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
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.
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 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 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 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 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.
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."
David Mikael Taclino
Inyu Web Development and Design
Creative Writer
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