Friday, January 15, 2010

Google found a good excuse to pull back from China

Recent high profile thread made by Google to pull back from Chinese market has drawn applause, particularly from China bashing audience. However, the real reason behind this seems to be more of a business decision. Google has not been running smoothly in China in last 24-months or so. After another high profile legal dispute with Microsoft on alluring Dr Kai-Fu Lee to run China operations, Google had high expectation on the native Chinese native Lee hoping he will be able to expend the search engine market share in country with the most internet users.

Unfortunately, like eBay's terrible loss to Alibaba and Yahoo's to Sina, Google tails Bidu, the native Chinese owned search engine by claiming only 32% of the search engine market there. Another blow to Google was Dr Lee's departure after his short tenure with Google.cn which last less than 24-month.

Ironically, Google went to Chinese market when Chinese government had much tighter regulation and filtering on cyberspace. Google had been complying fully only until recently, after the revenue declined, market share tumbled and top executive departed. Of those 32% market share claimed, less than 2% comes from Google.cn, the Chinese version Google search engine.

While defying Chinese government and protesting cyberspace regulations, Google in Indian at the same time turned over dissident''s IPs and mailbox information to India government leading to at least two arrests and jail time punishments. Google has not made any attempt to defy NSA on secretly intercepting personal communication when using its Gmail. Google permanently stores user information matching individual IPs with search keyworlds which is a huge privacy violation.

If Google.cn contributes less than 1% to its overall revenue and used only by 2% in China and declining, then to shutdown Google.cn makes complete business sense. If Google is so against cyberspace regulation, then why it went to China to begin with?