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Google Readying To Pull Out of China 343

Sagelinka writes "Both Google and the Chinese government appear to be leaking word that the search firm may soon shutter its operations there as negotiations between the two break down. Google first threatened to halt its operations in China after disclosing in January that an attack on its network from inside China was aimed at exposing the Gmail accounts of Chinese human rights activists. At the time, Google also said it was reconsidering its willingness to censor search results of users in China as required by the government. 'I think Google thought China would be flexible,' said Rob Enderle, an analyst with the Enderle Group. Google has since been negotiating with the Chinese government to find a way to continue operating in the country. Google did not respond today to requests for comment on the state of the negotiations with China."
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Google Readying To Pull Out of China

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  • by SputnikPanic ( 927985 ) on Tuesday March 16, 2010 @11:38AM (#31496396)

    Good. Google should never have made that devil's bargain in the first place.

  • by spun ( 1352 ) <> on Tuesday March 16, 2010 @11:38AM (#31496402) Journal

    After all, Microsoft never signed a 'do no evil' clause.

  • Yahoo/Microsoft (Score:3, Insightful)

    by _PimpDaddy7_ ( 415866 ) on Tuesday March 16, 2010 @11:38AM (#31496410)

    and I'm sure Microsoft and Yahoo will be more than willing to fill in any gaps...

  • China (Score:3, Insightful)

    by Anonymous Coward on Tuesday March 16, 2010 @11:38AM (#31496414)

    Frankly, I'm suprised Chinese officials didn't have any Google employees executed over this.

  • Enderle (Score:5, Insightful)

    by thelexx ( 237096 ) on Tuesday March 16, 2010 @11:46AM (#31496576)

    > 'I think Google thought China would be flexible,' said Rob Enderle, an analyst with the Enderle Group.

    And I think you're an idiot Robert. If there is one word NO ONE in the West would use to describe the Chinese government, it is 'flexible'.

  • by commodore64_love ( 1445365 ) on Tuesday March 16, 2010 @11:46AM (#31496582) Journal

    You read my mind. "Do no evil" is a good mantra for Google, but it also means they will lose business in China, and somebody else will gain a virtually monopoly as the "default" search engine - namely Microsoft. So come 2020 we'll have a divided world where Google is the #1 search engine in America/Europe and MS Bing will be #1 in China and its protectorates.

    It's like reading a prequel to Firefly.

    IMHO Google would be better off to enter the Chinese market and gain dominance, and then *gradually* bring more freedoms to the Chinese citizens, by using their economic muscle to buyoff Chinese citizens. If China won't allow Gmail to be private, then put a big banner on every page: "Your government is watching everything you type," rather than completely withdraw from this 1,100 million person market..

  • by Shivetya ( 243324 ) on Tuesday March 16, 2010 @11:48AM (#31496622) Homepage Journal

    that number is really good when used two ways.

    1) To sell people on the idea of possible market places

    2) When trying to dilute negative actions by the government on a per capita basis, like how they claim to be very environmentally friendly on a per capita basis.

    I do find it humorous all the people mentioning that Bing(MS)/Yahoo will go as they have no morals, I wonder how many read about the story in angst while using products wholly or partially made in China.

  • by perpenso ( 1613749 ) on Tuesday March 16, 2010 @11:48AM (#31496624)

    While China isn't a huge profit machine right now for them, access to 1.3B Internet users will be a big deal down the road.

    Android will probably keep Google in the Chinese market and generate targeted advertising revenue in some manner.

  • Subsidiary (Score:3, Insightful)

    by rodrigoandrade ( 713371 ) on Tuesday March 16, 2010 @11:49AM (#31496638)
    Yeah Google may pull out of China, but there's no way in hell they'll just turn away over a BILLION customers (or advertisers' customers).

    They'll just open a subsidiary in China and operate within the law.

    There: do no evil under your own brand name.
  • by LWATCDR ( 28044 ) on Tuesday March 16, 2010 @11:49AM (#31496640) Homepage Journal

    Will Google stop buying stuff from China.
    The Nexus 1 is made by HTC probably in China.
    The iPhone and most of Apples products are made in China so no Google isn't alone.
    We as a nation need to stop sending our money to China. How about it Google. Take that big monster pile of cash and build some factories in the US.
    Start making phones and motherboards in the US again. Would you pay $10 more for a Google Motherboard built in Iowa or Idaho over an Asus built in China if it was the same quality?
    Think of it Google you could pay workers in the US that would then spend that money in the US and buy stuff made in the US "hopefully"
    How about not just trying to not be evil but trying to be good?

