Google issue: China goes soft

China says ways to resolve Google issue, US cautious
16 Jan 2010, 0012 hrs , REUTERS

A spokesman for China's Commerce Ministry said there were many ways to resolve the Google issue.

China sought on Friday to play down a threat by Google Inc to quit the country on hacking and censorship concerns, saying any decision by the Internet search giant would not affect U.S. trade ties.

"Any decision made by Google will not affect Sino-U.S. trade and economic relations, as the two sides have many ways to communicate and negotiate with each other," spokesman Yao Jian told a regular news briefing in Beijing.

The United States said it was too soon to tell how economic ties would be affected, but added free information flow was crucial to China's maturing economy.

The United States has backed Google's decision to no longer support China's censoring of Internet searches, and has raised the issue at a diplomatic level.

"It seems to me that the principles that Google is trying to uphold are not just important in a moral or rights framework, but are also of very considerable economic importance," senior White House economic adviser Lawrence Summers said.

"I think it's too early to assess what all of the effects will be," he added when asked if the dispute would mark a turning point in the U.S. economic relationship with China.

Do not really see much implication for China. Google is a lightweight in china. Just a lot of hot air catered toward western audience. It is very convenient because politicans can talk a lot but have little implications to both sides.

Chinese response will be lets talk. But I doubt if much will arise and if Google wants to pull out so be it. baidu controls 70% of market share so Google is no big deal. In the search engine world, there are lots of choices. The number of users feed the value of a search engine which then draws in the advertisers. If Google loses China, they will stand to lose a large chunk of a potential market and someone will gladly step in. Lets say even if all the Western search companies pull out it will only mean the creation of a super Chinese based search company. As it is Baidu a fledging search company has $16B mkt cap on NYSE. Given rate of growth in China and monopoly status would not be surprised of this mkt cap increases.

Lets see if Microsoft will pull out. With MS there is repercussion for MS as it might lose distribution rights to its popular products.

Search engines are a convenience but has little impact. Now if we see large MNCs pulling out - people like GE, GM, HP, then it becomes an issue.

As for computer attacks, I am sure the security apparatus from all countries are constantly trying to breach each other's systems. After all where do you think the intelligence part of CIA comes from. Would not be surprised if CIA interrcepts emails all around the world.

What implications do you see?

Here is a good wsj market watch write up on this google issue:

Jan. 15, 2010, 4:51 p.m. EST

Could Microsoft benefit much from Google leaving China?
By John Letzing, MarketWatch
SAN FRANCISCO (MarketWatch) -- Kai-Fu Lee, who's overseen operations for both Google Inc. and Microsoft Corp. in China, posted a cryptic message on microblogging service Twitter the day after Google made its recent, startling announcement that it might exit the Chinese market: "A captain would never run away from his duty, if he knew the ship was sinking."

It's unclear exactly what Lee, who now runs Beijing-based investment firm Innovation Works, meant. He didn't respond to a request for comment.


China Holds Its Ground Against GoogleChina told companies to cooperate with state controls and that it's Internet policy is "open." Google is threatening to shut down Google.cn after it found cyber attacks originating from China. Video courtesy of Reuters.
But on Thursday, Microsoft (NASDAQ:MSFT) Chief Executive Steve Ballmer said during a televised interview that the Redmond, Wash.-based company would not be running anywhere, as it has no plans to follow a Google departure from one of the fastest-growing international markets.

"If you're going to operate in China, you have abide by the laws of China," Microsoft's Ballmer said during his televised interview on CNBC Thursday. "We've been quite clear that were going to operate in China." A Microsoft spokesman declined to comment further. Read story on how flaw in Microsoft browser software was exploited in attacks in China.

It's also not clear whether Microsoft could surmount considerable obstacles and capitalize on a Google (NASDAQ:GOOG) exit from China by gaining significant ground on local search leader Baidu Inc. (NASDAQ:BIDU)


Reuters

Kai-Fu Lee, former executive of Google and Microsoft operations in China.

According to comScore data, Microsoft sites held about a 5% share of the Chinese search market as of November, compared with Google's 14% share and Baidu's 62%.

Microsoft isn't likely to enjoy the same word-of-mouth boost that helped Google gain its significant -- albeit second-place -- market position in China, according to Peter Lu, an analyst with Beijing-based China IntelliConsulting. "Google is still viewed as a more technologically sophisticated Chinese search engine than Baidu," he said.

"The reason that Google failed to gain more market share from Baidu is not because of its search technology," which is widely favored, Lu added. Instead, Google has suffered from shortcomings in local advertising and promotion. "China is not a technology-driven market, and word of mouth is not very effective," the analyst elaborated.

Microsoft unveiled its revamped search engine, Bing, in May. It was introduced in China shortly thereafter.

