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Lucy Griffiths

Google Readying China Withdrawal

19th Mar 2010 News, Industry News 2 minutes to read

Several reports today suggest that Google will formally announce their departure from the Chinese market on Monday. This means that effective as of April 10th, China could well be one of the few Google-free zones.

Whilst heavy handed state censorship in China is a way of life, clearly Google are no longer prepared to play ball. Their ongoing feud with the communist nation’s leadership regarding the hacking of accounts and removal of content looks set to come to a juddering halt on Monday, with the announcement that they are to withdraw from the market.

The row initially kicked off in January [see: Google Threatens China Walkout], when Google allowed access to censored information following a breach of security. The attacks were supposedly carried out from two Chinese schools; a claim that China’s Government refutes. Regardless of the whys and wherefores, this caused a rupture in the already fragile relationship between Google and China; a rupture that now looks to be terminal.

China’s massive online population makes it a hugely lucrative market. It’s certainly not somewhere that you can easily turn your back on. Whilst Google doesn’t have the same measure of dominance in the country as it has elsewhere, China is a growing market with huge potential. Therefore the decision to abandon it (at least for the time being), won’t have been taken lightly.

In fact, just a little earlier this week Jimmy Wales, the founder of Wikipedia, was speaking of how Google was a positive force in China. During his keynote speech at the Changing Media Summit, he said “I strongly support Google in this situation… it’s important to pressure other internet companies to act in the same way. Internet censorship is a serious infringement of human rights.”

This of course has been echoed elsewhere in the online world too. Including some unlikely sources, such as search rivals Yahoo! and even the White House [further reading: Google’s China Move Gets Yahoo’s Support | Huffington Post and White House backs ‘free Internet’ in Google-China dispute | AFP]

Google’s exit from the market has long been anticipated, if not widely welcomed. This week shares in major competitor Baidu have increased by 6.6%, which contributes to a 51.7% overall rise since Google first announced their intention to withdraw (figure courtesy of Tech Trader Daily). Conversely, Google have experienced a 6% drop in that same period. This is of course a reflection of just how important China is as a market for online profitability.

Whilst this will negatively impact Google’s healthy income stream, their credibility can only benefit. China is a contentious market for any company to enter. With state censorship and related issues causing endless controversy; for many, the moral negatives far outweigh the financial benefits. By pulling out of the country, Google can free up resources for more positive ventures elsewhere. It also isn’t the worst PR either.

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