    On a more cynical note. Google isn't making a lot of money in China, odds are the Chinese search engine is benefiting from stolen Google tech will get government support, and they could leverage that tech to start going head to head with Google in world markets.
    So they have nothing really to loose by bailing out of China.

  • by c++0xFF ( 1758032 ) on Tuesday March 16, 2010 @11:49AM (#31496652)

    So, 20% of the world's population doesn't affect the other 80%?

    You're right that other places have a tighter cultural connection, but you can only ignore an elephant in the room for so long. Google may only be a mouse, but that's enough to make the elephant pretty mad.

  • Re:Enderle (Score:4, Insightful)

    by GPLDAN ( 732269 ) on Tuesday March 16, 2010 @11:50AM (#31496668)
    PLEASE stop using Rob Enderle as a source for analysis. Time and time again this guy has managed to be wrong, yet people STILL go to him for quotes on anything related to technology.
  • by Anonymous Coward on Tuesday March 16, 2010 @11:50AM (#31496672)

    Pretty sure Baidu's 60+% market share is going to hold in China...

  • What money? (Score:5, Insightful)

    by SmallFurryCreature ( 593017 ) on Tuesday March 16, 2010 @11:52AM (#31496702) Journal

    What money? People keep talking about China as if it is some huge source of profit for google. It is not. Google has a few side startups but its main business, advertising is NOT present in China. There are some chinese advetisers but they advertise OUTSIDE China.

    The amount of revenue is around 300 million dollar. A pathetic amount and that is revenue, not profit.

    The MBA's have long since declared China as some kind of holy grail, were the streets are made of gold and profits just happen. But it just ain't turning out that way.

    For europeans, the US of A was much the same. Oh if we can only launch our product over there, we will have it made. Forget, if you are big in Holland then a flea can squash you in the US. You are nothing. Do 10 miljoen euro's and you will be a tiny blip as a Humvee drives over you. Conquer the german market, go south to france. Not instantly across the ocean, with insane transportation costs, gap in working hours, cultural differences.

    Google did have long term plans for China, but they might be wondering that with the little result so far, it is actually worth the hassle.

    And I think China might be bluffing as well. If Google moves out, they might not loose all that much, but others could start to examine their own future in China.

    In itself, it is not unusual for a company to rethink its activities in a region.

  • by jimicus ( 737525 ) on Tuesday March 16, 2010 @12:03PM (#31496904)

    Look at this another way:

    Possible Motivation for An Organised Attempt to Hack Google:

    • Gain access to Google's user data. Not good - that data is far and away the biggest thing Google sell.
    • Gain insight into Google's technology. Even worse - their technology is what keeps their users coming back, and prevents the user data above from becoming stale.
    • Willy waving. Embarrassing for Google, particularly if it leads to either of the above being compromised.

    Sooner or later, the cost of dealing with this kind of espionage will outweigh the benefit of doing business in China. Looks like Google reckon that time has already come.

  • by introspekt.i ( 1233118 ) on Tuesday March 16, 2010 @12:07PM (#31496982)
    Schmidt may owe his allegiance to the shareholders, but he might also be able to make the case that pulling out of China (for now) in the name of free speech will add so much value to the Google brand that it may be an opportunity not worth missing.

    Or at least feels the pull and responsibility of profit more so than any sort of ethical dilemma.

    How are you so sure?

    Pesky ideals and ethics have no place in corporate America.

    I think you're being a bit too cynical with Google. At least thus far, I think they've shown a healthy habit of finding a third way to maintain trust with consumers and build confidence in shareholders. Google isn't in an invulnerable position. If they scare their customers enough, people will simply stop using them out of fear of what's going on with their information because they don't trust Google any more. Google has to appease its user base just as much as its shareholders. This issue in China might be a case of it falling in favor of its users to protect its brand in its main markets.

  • by khallow ( 566160 ) on Tuesday March 16, 2010 @12:14PM (#31497092)

    Could a lawsuit have merit when Google's motto is do no evil?

    No. And it's not clear that Google's presence was doing harm.

  • Re:What money? (Score:4, Insightful)

    by DigitalSorceress ( 156609 ) on Tuesday March 16, 2010 @12:15PM (#31497128)


    I've thought along the same lines for some time.

    Yes, China has a Billion people, but that doesn't scale the same way as a Billion US or European consumers would. There's HUGE cultural and economic gaps. This is why they're making all our cheap crap... they've got abysmal conditions for labor and can pay their workers a pittance. Sure, those conditions and that money is probably a BIG STEP UP over how many were living, but it does not equate into a billion people suddenly buying dishwashers, TVs, washers, driers, and other goods. Besides, even if it did, they're probably going to buy cheap Chinese-made crap anyway.

