Since this post was originally authored, the situation has changed. Click here to read about what’s happened and join the discussion.
After spending untold billions earning its 30% search market share, Google has had enough of duplicitous China and is preparing to pull out of the largest Internet market in the world.
The move comes after hackers tried to steal sensitive documents and source code from companies affiliated with Google and based primarily in the US. This isn’t the first time Chinese hackers have been implicated in vast espionage charges and definitely not the first time a foreign company has cried foul. It’s not uncommon to hear about foreign companies getting robbed blind by their partners, while at the same time the government is doing everything imaginable to support and encourage the growth of Chinese rivals.
In every industry, foreign companies are spied upon and obstructed, and there is nothing they can do about it but leave. The multi-nationals take it because the money is just too good: an assets manager for Morgan Stanley based out of Hong Kong told me his company bought real estate in China when it was around $120 per square meter. The price in most large cities is now at least $800 per square meter and here in Chengdu an apartment complex nearby is selling homes for $1,800 per square meter.
These types of numbers can be found in pretty much any industry here, so most foreigners deal with the dubious authoritarian practices before surrendering the fastest growing market on earth.
With the Chinese Internet community estimated at 350 million people and growing, companies like Google, Yahoo, and Facebook drool at the thought of penetrating this market. Free speech and public discussion are secondary concerns, not only for companies like Google that quickly dispensed with free speech in order to be in China, but also for the Chinese who are supposedly only interested in keeping their people corralled. There are Chinese versions of Youtube (Youku.com), Facebook (Renrenwang.com) and Google (Baidu.com) plus a host of other sites that have active chat forums discussing everything from democracy to corrupt officials to the possibilities of war with the United States.
There are a lot of things going on here: geopolitical Cold Wars using Internet companies as fronts and hackers as foot soldiers; economic competition using censorship and biased laws to support local industries; and finally the separation of Chinese and Westerners to keep us antagonistic and distrustful through media coverage of the former two struggles to incite nationalist fervor. What Google ends up doing will be of great importance, either way. It will set a precedent for other companies and will most likely influence web surfing in China.
What I’m wondering is: did Google plan this from the beginning?
Although it hasn’t captured a majority market share from search rival Baidu, Google has established a significant presence in China and is willing to give it all up in the name of it’s “Don’t be evil” mantra. Although widely criticized for entering the Chinese market under restrictions imposed by authorities, Google’s rationalization from the beginning was that having their search engine neutered (but available) to the Chinese market was preferable to staying out entirely.
Either we’re witnessing the closing stages of a bid to disrupt authoritarian control or Google’s patience has been too far strained. With Google’s incredible foresight and business acumen, it’s hard to believe the latter.
As it prepares for the high likelihood that it’s site will be blocked, the countdown to Google’s exit from China has begun.
Read about Google’s new approach to China on its blog and tell us what you think by leaving a comment