Google Prepared to Leave China

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.

Flowers and a “Google is so courageous” note

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.

For those of us who live here, we use VPN’s to get around the firewall and we keep an eye on the news so we are aware of what is blocked and what isn’t.

What I’m wondering is: did Google plan this from the beginning?

Google is prepared to leave its Beijing office and exit China

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

24 thoughts on “Google Prepared to Leave China”

  1. 1. Isn’t it funny that the mission statement that google came up with for itself boiled down to “don’t be evil.” It seems pessimistic at first, but it really does get down to the heart of the matter.

    2. This may be the most bold political statement that a giant multinational corporation has ever made.

    3. If they shut down our Gmail accounts, we are fuuuuuuuuucked.

    • Perhaps VPN’s won’t remain a luxury service for much longer!

      I wonder if Google, starting from 2006, made a deal with China having known that in all likelihood, this day would eventually come.

  2. Damn….lucky back in Oz….but everyone I talk to in the middle kingdom is on gmail.
    Oh well…no facebook. no google…
    Just add another one to the list..
    So what do we think? Well hell yea , let’s not be evil!! Sorry to say!!

  3. BL, hahaha you are right, this whole thing is about money anyway, at least from the Chinese perspective — but now Google has respect and a LOT of face. Netizens in China will remember that Google was brave and stood up for principles, which very few Chinese companies seems ready to do so far. Principles actually do make a difference …

  4. From NYT: Many people in Silicon Valley were surprised by Google’s stance. “I don’t think anybody is going to run away from China,” said Joe Schoendorf, a partner at Accel Partners, a Silicon Valley venture capital firm with a major presence in China. “Google has Microsoft on the ropes, and China is arguably the world’s most important market outside of the U.S. You don’t walk away from that on principle.”

    We’ll see if principle wins out over greed. Usually greed wins — we cannot expect any Chinese company to choose honor over profit, but if Google does it … it will send a very strong message. The “suits” of the world will probably laugh their way to the bank … what can Google hope to gain by acting on principle?

  5. It’s a battle. Morals vs. business and power

    None of the big foreign companies can survive in the Chinese market without local power involved.

    One Chinese IT guy’s blog said: those Chinese companies, don’t laugh about Google right now, cuz Google’s today is your tomorrow

  6. Hmmm Looks like soon we will be restricted to just shopping on the internet. I remember when it was the opposite. Using Archie, Gopher and whatnot to do research.

    Too bad the ISOC cant help us poor bastards..

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