Google’s China Dance Continues

Google executive chairman Eric Schmidt capped off his private trip to North Korea with a stop in Beijing late last week to meet with Chinese mobile application developers, according to The People’s Daily:

Duncan Clark, chairman of market research company BDA China Ltd, said that Schmidt’s visit to China was incidental, after his visit to the DPRK.

However, Clark added that “both Google China’s R&D presence in Beijing and its massive influence on the smartphone market through Android still give it a lot of heft here” despite the fact that local rival Baidu Inc has won the upper hand in recent times. Google’s Android is the world’s most widely used smartphone operating system.

Faced with a declining market share in China, Google is pushing into the mobile sector,trying to generate revenues from its mobile advertising products, which enable ads tobe shown on mobile applications, mobile search results and online videos.

John Liu, corporate vice-president of Google China, said earlier the mobile ad business is the company’s fastest-growing business in the country.

Meanwhile, the cat-and-mouse game with Chinese authorities over web freedoms in China continues. Google recently cancelled a search filter notification feature which tipped off users to banned or risky keywords, prompting some to claim that the Internet giant has given up the fight against Chinese government censorship. While activist groups such as GreatFire.org have expressed disappointment with Google, The Economist tries to put the move in perspective:

Fair enough, but a question comes to mind. Why should Google be buckling under now? Some see crassly commercial motives, supposing that the firm has stopped crying foul on censorship in order to woo back the Chinese government on behalf of its business interests. Such folk observe that Google has recently announced a tie up with Qihoo 360 Technology, a Chinese firm that puts out popular antivirus software as well as the country’s leading web browser.

Qihoo is determined to take on Baidu, which has consolidated its grip on China’s search market after Google’s departure (it is estimated to command a share of greater than 70%). A tie-up with Google would help Qihoo to improve searches and to better match eyeballs with relevant advertising. Google could benefit from the tie-up as the benevolent rich uncle, using the local firm as a proxy for its commercial aims. By keeping Baidu from becoming an utter monopoly, goes this argument, Qihoo helps keep the China market open for Google’s eventual re-entry when and if the censorship regime changes.

That seems a plausible thesis, but there is another. Every move Google has tried to make to combat, expose or pervert China’s efforts at censorship has been met and defeated by the authorities—often with overwhelming force. This was true too of its latest warnings about censorship. In the end, it may be that Google simply stopped banging its head against the wall, having realised that the headache was pointless.

The notion that Google could curry favour with the leadership now by halting its warning messages is ridiculous, insists a former Google insider: “the opportunity to capitulate was lost forever when Google gave the middle finger and left.”