Google has much to lose, little to gain

17:05, March 29, 2010      

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By Justin Ward

Google's departure from China sent shockwaves throughout the information superhighway, or at least it did outside of China. In China, it was more or less business as usual. Despite dramatizations in the Western media of Chinese mourning the loss of the search giant, the vast majority took the news with indifference or else they were insulted and said good riddance.

It's obvious that China can do without Google, since very few Chinese rely on it but rather turn to the domestic Baidu for their search needs. And for the time being, it seems Google can do without China, given that the country accounts for only about 1 to 2 percent of the company's total revenue, or about 250 to 300 million U.S. dollars annually. But this view is myopic at best and absolute folly at worst.

According to official figures, China's Internet users number 384 million, which exceeds the total U.S. population by nearly 77 million, and this number is growing constantly. Of course, Americans spend more dollars per capita online and have higher average incomes, but those facts notwithstanding, the amount of money to be made on the Internet in China is growing by leaps and bounds. Currently, the Chinese Internet advertising market is only worth 1 billion U.S. dollars, but according to estimates, that number could grow to as much as 20 billion by 2014.

As Ovum technology analyst Graham Titterington told BBC News in a recent interview, "In the longer term, Google needs China more than China needs Google." Titterington believes that Google will decide to return to China, eventually, but by then, it may be too late. ""The big question, though, will be how much momentum Google will have lost in the meantime." This is something Google should consider before it decides to burn its bridges.

As it is often mentioned, the Chinese word for crisis includes the character for opportunity, and a number of companies are poised to turn Google's crisis into their opportunity. Microsoft search engine Bing and others have declared their willingness to play ball with the Chinese government if it means access to Chinese Internet users. By the time Google returns, hat in hand, it may be irrelevant.

Google knew the score when it came to China. It sacrificed its supposed principles and agreed to abide by Chinese laws, so why is it crying foul now? This shows the move has nothing to do with free speech. If censorship is the issue, Google should withdraw from Europe and Israel, where it has agreed to censor hate speech in line with those countries laws. But that form of censorship plays a little better back home. It also makes little sense for Google to withdraw because of hacker attacks. It is as if by leaving China, they were retreating into some kind of magical hacker-proof fortress.

So if it is not censorship and it isn't hacker attacks or intellectual property, why leave then? The only possible explanation is that this is a calculated PR move designed to make Google appear to be the worldwide defender of the free exchange of information, but it won't change China one bit, and in the end, Google will find itself the real loser.
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