Google’s face-off with Chinese authorities and subsequent exit from that country left local search provider Baidu with virtually no competition. In fact, Google’s exit couldn’t have come at a better time for China’s top online search provider, which was beginning to face some stiff resistance Google.
Baidu just posted its first quarter results and they seem to suggest that it is doing a good job of devouring around 40 percent of the market that had Google written all over it until not a long ago. Compared to the same period last year, its net income shot up by 165% to $70.4 million during the first quarter. Revenues also witnessed a year-over-year increase of 59.6 percent to reach $189.6 million.
While Apple has had to push back the iPad’s global launch, citing huge demand in the US, it is business as usual for Chinese bootleggers. In fact, they are wallowing in the iPad’s absence as this gives them more time to lure some potential iPad customers towards cheap knockoffs. iPad clones have just begun hitting the Chinese market.
A brace of journalists, working for the news agency Reuters, discovered one such clone in the Southern Chinese city of Shenzhen. Based on their account, the clone appears to be a corpulent version of the original. Also, unlike the original, the fake iPad runs Windows 7 and costs only 2,800 yuan ($410). A myriad of similar knockoffs can also be found on some of the most popular online marketplaces in China.
In a blog post this morning, Google made note of a startling fact regarding censorship. By The Big G's count, out of the 100 countries they offer services in, 25 are blocking at least some part of those services. Google calls the problem of net censorship a "growing problem" and references the Open Net initiative's list of countries that censor online content.
According to Google, the increase in censorship is due to the unprecedented number of people meeting to share ideas online. This means the traditional methods of controlling a few print and television sources no longer work. The example of YouTube is used - the video sharing site sees 24 hours of new content every minute. As a result governments simply clamp down on the internet, blocking large sections of the internet that may contain content they do not approve of.
By way of examples, Google singles out China and Vietnam for political censorship. But Google points out that it complies with democratically elected governments that have specific restrictions - like a ban on pro-Nazi material in Germany and France. But Google sums it's position up as such, " We are driven by a belief that more information means more choice, more freedom and ultimately more power for the individual."
Do you take Google at its word, or is this just business?
Last week, when Google effectively stopped censoring its search results in China by redirecting all Chinese visitors to its uncensored Hong Kong site, it also set up a page to update users on the status of its services in China. The page was last updated yesterday to reflect the current status of its mobile services. Their status has changed from normal to “Partially Blocked.”
It marks the first time the status of any Google service has changed since Google started maintaining the page. While it may appear to be an open-and-shut case in most eyes, Google is not willing to jump the gun and blame the Chinese authorities. Google told the Los Angeles Times that it is too early for it to pin down the exact reason for the unavailability of its mobile services in China.
It admitted that the status of its services does fluctuate and outages are not uncommon. It could also be the handiwork of obsequious telecom carriers trying their best to appear on the same page as the government.
It was a cyber attack that sparked the current row between Google and the Chinese administration, leading Google to redirect all searches coming from China to its uncensored Hong Kong-based site. And the day began with the Guardian breaking the news of what appeared to be a fresh cyber attack against Google. The internet giant's corporate information sites were appearing in Chinese.
Even though a Google search for the term “Google executives” returned an English-language page at the very top of the search results, clicking on the link automatically redirected the user to a company page with all information in Chinese. The report also noted that the main corporate page “was also in Chinese and further directing users from there to the new non-censored Chinese version of Google.” With the inexplicable redirects coming straight after Google's exit from China, a cyber attack appeared to offer the best possible explaination.
Will Google's departure from China prove to be a harbinger of things to follow? Going by a report in a leading Indian newspaper, the answer is quite likely to be found in the vicinity of a “yes.” A report on Google's exit from China in the Hindustan Times carries a quote from the Indian Prime Minister Manmohan Singh on the prospect of another American tech giant shutting shop in China. The Indian premier is reported to have told the country's Planning Commission that Dell is about to shutter its China operations.
