Google's China strategy

Google is threatening to stop censoring search results and even to leave the Chinese market alltogether – the first action almost automatically leads to being forced to close operations.

One can easily imagine that if Google’s chief legal officer decides to take the affair public, it is probably because the firm is not able to get the necessary assurance from the Chinese government that such attacks would end – else why risk leaving what promises to be one the fastest growing market in the near future.

A number of things are surprising. First, officially, the threat comes after a series of cyber-attacks that hit more than 30 companies. Google’s response thus seems mismatched. Second, the US government got involved rather rapidly by making a public statement.

At the end of the day two questions remain. First, can China do without Google? Domestic companies would be thrilled to have the number 2 search engine leave its 30% market share for grabs. For sure, the pressure to innovate will diminish but the creativity of Chinese firms should compensate. The reason for Baidu’s dominant market is that the firm understand its market better. Second, can Google do without China? Analysts don’t seem to leave the idea too much (the share dropped by 1% solely on the news of the threat). More importantly though, Google can not afford to have the integrity of its data compromised, not for a company which plans to become the repository of all your personal information all over the world.

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