Google’s showdown with China..

Oleh: saksher
January 13, 2010

On the surface, Google’s threat to shut down its China operations after a cyberattack on its infrastructure looks like sheer business lunacy. How can the search giant give up on the world’s biggest growth market? It’s easier than you’d think.

First, the background. Google in a long blog post detailed how it suffered a cyberattack that changed the company’s outlook on China. The key points (Techmeme):

  • The attack was coordinated and focused on 20 large companies and some appear to be confirming that they were also involved.
  • The aim of this attack was to get the Gmail accounts of Chinese human rights activists.
  • The attack also focused on U.S., China and Europe-based Gmail accounts that supported human rights in China.
  • Google is way public about this attack and its reaction to them.
  • Google says it won’t continue to censor search results and may just shut down operations in China.

Reading all of this laid out in a blog post can be summed up in one word: Wow. Now let’s look at how Google arrived at this big decision, which could result in a complete pullout. Why would the Chinese government give a hoot if Google leaves the country? If Google departed, the Chinese government’s chosen champion—Baidu—will lock up all the search share. Baidu already has 63 percent of the Chinese market, according to comScore.

So let’s look at some of the calculus behind Google’s big decision on China.
– Google’s currency is user trust.
- What happens in China can hurt Google’s other businesses.
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Google doesn’t have as much to lose in China–at least today
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There may be a regulatory payoff.
- Google’s threat to leave China may be a bluff.

Note: Source taken from ZDNet blog.

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