Reuters on Google in China: Putting Android first?

Following the news that China has renewed Google’s internet license, allowing it to continue to operate in the country, Reuters has this excellent Q&A on Google and China.

It’s worth reading the whole piece, but here some key excerpts.


Without the Internet Content Provider licence, Google’s search presence in China would have reverted back to when it did not have a localised search page. China users keen to access Google search had to turn to its offshore sites, meaning longer search times — and a boost for Baidu, the top local player.

Google’s current search business in China accounts for a tiny slice of its $24 billion in annual revenue, with analysts putting its annual China revenue at $300-$400 million. But the long-term growth prospects are key.

For one, Google is keen to provide non-search functions on the site, such as music search and text translation.

As the world’s largest Internet market with nearly 400 million users, China has huge potential. Firms that got out of it early, such as eBay and Yahoo Inc,  haven’t been able to regain a foothold.

The potential of China’s huge market remains to big attraction which keeping Google in the country, but these are the same threats which Google was prepared to embrace earlier this year when it came out publicly.


Google’s hard-fought effort to stay in China may pay off if it successfully maintains access to the world’s largest Internet market by users.

With an Internet penetration rate of 25 percent, China’s online sector is still in its infancy. Japan and South Korea, the two most Internet savvy Asian countries, have penetration rates between 70 to 80 percent.

China holds not only huge market potential for search, but also from other Internet sectors including social-networking, e-commerce and online gaming.

The downside of operating in such a market is the strict government controls — a source of friction between Google and Beijing that was largely responsible for the original dispute.

Allowing itself to be subjected to China’s censorship rules could undermine Google’s credibility after it won plaudits on the world stage earlier this year for its tough China stance.

The honesty that Google showed on announcing its new approach to China earlier this year seems a long way after this latest development.

Refresher: the below is a key paragraph from the ‘new approach to China’ post on the Google blog in January 2010.

These [cyber] attacks [on the company’s corporate infrastructure] and the surveillance [of Gmail accounts belonging to China-based activists] they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down, and potentially our offices in China.

Yet Google has turned its no censorship decision on its ahead to explicitly avoid shutting its China site which would mean, as the company put it, “Google would effectively go dark in China”.

Reuters continues…


The non-renewal of Google’s ICP licence would have spelled uncertainty for Android as China could also find a way to make it hard for Google to develop and market the platform in China.

China’s two main telecom firms China Mobile and China Unicom already offer smartphones running Google’s Android system.

Credit Suisse analyst Wallace Cheung expects Android to become the most popular mobile operating system in China in the long run, beating out Apple’s popular iPhone.

Beyond search, Google still has its Android platform, an open source operating system for mobile phones.

From the evidence put forward by Reuters it seems mobile is a key decision in motivating this latest manoeuvre.

While Google has struggled to build sizeable share in China’s search market, its Android device has a real opportunity to capture a significant share of China’s mobile market — reports an estimated 786.5 million mobile users in the country, the period of January-April 2010 alone saw 39.12 million new mobile phone users emerge — which will only grow in time.

Then there is the influence China exerts on other parts of the world, the market truly is unmissable in that respect.

Is it too early to conclude that Google has moved to secure the potential of Android, and mobile strategy, in the world’s most populated country?