Google’s Losing Hand in China

It took me a while to digest the situation that’s arisen between Google and the Chinese Government.  On the face of it you have the PR statements directly from Google’s official blog:

“We detected a highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property” and “we have evidence to suggest that a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists.”

Which, was followed by Google publicly calling out the Chinese Government and stating that they will pursue the operation of an unfiltered google.cn.

However, if the Chinese Government will not allow the unfettered access for it’s people to all that Google indexes then they will pull out of the Chinese market completely and shut down google.cn as well as the offices that the company operates in the country.

A Champion of Free Speech?

Huzzah Google!  But not so fast.

Regardless of the corporate slogan, “Don’t be evil” Google is a for-profit publicly traded entity that exists to make money.  Why would a company that actively cooperates with the Chinese Government by employing people whose sole job is to track down and eliminate disallowed content from the google.cn index suddenly change it’s tune and become a trumpeter for free speech?

Advertising revenue is by far the largest source of income for Google so why threaten the Chinese government in such a way that would deny your ad partners the chance to reach the 338+ million internet users in China?  On a stance of free speech the shareholders will not have it.

So what really happened?

What Really Happened

It’s important to understand what Google is really concerned with in its relationship with China.  The attacks that China made on the intellectual property of Google and at least 20 other western companies is the real key here.

It’s smart for Google to focus its media spin on the activists whose gmail accounts were hacked (using pure social engineering techniques, BTW), however, the reason so many of us use Google is because of its prowess in search.  Though ad revenue may keep the cogs going, if the search functionality was crap there would be no reason for people to use Google.

China’s attempt at co-opting the search algorithms potentially degrades the functionality of Google search. Big time – potentially.

The Search Algorithm, Not the Users, is What Google is Afraid of Living Up

Currently, estimates put Google’s China revenue in at around $300 million, or 1.6% of its total sales. Which is a rather small concession compared to what it would lose if say Baidu, the current king of Chinese search, were to get their hands on what makes Google such a worldwide search powerhouse.

A Chinese competitor using the Google IP could become a worldwide competitor in short order, leaving much greater Google losses in its wake.  I guess keeping enemies closer is a bit trite in the eyes of Google, but it looks like this is simply their safest bet.

The Chinese have no incentive to concede and Google can’t risk its golden goose.  The days of google.cn are numbered indeed. That is, unless China decides to stop their cyber theft ways.

But hey, China is already hacking into our very own government’s web systems and are the biggest thieves online at the moment, so I’d say that is not likely to happen.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: