Why now Google?

UPDATE: A Google Spokesperson just emailed me this: “This is not about market share. While our revenues from China are really immaterial, we did just have our best ever quarter [in China].”

Techcrunch’s Japan writer, Serkan Toto, tweeted at me tonight: “Astonished about how some people, i.e. @scobleizer, idolize Google now. What did G do in the past 4 years in CH besides playing along?”

Randy Holloway, who works at Microsoft, tweets: “You are a good guy, but you have lost your mind today. Ever think that Google is pulling out of China because they are *losing*?”

UPDATE: While I was writing this post, TechCrunch ran a post that said it was about business (and made the point that Google did this because it was losing again).

I think both questions are legitimate (albeit misguided) and they aren’t the only ones asking.

First, let’s take on the question of Google losing in China. I think this is an overly-cynical take (I stole that line from Danny Sullivan, search expert, who said the same thing).

Why is it too cynical? Because, well, if that was how business decisions got done than Microsoft would have pulled out of the search business long ago. But, seriously, to answer that you need to go and visit China, as I have. China is a HUGE market. In 20 years it’ll be much bigger than our own in the United States. Their people are getting online in HUGE numbers. So, to give up on this market now just doesn’t make sense.

Also, Google, and most other tech companies, have many employees there who develop features for the US market. I saw this first hand when I worked at Microsoft. Many of the coolest features inside Windows and Office were developed in China. So, to pull out of the Chinese market, even if you are a losing business concern there (Google was not, even though it was coming in #2 behind Baidu) doesn’t make sense at all because you’d have to give up these employees, many of which are smarter and work far cheaper than engineers in USA (when I visited China last year a HIGH END engineer was paid about $25,000 US per year, compare to a high end engineer in Redmond who usually gets paid $200,000 or more).

Pulling this move in China actually strengthens Google’s competitors (Microsoft, Yahoo, Apple, et al). Why? Because over in China EVERYTHING is done with government support. Every factory I visited was assisted by the government and approved. If Google falls out of favor with the government, it won’t get the best employees, won’t get approvals for offices, will get blocked even more frequently than it is today (how do you think Baidu got so big, anyway? You think they are actually more innovative? Yeah, right. More on that in a future post).

Not to mention that the best supply chains in the world are in China. Translated to English: that’s where the Google Nexus One phone was made (and the hard drives that Google uses, etc etc).

Google has EVERY INCENTIVE to kiss Chinese ass. That’s why this move today impressed me so much.

Now, onto the other point, that Google hasn’t done much up to now to fight Chinese censors and other human rights issues. Um, I’m sorry, but when I visited China I heard from many people that of the American companies Google didn’t play the game as well as, say, Yahoo or Microsoft. Remember Yahoo? Remember what they turned over to the Chinese government? When I worked at Microsoft I saw them play footsie with the Chinese government too. Heck, the Chinese president visited Microsoft’s campus when I worked there and got a red-carpet welcome. Why? Because China is a HUGE market and a HUGE supplier of labor that builds Microsoft’s products.

It doesn’t matter to me that Google played footsie up until today, either. They were the first to stop playing footsie and THAT deserves a HUGE round of applause.

UPDATE: VodPod’s CEO, Mark Hall made quite a few good points in his post about Google and China.

About Robert Scoble

As Startup Liaison for Rackspace, the Open Cloud Computing Company, I travel the world with Rocky Barbanica looking for what's happening on the bleeding edge of technology and report that here.

77 thoughts on “Why now Google?

  1. Google can't win in China that is why they are embarrassing the Chinese. If they want to take the moral ground they should have not got into this to begin with. Look at the Indian workers in the U.S. the work live slaves and are pissed upon. Where is the human rights there.

  2. You could think this even bigger. What if there weren't any Chinese behind the actual attacks but one of our many secret agencies, giving Google the reason to follow the Government's command to pull out of China? Let's see what will go on with Yahoo, Hotmail etc. the next days and weeks.

