Google Close To Pulling Plug On ‘Google China’

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The Wall Street Journal reports: Google Inc. appears increasingly likely to shutter its Chinese-language search engine, a step that would remove one of the last major foreign players from the world’s most populous and fastest-growing Internet market.

A person familiar with situation said on Saturday that Google is likely to take action within weeks.

Google and Chinese authorities have been in talks about the extent to which the U.S. Internet giant will be able to operate a business in China if it follows through on its pledge two months ago to stop following government censorship requirements on its Chinese site, Google.cn. Those talks increasingly appear deadlocked, and Google’s hopes for being able to operate Google.cn without filtering results—which were always thin—have all but disappeared.

On Friday, Minister of Industry and Information Technology Li Yizhong, asked by a reporter about Google’s plan to stop filtering results, said doing so would be “irresponsible” and warned that the company would “have to bear the consequences” if it violates China’s rules. His comments reinforced expectations that the authorities will force Google.cn to close if the company stops censoring it.

Google has about 36% of China’s search revenue, according to Analysys International, a Beijing-based research firm, compared to 58% for local rival Baidu Inc. The U.S. company is one of the few foreign participants with significant market share.

A combination of strict government regulation, intense competition from Chinese companies and strategic mistakes on the part of the foreign companies themselves has meant that foreign Internet companies have either struggled to make inroads in China or never entered the market to begin with.

Google’s closure of Google.cn would leave the Internet in China—which has about 400 million users, more than any other country, and is adding about 250,000 more each day—almost entirely dominated by local companies.

That helps the Chinese government’s efforts to control information, because it can more easily control local companies, but it means foreign participation in one of the fastest-growing parts of China’s economy will be limited, and it leaves Chinese users increasingly isolated.

(READ MORE: http://online.wsj.com/)


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