Fallout from Google leaving China

Jeremy Hobson Mar 23, 2010
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Fallout from Google leaving China

Jeremy Hobson Mar 23, 2010
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TEXT OF STORY

Kai Ryssdal: It’s been, oh, 24 hours or so since the news broke that Google’s going to stop censoring its search results in China. Beijing, of course, has its own army of censors, so it’s not like Chinese Web surfers are getting any more information than they used to.

Washington is trying to stay out of it. The State Department says it had nothing to do with Google’s decision. But more worrying for Google, perhaps, was a move today by a well-known Hong Kong billionaire. He cut all ties between Google and his popular Internet company in order to stay in Beijing’s good graces.

Marketplace’s Jeremy Hobson reports now on fears other companies may follow suit.


JEREMY HOBSON: At last check, Google controlled 36 percent of the Internet search market in China. Well behind its chief competitor there, Baidu. But in terms of ad revenue coming into Google from its business in China?

ANDY MIEDLER: The true financial impact is quite minimal, at only 1 to 2 percent of revenues, and we think that’s the more important aspect to look at.

That’s Andy Miedler, a tech analyst at Edward Jones. He says he’s disappointed that Google will miss out on potentially enormous growth in the Chinese market. But he doesn’t expect this decision to have much of an impact on Google’s business throughout Asia.

MIEDLER: What we expect Google to do is to continue to compete aggressively in the Asian market, which offers higher growth potential, given that many of these markets still have a very infant Internet advertising base.

But by aggravating China, Google may have opened up a can of competition.

Whit Andrews is an analyst at Gartner. He says companies throughout Asia may back away from Google in order to take advantage of the situation.

WHIT ANDREWS: Plenty of companies will sever ties to Google, perceiving, accurately, that there is now a vacuum in China for the services that Google provides, and that’s to be exploited.

Others may spurn Google to keep Beijing happy. But Andrews says over the long term, Google will cement an anti-censorship reputation, which can’t hurt for a global search engine. In the short term, of course, Google shareholders will be crying over today’s stock slippage.

In New York, I’m Jeremy Hobson for Marketplace.

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