Google Leaving China | An SEM Perspective on Mr. Opportunity's Bold Move

By Paige Payne | Jan 18, 2010
More Articles by Paige


Taking center stage in technology headlines for the week was Google’s announcement this past Tuesday regarding potentially suspending operations in the world’s largest online audience, China.  With such a statement came a flurry of media coverage on the event.

I will start by saying I do feel the media coverage has done a fairly decent  and thorough job of explaining the basic facts and what’s at stake behind Google’s bold move.   On the flip side, I’d like to give my Search Engine Marketing (SEM) perspective on Mr. Opportunity’s bold move.

If there is one thing I have come to appreciate since getting into the Search Engine Marketing industry, it has been that Google is extremely methodical…no no…make that SURGICAL when it comes to their Google ways of doing business.  Google loves to fly under the radar when it comes to their own marketing tactics …changes are subtle, explanations are vague, every action has a noble purpose! But Google is a business, and there is always a bottom line underlying everything they do.

The Situation: The Big Picture

As reported by The Washington Post, The New York Times, and Marketwatch, sometime in the month of December Google engineers located at the Silicon Valley campus in California began to suspect that Chinese intruders were breaking into private Gmail accounts and thus launched a secret counter-offensive.

During the course of their investigation, company engineers uncovered evidence of the aftermath of the attacks, not only at Google, but also against at least 33 other companies, including Adobe Systems, Northrop Grumman and Juniper Networks.

Once they discovered the breadth of the problem, they alerted American intelligence and law enforcement officials and worked with them to assemble powerful evidence that the masterminds of the attacks were not in Taiwan, but were on the Chinese mainland. But while much of the evidence, including the sophistication of the attacks, strongly suggested an operation run by Chinese government agencies, or at least approved by them, company engineers could not definitively prove their case.

Accrording to Eli Jellence, head of International Cyber Intelligence for the Silicon Valley-based cybersecurity research firm Verisign iDefense, in an article by the Washington Post, “The hackers appeared to be after information on weapons systems from defense firms and were seeking companies’ “source code,” the most valuable form of intellectual property because it underlies the  firms’ computer applications.”

The Situation: Remove the other 33 companies from the equation and look at how the attacks affected Google alone

On Tuesday morning (about a month after the initial incident), Google announced that it would stop cooperating with the Chinese on Internet censorship and consider shutting down its operations in the country altogether, citing assaults from hackers on its computer systems and China‘s attempts to “limit free speech on the Web.” (The New York Times)

Additionally, Google officials said the company found that the Gmail accounts of dozens of China human rights advocates in the United States, China and Europe “appear to have been routinely accessed by Interet users in China, in Millionsthird parties.” The hacking most likely occurred through phishing scams –luring users to download malicious software by opening innocent -looking e-mails– or malware placed on users’ computers, rather than by breaking into Google’s corporate infrastructure, the company said. (WashingtonPost)

Based on its investigation to date, Google said, it does not believe the cyberattack on its accounts succeeded.  “Only two Gmail accounts appear to have been accessed, and that activity was limited to account information (such as the date the account was created) and subject line, rather than the content of emails themselves,” the company said in a blog posting. (WashingtonPost)

Reaction To Google’s Response:

Privacy advocates applauded Google’s move to disclose the cyberattacks and reverse its stand on censorship of its China search engine results. “Google has taken a bold and difficult step for Internet freedom in support of fundamental human rights,” said Leslie Harris, president of the Center for Democracy and Technology, which also receives funding from Google, among other major tech companies. “No company should be forced to operate under government threat to its core values or to the rights and safety of its users.” (WashingtonPost)

“The withdrawal from China will wake up more Chinese and make more people discover that China lacks freedom on the Internet and the government has very strong censorship online.” (washingtonPost.com)

“Google is a great soldier of freedom.  You don’t bend to the devils,” said a representative comment on the site Tiayna.cn (WashingtonPost.com) “Google is good. For the sake of technology advancement, the Chinese side should reach a cooperative agreement,” the comment said.

Analysis of Google in The Internet market in China:

  • “China is the world’s largest Internet market by total number of users — China Internet Network Information Center estimates that China had as many as 338 million people using the Web as of June 2009, and growing rapidly — although the Chinese market for Internet advertising is still quite modest at present. BNP Paribas’ China-based analyst Yvonne Yang says estimates the size of China’s online advertising market at about 20 billion yuan ($2.93 billion) in 2009, of which the search advertising market was nearly 7 billion yuan. Google is currently the second largest Internet search provider in China, and is gaining on the leader, Baidu Inc. According to data released Wednesday by Analysys International, Google’s market share in the recently concluded quarter rose to 35.6% from 31.3% in the third quarter, while Baidu’s share fell to 58.4% from 63.9%.” (MarketWatch)
  • Along with many US companies attempting to compete in the global marketplace of China, Google has largely been handicapped by tight government restrictions. Google is the only global US internet company to manage its own arm in China.  Other websites such as Twitter, YouTube, and Facebook are all blocked by what is referred to as the “Great Fire Wall of China.”  Google itself has clashed with the Great Fire Wall of China.  Since Google set up google.cn in 2005, they have been forced to agree to remove any information that China’s leaders have considered too sensitive in order to operate in the country.

Yes, today Google is currently the second largest internet search provider in China and it’s estimated that Google only draws a mere $300 million of its $21.8 billion in revenue from mainland China. While Google’s business in China is now small, analysts say that the country could soon become one of the most lucrative Internet and mobile markets, and a withdrawal would significantly reduce Google’s long-term growth.

Additionally, “surveys have shown that most Chinese people have trouble spelling Google or don’t know its Chinese name, Guge, which means ‘valley song.’ “(washingtonpost.com)

In my opinion, while Google appears to be doing the right thing and standing up to the Chinese government, Google in no way wants to cut off their nose to spite their face and close shop in China completely:

  • Google just had one of their best quarters to date in a country that not only has the largest audience of internet users but that analysts forecast to be one of the most lucrative internet and mobile markets in the future.
  • Due to tight government restrictions, Google has been troubled with brand awareness resulting in a low market share and limited revenue
  • Google is presented with the opportunity as James A. Lewis a senior fellow at the Center for Strategic and International Studies in Washington puts it, “From everything we are learning is that in this case the Chinese government got caught with its hand in the cookie jar.”  Due to the seriousness of the other cookies China was “caught” with their hands on, Google has been able to gain strong support from the US government and a large audience of the Chinese population looking for the free transmission of information online.

Google has nothing to lose by taking a bold stance given the current circumstances in China.  Without somehow reworking the current arrangement Google has with China, maintaining shop in the largest internet market in the world is worthless.  While it’s highly unlikely for Google to make out with sticking to completely unfiltered search results, look for Google to somehow work things out with China where they both save some face.  Perhaps Google “shuts down” Google.cn or re-brands Google.cn filtered search results to Google.com for Chinese internet users?  In addition maybe filtered YouTube.com videos make their way back into the mix, only accessible to the homepage of Google.com for Chinese internet users?

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