Google Should Embrace Its Role as a Troublemaker in China
Google's (GOOG) decision to close its mainland China search engine and direct users to an uncensored Hong Kong site has been widely seen as disastrous for the company's business prospects in China. A lot is at stake -- China is the largest and fastest growing market for both internet and mobile users. But by taking a principled stand and refusing to censor search results, Google can lay claim to an important market: the wealthy, well educated Chinese citizens who desperately want access to unfiltered search.
It's clear that Google has been able to appeal to Chinese users in a way no other Western Web company has. In the last six months of 2009, before it entered into open conflict with the government, Google was able to make significant gains in market share against the government backed Baidu (BIDU). It did this in part by censoring less than its counterparts and by alerting users when information they saw was being censored.
My colleague Erik Sherman argues:
Given Chinese history and its long-demonstrated approach to negotiation strategies, the idea of a company trying to play hardball with the Chinese government has been mystifying. Google has seemed alternately blindly arrogant and hopelessly naïve.In fact, the Chinese government is mindful of Google's clout, both locally and globally. Two weeks ago China's minister of industry and information technology, Li Yizhong, condemned Google's actions, but noted that "If you don't leave, China will welcome that; if you don't leave, it will be beneficial for the development of the Internet in China." The government could completely block Google's Hong Kong site at any time, as it does for bigger sites like Youtube, Twitter and Facebook. The fact that it hasn't shows the respect Google has earned.
In the short term, Google will suffer. China Mobile (CHL) and China Unicom (CHU), the nation's top two mobile firms, have already canceled deals with Google following government pressure. Advertisers are fleeing to Baidu and Google employees on the mainland will certainly be in an uncomfortable position. The showdown between these two powers is far from over.
But by differentiating themsevles from the rest of the search market Google is offering Chinese users a powerful alternative, laying the groundwork for future business with the country's burgeoning middle and upper classes.
Image from Flickr User CainandToddBenson