The Indian head of government is quoted as having told the Planning Commission,“This morning I met the chairman of Dell Corporation. He informed me that they are buying equipment and parts worth $25 billion from China. They would like to shift to safer environment with climate conducive to enterprise with security of legal system." Although it is difficult to discount anything that quotes a country's leader as its source, it is still wise to wait for a clearer picture to emerge.
But there is no denying the fact that the Chinese government has plenty to ponder in the aftermath of Google's exit. The Chinese economy may not be under any real threat of a collapse, for the dragon can only founder in the face of an exodus of foreign companies, but it will surely have its hand forced if a few more foreign businesses grow a conscience or leave in search of a more stable environment. It now knows that businesses are not entirely shy of moving out in search of “safer” alternatives, where they are immune from the whims of a government adamant on making everyone fall in line.
The Starting yesterday, Google shut off their Google.cn domain, and redirected the traffic to the uncensored Hong Kong version of the search engine. Now Chinese users are unable to view uncensored search results on the Hong Kong site due to government filters. This is probably not the last move China will make to punish Google.
China’s biggest telecom, China Mobile, is expected to cancel an agreement with Google to provide their homepage search. Many have said this is due to direct government pressure. China’s second largest cell carrier, China Unicom, has also delayed to launch of a smartphone based on Google’s Android operating system. It is also looking grim for Google’s Chinese sales presence, which could come under government pressure to shut down.
We probably haven’t seen the end of this saga, but the longer it goes on, the less likely that Google will ever manage to work out a deal with China. Should Google just pull out all together, or is this piecemeal approach best?
We had previously heard that Google may be announcing an exit from the Chinese market today. As it turns out, they’re taking a slightly different approach. The Google.cn domain now redirects users to the uncensored Hong Kong version of the search engine. Google says they plan to retain most of their operations in China including R&D teams and sales.
The move seems to be a direct challenge to the Chinese government, which could easily block access to Google on mainland China. Google’s David Drummond claims the move is “entirely legal” and went on to say, “We very much hope that the Chinese government respects our decision.”
Beijing has not yet responded to Google’s action, but the government has become increasingly harsh over the weeks. Some analysts pointed out that Google’s plan could backfire, leaving their sites blocked even in Hong Kong. For now it’s a waiting game for the Big G.
A report by China Business News today indicates that Google may have set a hard date of April 10th to shut down their Chinese operation. CBN also reports that an official announcement may come on March 22nd. Google is still remaining tight lipped on the matter.
The Google/China dispute started in January when Google disclosed that it had been part of a hacking attack from within China. Combined with the state imposed censorship, Google said the market was perhaps more trouble than it was worth. We’ve been hearing reports of ongoing talks, but in recent days more rumors have emerged pointing to a Google exit.
Former Google Asia employee Peter Lui says if Google leaves, they might not be able to get back in. “[Google] burnt bridges and they’ve burnt the Google brand in China,” said Lui. This is all still rumor, but come Monday if there is a Google press conference scheduled, we’ll know we’re on to something.
Last week we reported that Google's China talks may soon be coming to a close, and CEO Eric Schmidt even hinted to reporters at the Abu Dhabi Media Summit that "something would be happening soon". Well, if you believe the Financial Times, Google is about 99.9% sure it is going to pull the plug on China. Wired.com attempted to contact a Google spokesman for a comment, however they would neither confirm or deny the report. According to the Times, Google has drawn up a detailed plans for how it will exit the Chinese market, and is poised to execute.
If Google does pull out of China, the action plan is no doubt intended to protect local employees from retaliation by authorities. It is still unknown if they intend to push ahead with their plans to un-filter Google.cn, but Chinese authorities made a very stern and public warning to the company on Friday. "If you don't respect Chinese laws, you are unfriendly and irresponsible, and the consequences will be on you," said China's Minister of Industry and Information Technology, Li Yizhong.
According to the Financial Times Google is exploring every option to keep its Chinese businesses afloat, but is wary of the backlash from authorities which may make this all but impossible. "It's very important to know we are not pulling out of China," Eric Schmidt, Google's chief executive, told the Financial Times at the time. "We have a good business in China. This is about the censorship rules, not anything else."