  3. My comment was about search censoring. Google, Yahoo and Microsoft have all done badly.

    However, you raise a good point in that we should look beyond search censoring. The yahoo case you mention is a good example of yahoo being on the opposite side of freedom and obeying a court order. Do you know if google has ever disobeyed a court order in China ?

    If google has disobeyed a court order and sided with freedom, you could make a good case that yahoo was much worse than google. However, all evidence indicates that Google has obeyed every important Chinese court/govt order. So I don't have reason to believe that they would have behaved any differently than yahoo did.

    You should also consider the fact that yahoo pulled out of China a long time ago. Google didn't talk about pulling out of China until after a “highly sophisticated and targeted attack ” on them.

    To reiterate my earlier comment, I applaud Google's move and think that they've helped the cause of freedom. However, I think it is a bit naive to assume that the move was driven solely by consideration of human rights or censorship and it is also incorrect to assume that there is a big difference between past google policies and those of other American companies.

  4. I have a different take on this issue. While I don't agree with the cynics that say Google's just cutting its losses–I also don't agree that Google is acting out of the altruistic goodness of their collective heart. In this post for @BanyanBranch I posit that perhaps Google is leaving China with plans to return stronger in the future. http://www.banyanbranch.com/google-vs-china-the

  5. Take a look at this: http://dealbook.blogs.nytimes.com/2010/01/07/co….

    Think about this: Google is 'shorting' China's regulators by playing poker face. Nothing is forever, everything's a negotiation, it's likely that the Chinese government will do some deep thinking over the next five (ten) years. It might just be time to indicate that Google really wants to be a more positive influence in China, that is, wants to do business without blackmail, corruption, favoritism, and so forth, so on, and so on.

    suppositio.us

  6. How is this any kind of victory for human rights? Google shows censors results one day, doesn't exist in China the next. Same end result for people living in China. It's not like this is going to intimidate Beijing, is it?

  7. Well, for example, Yahoo handed down user private information that lead to arrests of some journalists, which is somewhat more serious than limiting search results.

  8. I always thought this was a nice feature. You could safely browse google.cn, and occasionally when you saw that there were some censored results, you could decide that if you cared about the topic it was worth to do some proxying and use some encrypted channels to get this info from google.com. But most of the time it would be too much work to always surf in the paranoid mode.

  9. Is this how people thing in Microsoft? Because Google has more
    share in China than Microsoft and Yahoo combined in US.

  10. So how many pitchers of toxic Chinese Kool-Aid has Scoble drunk? You're intoxicated man. Best get to an emergency room fast. China's barreling along with no brakes. China will not be where you think it will in twenty years. They will be big but not that big. You're extrapolating from the past twenty years and applying it to the next twenty. I can guarantee you 100% that it will not turn out that way. They've already hit the demographic wall. It won't matter how smart their engineers are or how many they have, just like it doesn't today. What matters is the flexibility of a nations economy based on market conditions. What a genius achieves in one economy can be achieved by a dummy in another. Smart people are less important than you think. Far and away the most important thing is a dynamic and flexible economy. China's economy is making great gains by catching up under top down command fashion. The Soviet Union made great gains for 50 years in the same manner and nationally the USSR made amazing progress for decades until rigid policies began to show just how flawed and ossified the system was. Over the past twenty years, there have been social and economic time bombs set all over China and I doubt they will be defused before they go off in a chain reaction. China's still got another revolution coming and it won't be pretty. Why not get out now. Reenter after political climate change and help clean up the wreckage in developing China into a large (but not the largest) developed country for the rest of the 21st century.

  11. It seems obvious that Google are doing this because they are Angry. Business people have emotions too.
    It's quite an impulsive “up yours” reaction to the Chinese attempt to hack them. There's another country that likes to use cyber wars as a instrument of Government policy, and that's Russia. I wonder how long Google will stay there?