    I had a point in here somewhere... Oh yeah: Someone once told me that when "they" declare a gold rush, be the one selling the shovels.

    I think that there are a lot of clever people selling shovels (getting rich sending business to China or making money off businesses who think their futures are in China), and a lot of not-quite-as-clever folks mining for gold (looking to make fortunes by doing business in/with China).

    Maybe Google is starting to add up the cost of doing business there and has realized that they were on the wrong end of that equation.

    Google wins twice: 1) they stop spending money and taking (security and financial risk) on a losing proposition, and 2) they get a big public relations boost for standing on principles.

    Don't get me wrong, I've got nothing against the Chinese people... I'm just saying (as the parent post said) China is nowhere near the business-paradise that many folks seem to think it is. There are different cultural, economic, and government forces at work than in the West, and anyone who thinks they can just waltz in there is falling victim to magical thinking:

    1) Start doing business in / with China
    2) ???
    3) PROFIT!

  • by recrudescence ( 1383489 ) on Tuesday March 16, 2010 @12:19PM (#31497190)
    It's obvious you're not a doctor ...

    I wouldn't think twice sending that patient to another doctor.
    If they're dumb enough to demand an unnecessarily high-risk procedure, I'd advise them against it and offer the alternatives, and if they still wanted it, I'd explain why I wouldn't feel comfortable offering it to them. I agree, the shitty doctor who is willing to perform it may cause more harm. But, the patient is bent to be massacred in one way or another anyway, and at least I won't be the one who gets his ass dragged to court trying to defend myself on why I performed a procedure that goes against all clinical and ethical guidelines and clearly fails the Bolam principle.
  • by spooje ( 582773 ) <`moc.liamtoh' `ta' `ejoops'> on Tuesday March 16, 2010 @12:20PM (#31497214) Homepage
    You read my mind. "Do no evil" is a good mantra for Google, but it also means they will lose business in China, and somebody else will gain a virtually monopoly as the "default" search engine - namely Microsoft. So come 2020 we'll have a divided world where Google is the #1 search engine in America/Europe and MS Bing will be #1 in China and its protectorates.

    No, Baidu will be the default search engine. Oh, but wait it already is!

    It's not as if Google didn't try to dominate the market in China, but the government interfering in their products and the locals just plain liking Baidu better they couldn't. You're also confusing with other products like Gmail and google apps. is what's being shut down because it's the only legal business google has here. The Chinese government has no control over what happens on and can't censor any search results because they come from the US.

    If Google shuts down then the Chinese government will probably retaliate and block, but they are two completely different things.

  • by Idiomatick ( 976696 ) on Tuesday March 16, 2010 @12:22PM (#31497240)

    Interaction is a good thing. Google opens the world up to China much better than China based Baidu. From there Chinese people get access to a wider range of views and opinions. They have greater contact with europeans and americans so they can see more opinions. They can realize more effectively that people aren't out to get them. Even though censorship is bad nothing is clearly more censorship.

    The best solution would be for Google to poke holes in China's wall... repeatedly. Automated English -> Chinese translations brought to the forefront. That would increase the list of things China's firewall would have to blacklist by a fuck of a lot. How about having the Google logo say something 'interesting' about Chinese government each day? Or provide high-quality networking tools and remote networking tools that can act as a proxy. Just push the envelope repeatedly until either China cools down or they get thrown out.

    "it would be a big FU to China to leave it as is but remove all censorship."
    While that'd be fun... it'd put google at pretty big legal risk. And more importantly the CEO has a duty to not have all his chinese employees taken to a chinese prison and not heard from again for 20 years...
  • by merc ( 115854 ) <> on Tuesday March 16, 2010 @12:26PM (#31497322) Homepage

    Yeah, but it's also nice to be able to recognize the shills and nutters. Whenever I read a report or analysis written by Enderle, Lyons or Didio I immediately consider the opposite of whatever they claim might be true. Whenever I hear anything written by O'Gara I assume it's outlight lies and spin.

  • by yog ( 19073 ) * on Tuesday March 16, 2010 @12:45PM (#31497636) Homepage Journal

    It seems that Google can't win. Either they make a deal with the devil as SputnikPanic puts it, or they behave ethically and attract savage criticism from armchair quarterbacks everywhere.

    Google has a corporate culture of idealism, no doubt fed by the youthfulness of its top executives and much of its staff. Beyond that, they have traditionally been a good corporate citizen, giving a lot of their work back to the community by open sourcing it.

