opinion


Google looks longingly at China but it won’t get its own way

Googlers having fun

Google is the world’s most popular search engine and Android is the dominant mobile operating system, but the internet giant won’t everything get its own way as has another go at the Chinese market.

In most markets worldwide it has a very dominant position in the sectors it operates in. This results in it throwing its weight around, perhaps coercing smaller players to accepting its way of thinking, but it generally gets what it wants. This has sometimes resulted in Google falling foul of regulators, but fines don’t seem to bother it, such is the comfortable financial position it is in.

In short, Google is used to getting its own way and forcing it will on the rest of the world. There might be a very sharp and painful reality check on its way down the silk road.

Earlier today (January 16), Techcrunch reported Google had opened a new office in Shenzhen. The email sent to Chinese staff, which you can see below, possible indicates the internet giant is ready to have another pop at the very lucrative Chinese market.

Shenzhen is a sensible place to have an office as it operates as the heart of the Chinese technology industry. Huawei’s head office is in the city, as is ZTE’s and Tencent’s. The city also plays host to a large presence of Alibaba, Baidu and Foxconn. Not a bad place to build relationships. We suspect this might be a first-step to attempt to establish itself as a prominent player in the Chinese internet society. Get a foot in the door and expand over the next couple of years.

Google Letter

Google and China have always had a bit of a strained relationship. The internet giant has found itself on the wrong side of a ban on several occasions, as it continuously struggles to navigate through the red-tape maze. Precedent is not on the side of Google, but this is not why we think it will struggle. Ultimately, China doesn’t need Google.

This is why Google is able to act like the schoolyard bully in so many other markets; everyone else needs Google more than Google needs everyone else.

Think about it this way, if Google loses an advertiser, even a significant one, it isn’t too bad. Of course, if it starts happening regularly executives will start asking some serious questions, but Google has millions of advertising customers. It can afford to be stubborn with some relationships as losing one will barely register on the spreadsheets.

On the other side of the coin, if an organization boycotts Google, it is boycotting the most popular search engine, the world’s most popular video streaming platform, the market leading mobile operating system, the second most popular app store, as well as other services. In other words, a business will struggle to operate in today’s digital society without Google. Google has the upper hand in every relationship.

Google is in a comfortable position almost everywhere because people need Google more than Google needs them. This is certainly not the case in China.

There was a void in China which has now been adequately filled by Baidu. Some might assume Google will brush aside this competition in the long-run as the stereotypical view from a lot of people is that Asian versions of a Western brand/business/product are somehow defective or substandard. This is not the case with Baidu.

Baidu has a very strong reputation in China, and is now moving into the international markets. In the Google absence, Baidu has made a formidable business model, making it as indispensable to the Chinese people as Google is to everyone else in the world, and won’t be bullied financially by Google. And it certainly won’t get any help from the Chinese government; China has gotten by perfectly fine without Google to date so we don’t expect any special treatment which it might get elsewhere.

We don’t want to take anything away from Google as ultimately its dominance is down to its ability to do search engines better than anyone else. It recognized how crucial it would be and put a ridiculous amount of effort into creating a product which wowed the world. The same can be said of the Android OS. It made a brilliant product, and took over. It’s dominance is reliant on the fact there are not many suitable alternatives, or consumer behaviour has made them comfortable relying on the Google businesses. This will not be the case in China.

Google might be looking longingly over The Great Wall of China, dreaming of the billions which can be made, but it might find itself against a foe which it cannot beat. Ironically, the very reason it dominant everywhere in the world might be why it won’t succeed in China.


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