  12. I think Baidu benefits from hometown favoritism and the fact that they have close government connections. I'm sure they're better at kowtowing to the party bosses in Beijing (though they've also been blocked occassionally for not adequately censoring political content, porn etc.)

    However, Baidu isn't a US company and your blog comments were about US companies

    If you look at the US companies, all of them were equally willing to censor their search results.
    I don't think it makes much sense to say that one company's censoring was significantly better (or worse) than another company's censoring – though I'm sure that their censoring code would work differently (simply because they were written by different developers and also because of bugs)

  13. Seriously I just don't understand your blog posts, Almost all the sentences start with I heard, I think etc.
    Journalism shouldn't be like this.

  14. Dealing with the Chinese government is not black or white, but a wide variety of grays. You can comply with local laws while being “difficult.” My friends say that Google tended toward the more difficult side of things. There's a reason that China blocked Google a couple of years while leaving Baidu up. Google was being punished for not playing the game to someone's liking.

  15. I understand your point, but using Tiananmen Square as a test query is misleading. Of course “天安门广场” is going to return images of, you know, the actual square! Here are the search results for “天安门广场” in Google.com, which is US-based and uncensored:

    http://bit.ly/7C8EsD

    Huh, not much there — but this time you can't blame censorship for it.

    Why? Well, English speakers are very likely to associate Tiananmen with the 1989 crackdown, so Google's search algorithm associates the term “Tiananmen” with images of the tank guy.

    On the other hand, for mainland Chinese, “天安门广场” has a meaning outside of the 1989 crackdown. It's a place, and one that's smack dab in the middle of Beijing. When someone in China mentions “天安门广场”, they're probably using it in the context of “there's a street vendor near the northwest corner of Tiananmen Square selling kites,” not “never forget the people killed here 21 years ago.” Most people on the Internet use it for boring everyday stuff, not to foment dissent over an event a lot of “netizens” are too young to remember. Google's algorithm picks up on this kind of thing and organically ranks things related directly to the location itself over things related to the one incident that English speakers associate Tiananmen with.

    “天安门广场 1989″ and “Tiananmen 1989″ are probably much better terms for proving your point.

    That said, you're right that Google.cn hasn't implemented all or some of the de-censoring yet. You can tell, because on the bottom of the search results on Google.cn, you see “据当地法律法规和政策,部分搜索结果未予显示。”

    That is, “According to local laws, regulations and policies, some search results are not shown.”

  16. By throwing the ball into the Chinese authorities' court, Google is potentially setting up for not just a “Google vs China” situation, but a more complicated issue that China has been grappling with since its emergence in the last decades and how the world perceives it as an upcoming giant in terms of internet users.

    Zhou Xisheng, Deputy Chief of Xinhua News Agency, Director-General of Xinhua News Net, had recently proclaimed that “China has the most open internet in the world” – http://bit.ly/7b01tA . It will now be seen if their actions are indeed as loud as their words.

  17. The little question here is this, let's say google is really hiding its true intentions about halting its business proposition with china. Let's say that this “SOPHISTICATED ATTACKS' where just an alibi by google too, to make china look the scrooge of today's news.

    – What will google achieve from all of this hype?

    Google is a Human Right Activist Now? C'mon details: http://bit.ly/google-china-censorship-details

  18. You made a really valid point there Robert: Supply chain and the Nexus One that, without chinese support, will go down the drain faster than a rat leaving a sinking ship. On quite a few accounts the Nexus is not what it was expected to be and apart from all the complaints coming in, the “superphone” is noway near a trendsetter. I'm sure that's not what Google expected in going head-to-head with Apple.

    Now let's take it up a notch, in layman's terms: Google gets mad at Apple, builds its own phone. Apple gets mad, buys the largest mobile advertising network. At this point both of them are in a toestepping dance contest and neither is winning (and please not go into the “driving innovation” nonsense) so one or the other has to put on some shoes.

