16/03/2010
fledgling Web outfits would
BEIJING – China without
Google — a prospect that
looks increasingly likely —
could mean no more maps
on mobile phones. A free
music service that has
helped to fight piracy might
be in jeopardy. China's
fledgling Web outfits would
face less pressure to
improve, eroding their
ability to one day compete
abroad.
Chinese news reports say
Google Inc. is on the verge
of making good on a threat
to shutter its China site,
Google.cn, because Beijing
forces the Internet giant to
censor search results. The
reports indicated that
Google had, in fact, already
stopped censoring results,
but searches Tuesday for
sensitive topics like
"Tiananmen massacre"
appeared to still return only
whitewashed results.
A Google spokesman, Scott
Rubin, denied censorship
had stopped and would not
confirm whether Google.cn
might close.
The extent of a possible
pullout from China is
unclear. But on top of a
Facebookof Google loses and others
local search site that Google
says it may close, services
that might be affected
range from advertising
support for Chinese
companies to online
entertainment.
"If Google leaves, it's a
lose-lose scenario, instead
of Google loses and others
gain," said Edward Yu,
president of Analysys
International, a Beijing
research firm.
Google says it is in talks
with Beijing following its
Jan. 12 announcement that
it no longer wants to comply
with Beijing's extensive
Web controls. But China's
industry minister insisted
Friday the company must
obey Chinese law, which
appears to leave few
options other than closing
Google.cn, which has about
35 percent of China's
search market.
Google CEO Eric Schmidt
said last week something
would happen soon, but
Rubin, speaking by phone
from Google's headquarters
in Mountain View,
California, said no action
had yet been taken.
companies rely on Google
Such a step could have
repercussions for major
Chinese companies as well
as local Web surfers. It
would deliver a windfall to
local rival Baidu Inc.,
China's major search
engine, with 60 percent of
the market. But other
companies rely on Google
for search, maps and other
services and might be
forced to find alternatives.
China Mobile Ltd., the
world's biggest phone
company by subscribers,
with 527 million accounts,
uses Google for mobile
search and maps. Baidu
offers mobile search, but
China Mobile passed up a
partnership with it earlier
after they failed to agree
on terms, according to
industry analysts. Millions of
mobile customers might lose
access to Google's Chinese-
language map service.
A key issue is whether
Beijing, angry and
embarrassed by Google's
public defiance, would allow
the company to continue
running other operations,
including advertising and a
fledgling mobile phone
who defend China's controls
businesses in China if
Google.cn closes.
China promotes Internet
use for business and
education but bars access
to sites run by human rights
and political activists and
some news outlets. Officials
who defend China's controls
by pointing to countries
that bar content such as
child pornography are stung
that Google has drawn
attention to how much more
pervasive Chinese limits
are.
Chinese Web surfers are
blocked from seeing
Facebook, YouTube,
Twitter and major blog-
hosting services abroad and
a Google pullout would
leave them increasingly
isolated.
Google hopes to keep
operating its Beijing
research and development
center, advertising sales
offices and mobile phone
business, according to a
person familiar with the
company's thinking. But the
person said the company
won't do that if it believes
its decision to stop
censoring search results will
use Google's Android
jeopardize employees in
China. Industry analysts
estimate Google has a work
force of 700 in China.
The government says
Chinese mobile phone
carriers will be allowed to
use Google's Android
operating system but there
has been no word on
whether efforts to sell its
own phones in China might
be affected. Google
postponed the launch of
two phones with a major
Chinese carrier due to the
dispute.
Uncertainty also surrounds
Google's China music portal,
a free, advertising-
supported service launched
last year in partnership with
four global music companies
and 14 independent labels.
Industry analysts say it has
helped to undercut China's
rampant music piracy by
offering an alternative to
unlicensed copying.
"Without that, are we back
to, `Piracy wins'?" said
Duncan Clark, managing
director of BDA China Ltd.,
a technology market
research firm.
The music service is run by
The biggest impact of a
Top100.cn, a company
part-owned by Google, but
can be accessed only
through Google.cn.
Top100.cn's executive
chairman, Erik Zhang, said it
is preparing for the
possibility that Google.cn
might close but said his
company has not been told
whether that will happen.
He declined to give other
details.
The biggest impact of a
Google departure could lie
behind the scenes, where
Chinese companies, many
of them small
entrepreneurs, rely on its
AdWords advertising
service, Gmail e-mail and
documents services.
Those might be disrupted if
Beijing turns up Internet
filters to block access to
Google's sites abroad. Its
U.S. site has a Chinese-
language search engine but
is already inaccessible due
to government filters.
In an uncomfortable irony
for Beijing, Google might
suffer little commercial loss
from a pullout while China's
own companies are hurt.
The bulk of Google's
revenue would still be kept
estimated $300 million in
2009 revenues in China
came from export-oriented
companies that would need
to keep advertising on its
sites abroad even if
Google.cn closes, according
to Yu.
"We believe the majority of
revenue would still be kept
on, with keyword purchases
listed on Google.com
instead of Google.cn," he
said.
The loss of competitive
pressure from Google also
might slow Chinese
development in search and
other Internet services, Yu
said.
"This is definitely a bad
thing for Chinese companies
that want to go abroad in
the future," he said.
The industry minister, Li
Yizhong, said Friday that
China's Internet industry
would develop without
Google. But even some
Chinese industry leaders
who normally toe the
government line in public
are warning that controls
on Internet companies and
media are handicapping
their growth.
People in the industry say it
Beijing has steadily
tightened controls over
Internet content and
foreign investment in the
industry. Video sharing sites
must have state-owned
media outlets as partners.
People in the industry say it
is getting harder to register
privately financed sites.
"Without full and fair market
competition, there will be no
quality, no excellence, no
employment opportunities,
no stability and no real rise
of China," said the chairman
of major Chinese portal
Sohu Inc., Charles Zhang,
in a speech in February,
according to a report on
Sohu's Web site.
"How do we do this
practically?" Zhang said.
"The problem is
complicated, but the
fundamental point is to limit
the power of the
government."
People in the industry say it
Beijing has steadily
tightened controls over
Internet content and
foreign investment in the
industry. Video sharing sites
must have state-owned
media outlets as partners.
People in the industry say it
is getting harder to register
privately financed sites.
"Without full and fair market
competition, there will be no
quality, no excellence, no
employment opportunities,
no stability and no real rise
of China," said the chairman
of major Chinese portal
Sohu Inc., Charles Zhang,
in a speech in February,
according to a report on
Sohu's Web site.
"How do we do this
practically?" Zhang said.
"The problem is
complicated, but the
fundamental point is to limit
the power of the
government."
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