    They created the Android phone operating system to be an open alternative to the various proprietary systems. Anyone can take it and run with it. A whole menagerie of excellent smart phones has emerged with Google technology at their core.

    Almost all of Google's apps--search, email, scholar, news, maps, voice, and on and on--are free to use, usually in exchange for mild ad text and aggregated use data.

    Google gets it. They do things right. They reward innovation, they encourage creativity. They are the epitome of a great American company.

    Therefore, to top off their greatness by refusing to deal with a censoring, dissident-hacking corrupt communist-only-in-name dictatorship is both admirable and gutsy and uniquely American. If only all American companies operated on principles rather than pure greed, think what a better society we would have, and a better world.

    I feel duty-bound to support Google in whatever ways I can. Right now it's my Nexus One phone, my gmail, and when I have some spare cash I'll buy a few shares of stock. Go, Google! Show those arrogant turds that at least a few Americans still believe in freedom over profit.

  • by damburger ( 981828 ) on Tuesday March 16, 2010 @12:54PM (#31497772)
    Not entirely. The complicity between western tech companies and the worlds nastier regimes are well documented - see Nokias role in helping Iran block twitter for example - and this has lead some (including myself) to suspect that these regimes are being used as testing grounds for this software, in preparation for it being used in the west to control content for commercial purposes (and possibly censorship too).
  • by King_TJ ( 85913 ) on Tuesday March 16, 2010 @12:55PM (#31497788) Journal

    Anything short of Google exiting China completely would just emphasize China's stance that they can censor anyone, any time -- and even the USA will bow to their demands, when push comes to shove.

    It's irrelevant if "Bing takes their place", really. This isn't about Bing or Microsoft right now. It's about Google and how THEY will react to being told by a nation how to run a search engine.

    If and when Microsoft opportunistically steps in and offers to do what Google refused to do, THEN it will be about Microsoft. We can cross that bridge when we come to it.

  • by severoon ( 536737 ) on Tuesday March 16, 2010 @01:39PM (#31498460) Journal

    My uninformed opinion about this is that Google made the deal in the first place because they recognize the difference between the Chinese government and the Chinese people, and after doing the calculus on it they reasoned that the overall benefit to the people was worth dealing with the government's rules, provided they didn't get too overt with it. I'm sure they also figured into it: once the people get a taste of a great search engine, and it gets taken away, they know what they're missing. If Google never goes in in the first place, they have no alternative but to believe what the government tells them, that Baidu is the best, yadda yadda.

  • Re:Posturing? (Score:4, Insightful)

    by DarthVain ( 724186 ) on Tuesday March 16, 2010 @02:48PM (#31499550)

    Emphasis on "down the road."

    1) Google makes ALL its money through Ad revenue.

    2) 1.3B Internet users does not equal 1.3B consumers

    3) For the most part China still exports most of its goods.

    Much of China is undeveloped. While many are moving to urban areas and earning a wage, many wouldn't have what we would describe as "disposable" income.

    There are a new class of people in China that can certainly afford "stuff", however that number is much much less that the total internet users (though growing).

    Google has also shown that it can break into well established markets and be successful.

    Thus I am of the opinion that Google is not in a great big hurry. If I was Google I would play hardball as well. Perhaps down the road it will give you a favorable bargaining position.

    Until Chinese start buying products at a fair market value (there is a reason why software in the USA costs 250$ and in China 13$), who exactly are you advertising to, and how can you make any money off of them? I mean if it takes 100 clicks on a link to sell one copy of software at 250$ then that service is worth X. If it takes 10,000 clicks on a link to sell one copy of software at 13$ then that service is worth Y. It is a rather simple equation. Now take a tally of all the X's and all the Y's and subtract that from what it cost to actually provide that service. If you get a negative number for Y, or a number so small in comparison to X, then basically you don't really care all that much one way or another. The only exception would be for "future considerations", basically start market penetration now (which will cost little), and in 10 years or so it might pay off. Of course if your Google, you can also leverage the fact that most of the known world uses your product, and if you keep it up, hopefully in 10 years that won't change, in which case penetrating that market down the road might not be that big a deal anyway.

    It will happen, its just many years away is all, and Google need not bend over backwards simply to enter into a market of little value now in the hopes that one day it will work out.

  • Re:Posturing? (Score:3, Insightful)

    by binkzz ( 779594 ) on Tuesday March 16, 2010 @03:24PM (#31500072) Journal
    It's not just about the market - it's also about the risks. If they stay in China, sooner or later the Chinese government will gain full access to their servers (either by hacking or by confiscation), and with it all the information they want. Plus the search algorithms.

The shortest distance between two points is under construction. -- Noelie Alito