"Its brand awareness is very low and market share is tiny," Lu said of Bing, pegging its share in China at less than 1%. "Bing is so small that the government doesn't even notice it."

Microsoft has committed a significant amount of money to promote Bing worldwide, though it's faced some specific challenges in China. Like Google and others, Microsoft must voluntarily censor politically sensitive search results there. It also has encountered local hurdles in marketing Bing.

Last summer, it was noted that in Mandarin Chinese, "Bing" could mean "ice," "frozen" or "sick." Microsoft said it was aware of the possible interpretations, and took pains to select a Chinese character to use with the brand that ensure a pronunciation meaning "certain to respond."


'The reason that Google failed to gain more market share from Baidu is not because of its search technology. China is not a technology-driven market, and word of mouth is not very effective.'



Peter Lu, China IntelliConsulting

Still, the software giant has a long way to go in China, said Collins Stewart LLC analyst Sandeep Aggarwal. "Microsoft in our view is probably nowhere in the running" in China's search market, Aggarwal commented. While Google's potential departure from the local market "does help them, they are a niche player as of now."

Even if Google's sales in China made up a relatively small part of its revenue overall, it was making impressive progress: "Revenue there was growing three times faster than in the U.S.," the analyst said.

Google announced Tuesday that it's recently suffered a series of cyber-attacks apparently aimed at violating its network and identifying users of its email service who advocate for human rights and democratic reform in China. Read more about how Google is considering leaving the Middle Kingdom.

As a result, Google said it now plans to stop censoring its local search results in China on Google.cn to avoid sensitive topics -- which would likely result in losing the opportunity to do business directly in the country.

While users in China could still theoretically visit the Google.com site following a Google corporate exit, access may be problematic.

On Friday, the State Department said the United States would demand an explanation from China about the recent cyber-attacks, which in addition to Google were also reported by Adobe Systems Inc. (NASDAQ:ADBE) and Juniper Networks Inc. (NYSE:JNPR

Google pull out from China will be bad for Google only. The rest says THANK YOU. Less man more share. It is nice to see China stand up to its bullying tactic. China should just start a searchengine call GIGGLE and she can giggle all the way to the bank.

longbow said:

Do not really see much implication for China. Google is a lightweight in china. Just a lot of hot air catered toward western audience. It is very convenient because politicans can talk a lot but have little implications to both sides.

What implications do you see?

Click to expand...

Put it this way.
Money is not everything to some people.
And besides, the world is out there for Google, with or without China.

Microsoft is the wrong example to cite. In fact Microsoft operates similarly to China where other people's ideas are bundled and sold. Microsoft has never invented anything from applications to GUI. All the good ideas came out first as word perfect, harvard graphics, Apple GUI etc. They are both perfect partners. People have respect for google but not the type of respect for microsoft.

scroobal said:

Microsoft is the wrong example to cite. In fact Microsoft operates similarly to China where other people's ideas are bundled and sold. Microsoft has never invented anything from applications to GUI. All the good ideas came out first as word perfect, harvard graphics, Apple GUI etc. They are both perfect partners. People have respect for google but not the type of respect for microsoft.

Click to expand...

Google is a top class innovation driven company.
Even copy cats cannot imitate some of its innovative ideas.
Example - Google Earth, Google Maps, Google Translator and so on.

can china do without goggle? no problem at all....

can goggle do without china? let see about it,,,

people will not die without goggle earth/map/translation since there are alternatives,,,,

goggle want to be involve in a country's politics by citing freedom of information, they can f### off for who cares,,,,,

try living 1 day without goggle, and try to live 1 day without involving chinese products (from your handphone (mostly made in china) to what you wear), you will see what i mean

they did it more to protect their reputation about providing security and privacy to their users. there is a massive exodus of gmail users when this news broke. users have little faith in how google secure their content and information.

Contrary to what we think here, Google is pretty influential in China. The Baidu.com is widely used in China. Of course there are other Chinese based search engines but in China, many websites are infested with malware and spyware.

Goh Meng Seng

yes, agree.....

eatshitndie said:

they did it more to protect their reputation about providing security and privacy to their users. there is a massive exodus of gmail users when this news broke. users have little faith in how google secure their content and information.

Click to expand...

True for 1st world nations but money is everything for 3rd world nations with large population of poor where there is always the danger of starvation. For these countries money means life and death.

First there was Yahoo then google then ?????

Technology moves along and nobody stays in the lead for long. MS for all their copying ways have remained a profitable and viable company. Their sharesholders (citizens) have done well.

GoFlyKiteNow said:

Put it this way.
Money is not everything to some people.
And besides, the world is out there for Google, with or without China.

Click to expand...