    Which leads us back to China, where Google is losing (was losing) big time in terms of PR but gaining a whole lot more on the technology/inside market, which made some waves in two directions: Government and competition.

    Now, we all know that China has been buying large chunks of whatever it can find for the past 10 years and putting it aside & the money to good use. Now about having a utopian scenario of the biggest Internet company in the largest & most influential country that can do whatever it wants?

    Doesn't it sound like a sweet deal waiting to happen? Well it does, except that this company is already losing ground thanks to its first few compromises and of top of that, it's upsetting another company that is the chinese (and the world's) tech darling.

    It's just your regular case of “take it or leave it, it will make you look good either way”. And it only took a couple of phone calls.

  19. Google's “pulling out of China” doesn't mean they will entirely close down their research & development facilities in Beijing. They can still tap into China's talented (and cheap) engineering pools and in the mean time not competing head-to-head over Internet with locals.

  20. So, here's a question: Why does it really matter why they are pulling out? The fact is that they are pulling out. A more interesting question might be what the implications are for the search industry in both China and the West. If there are no implications than this conversation is probably not worth happening?

    Andrew Pass
    http://www.lessontech.blogspot.com

  21. RB- I'm not saying that it makes sense for Google to do anything. I'm suggesting that pulling out of the market because they are losing is a possibility worth exploring. As for what was offered for Yahoo nearly 2 years ago, it's hardly relevant to this topic.

  22. When it comes to China, Google's backbone was as flexible as that of a Chinese circus contortionist. I'm glad it found its backboe.

    Bobbie Johnson made a good comment: “Goog acted after its rights were infringed, not the rights of its users.”

    Either way, I'm glad it took this stand. Siicon Valley companies have a terrible reputation when it comes to kowtowing to China. They say they stand up for people's rights but not if it involves China.

    Seems there is a lot more to this story than we've seen so far.

  23. This is generating a lot of noise, but hasn't played out fully yet. Re-read the press release and you'll see there's a lot of hedging and caveats in there: 'may', 'if', 'potentially', 'review'. No absolutes to date ..

  24. I applaud Google's bold move. However, speaking about your comments

    >>when I visited China I heard from many people that of the American companies Google didn’t play the game as well as, say, Yahoo or Microsoft.

    This is pretty lame.

    What exactly did you hear ?
    Why is Google's censoring of search results not as bad as that of yahoo and Microsoft ?

    I think you should stick to applauding Google's current move instead of defending their past practices ((without a credible explanation of why they were better than all other American companies)

  25. “HTC is inside the walled garden” Yup, and interesting point, thank you for that S Mohan Ramkumar. :) @org9

  26. China's been censoring Google.cn for at least six years now, and Google (and Yahoo, Microsoft, Cisco and other Silicon Valley companies) has been collaborating and condoning that activity. They went before Congress and defended their involvement in censorship. I asked a US State Dept official about this in 2005 in Hong Kong and he said you have obey the laws of the country you operate in (meaning: US Gov't wasn't trying to change this situation either.) I really want to know if Google talked the State Dept before they made this move.

    The Chinese Government isn't used to this type of public, international rebuke from a respected business entity. They'll either make a backroom deal with Google or claim that Google is offending the Chinese people.

  27. Danial, I am thinking your two cents should be added to my two..Four cents! Now, when Google Corp. says “attack from China” do they mean China's Government or some person/group in China? Important distinction for some of you, i assume? @org9

  28. Good analysis as always, however I think there is more to this issue than what you state. Google can do much more “good” being in China than being out of it from both a humanitarian and openness point of view. I rambled a bit here: http://bit.ly/6ooo0e and don't think Google will follow through as it does more harm than good… Just my 2 cents

  29. Dude, seriously. Would it kill you to stop asking rhetorical questions in your tweets and blog posts FOR ONE WEEK?

  30. didnt you guys offer 45 billion for a company with a smaller share worldwide than Google has in China? And yet you think it makes sense for Google to pull out of the Chinese market because they're *losing*?

