising with such huge profits at stake, even with only 31% of the market. It will be fascinating to observe if the company is able to successfully overcome their protestations, should the pull-out be attempted (one thinks not, though we might never even come to this stage…).
There have also been numerous comments given which cite this as an opportunistic PR-grabbing attempt to exit from a market which Google has given up hope of conquering after four years of trying – and this of course is exactly what many of the Chinese authorities (including Baidu) are saying. I personally am somewhat disinclined to believe this however for two reasons:
1. Even with a third market share, Google makes hundreds of millions of dollars in China – it is unlikely to forsake this as mere small fry, just because the figure is not tens of billion.
2. Even more crucially – this is exactly the PR line that you’d expect Chinese authorities to take in order to limit the damage to reputation and image that would be done by the Google pull-out. As a result it seems super fishy to me as an explanation…
All in all Google stands poised at a difficult crossroads – and maybe exasperated that after four years it has been unable to change the terms of its operation in China (the reality of which is underlined by the recent attacks – i.e. that they are essentially part of the apparatus of state control and censorship), the only way they really should avoid is going back to how it was before the attacks and the ensuing media accusations. As always we’ll keep you updated with what happens, but I expect this to turn into quite a political and sensitive ‘hot-potato’ – at least outside of China, for as we know, inside its borders this very article that you are now reading (and anything relating to the whole story in fact) is probably unavailable to the Chinese internet community…
Dejan Levi