    Thats an interesting contradiction.

  31. “Um, I’m sorry, but when I visited China I heard from many people that of the American companies Google didn’t play the game as well as, say, Yahoo or Microsoft.”
    -> But the point is they did play the game, too, didn't they? I agree there are “layers” of censorship, but wouldn't it be the “honorable” thing to not play the game at all?

    “It doesn’t matter to me that Google played footsie up until today, either.”

    I disagree. Here's an example why:

    Type in Tiananmen in Google.com and you'll get this:
    http://bit.ly/5222fG

    Type the same (simplified Chinese: 天安门广场; traditional Chinese: 天安門廣場) in Google.cn and you'll get this (simplified word):
    http://bit.ly/7KFf1y

    Quite a difference isn't it, still, after 4 years? (I know it takes some time for Google to implement their plans into the search).

    “They were the first to stop playing footsie and THAT deserves a HUGE round of applause.”
    If it really is for the reasons Google stated, then yes.

    Nota Bene:
    As I said over on Twitter, I heard the first rumors about Google planning to pull out of China in November last year (from sources out of China). This can or can't be connected to what has happened today, but it's interesting to know.

  32. I remember you being here very well and I take nothing away from your experience at MS. You do have great insights about the company and made great contributions here. I just need to make it clear that I'm expressing a personal opinion here and I'm not trying to speak for the company. Our product groups and executives are more than capable of providing their point of view on Google's activities if they choose to do so.

    While working at Microsoft probably does influence my view about many things I don't have anything to gain by Google's stance on China. I'd just like to see people give some serious thought to this situation and attempt to understand what's really going on and what the true impact will be of any actions taken by Google.

  33. Wow. Was dredging the net for some serious analysis on this very important topic. Except for you, no major blog network is following up with insights.

    The major hit could be on the Android platform as HTC is inside the walled garden. Forget about other tech companies, there is a not single Sovereign Govt. in the World that dares China publicly. So Google has just won brownie points that could last for a century. They are back in my Super Duper Good list. ( Eric Schmidt's privacy talk fiasco ruined a real lot for them).

    Will you be kind enough to investigate & post the dynamics of the breach that creeped the hell out of the World's largest search engine?

  34. Google's 30% (rough based on numbers I've seen tonight) isn't something they walk away from lightly. It's a big market and 2nd place is still a *very big* place.

    1. Given their 2nd place market share in China and large cost savings of engineering there, it wouldn’t make sense to pull out. Being able to monetize 30% of the Chinese search market is a good situation to be in.

      A summary of what Scoble is saying http://istldr.com/view.php?q=145

  35. Robert, I am not talking about other tech companies. I am a critical Criminologist and was questioning & am specifically talking about and rightfully questioning Googles Corp. motivation today, not last week or last year. I am waiting this out…. On the face of it of course we can all applaud.. but i do try my utmost to never judge just the face of anything- till its been really mulled over. I think its great you are taking a position and this is why i find it worthy to see what your thinking or saying on twitter. I could care less about your following or clout but think you deserve respect just for saying what you feel, think, know, value as do the rest of us out here. I too have independent thoughts on this and know better then to “camp up”. You rock Robert, but keep cool and let other opinions flow………………….. @org9

  36. I'm sorry, but you DO work for Microsoft and my readers should know that. Just like my readers should know I work for Rackspace. Everyone knows you aren't speaking for Microsoft, but, sorry, it DOES color your opinions and don't try to tell me it does not. I worked there, remember?

  37. Robert, I don't think you should quote me as an employee of Microsoft here. I don't work in search and you know that. I'm just asking an obvious question about the motivation for Google to pull out of China when nothing about China's policies has really changed. They are losing in that market and have failed to make any significant gains on Baidu. Why not consider the bigger picture for their motivations? Seems like a fair question to me.

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