English Literature

Google has struggled with the Chinese market for some time now. Google is the perfect example of free market, free speech, and freedom of information for the technological era. While China has grown to a giant in the world market, socially and politically it has remained closer to its communist roots. The censorship and filters employed by the Chinese government to adapt Google to its own values and norms have chafed at the search engine for some time. In effect, the restraints placed on Google by the China, as a precursor to doing business within the country, can be seen as more damaging to Googles purse strings than its moral fortitude. Yet in January, when China and Googles relationship hit its breaking point, Google turned the focus away from economics to Chinas human rights record. This shifted the attention away from Googles business failure and onto China, which I believe to be the case. Instead of admitting its own market failure, as analyzed in the context of microeconomics, Google moved away from economics entirely and changed the subject entirely.

There is no major Internet traffic in China with many dot com services being located outside of the country. This means that search engines are not affected by large volume tasks being processed at any particular time and this helps to improve the overall Internet traffic flow. In this way, Google s departure will mainly be symbolic. While in the Chinese market, Google provides a service. Due to a variety of circumstances unique to the market in China, Google failed in the most basic sense. It was simply inefficient its censored version could not compete within even such a closed market. In this, Googles overall individual economic gains were inefficient. Market failure can be caused by any number of factors including uncompetitive markets, goods or services that are not public. In the case of China, the heavy presence of the Chinese government in dictating Googles operations, created a market failure for the company.  Intervention can be in the form of regulations, leading to imperfect and inefficient outcomes. For Google, the largest regulation was in the form of censorship and filters, to block certain aspects of the search engine. I think, what is interesting is that not all foreign companies have failed in China. Chinas relationship with the outside world has only grown over the past couple decades. While it regulates these businesses as well, some of them have flourished while a mega-giant like Google has failed in the Chinese market. I think this is mainly because of the product that Google represents, which is mainly freedom of information. A major foreign exportimport company would have to deal with regulations concerning taxes, routes, proper documentation and permissions but these are easily coped with in the business world. However, with Google the regulations hit more closely to construction of the search engine. This undermines the product, and when a product is undermined by the government it loses its marketability.

It is unclear if economic failure is the cause of Google departure from the Chinese market but I think it is likely. Recently, there have been major attacks on human rights activists email accounts that are believes to be politically and ill-motivated and been partially to blame for the problems between the Chinese government and Google. Using Google as their search engine, the attackers have put Google in legal and possibly financial risk. While Google has used this to cry foul against, not the Chinese governments treatment of their company, but instead the governments human rights record. I find it interesting that after several years of operating in China, Google suddenly develops a conscience concerning the Chinese governments policies. What seems more likely, is that through decreasing returns Google has decided to stop their operations for economic purposes and use the moral high ground as a cover up. Through that they are able to maintain their public image. The attack on the human rights activists using Google, could be used by Google in the long run to paint them as wrongly persecuted by the government, but could also have just as easily have been the work of a Google competitor.

Competition brings out both the best and the worst in any industry, with competitors developed newly crafty and ingenious ways of outdoing one another. The email attacks could have been from an existing competitor such as Baidu, using a hackers hand to finally spoil Googles image in the eyes of the Chinese government. This would of course prompt government intervention, increased regulations and cutting away at the search engine. While interesting to discuss, overall I think even without the email sabotage Google would have eventually faced up to its own failure in the Chinese market. Overall, China contributes only one percept to Googles total output in terms of sales Googles exit from the Chinese market will likely not have a major impact on the companys future or continued profitability. Google is a world wide company with massive markets, it does not need to engage in a battle of politics in a market where the profit is so slim.

In the future, its likely Google will concentrate on market that will undoubtedly contribute to its net profit. Even in China, the official censored Google search engine is used less than the uncensored version. This makes sense because the nature of search engines is the amount of material that can be processed through them. Google could not hope to gain a major profit from the operation of the censored search engine in the first place. I think it is perhaps the realization that it the business endeavor was doomed from the beginning, is part the reason Google is now trying to save face by turning the blame to the Chinese governments policies as to blame.

Google isnt the only one playing the blame game China has also launched its own campaign against Googles  values.  Broadcaster CCTV has blamed Google for propagating pornography, which accessed through the search engine can be seen to negatively impact young people. Playing into a fear of moral corruption, Google could be portrayed as undermining social beliefs. While the lack of censorship in the Internet content accessed through Google is one of the search engines greatest assets, allowing for a wide availability of information, it also creates the negative side of the business. The Government should however note that pornographic content is accessed at will and blame should not be on the company s management but instead something to be addressed on a social level. For the last six months, there has been increased censorship of domestic sites without apology. The Chinese government has been outspoken in expressing their lack of concern over foreign opinions concerning their domestic politics. Since the search engine is operating in their country, the belief of the Chinese government is that Google must adapt to the laws of business operation in the country.

The media reports as though Google will certainly be  leaving  China but it has yet to materialize. While it can be considered to be an assumption of the company s future market plan, there is no guarantee but Google isnt taking chances and is preparing for its rainy day. However, it should not burn its bridges completely by allying itself ideologically against China. In any business, recessions occur and with time you find yourself on the boom again. Google in China is not dead yet, future economic changes may render Google and the market in China as  compatible. Unfortunately for Google, there is little confidence in market campaigns and their image has been tainted not only by the email attacks but also its ongoing fight with the Chinese government. It may take years before the average client can trust them again. The main problem is that the failure of Google wont just affect Google but also related parties such as g-mail, business hosting and Google docs operated by the search engine. Without the supplementary and complimentary relationship between the basic search engine and the related components, the impact will be much larger than if it were the search engine alone.

Googles relationship with the Chinese government is, as I noted above, not unique. Many other companies have also encountered problems with operating under the Chinese government. Like Google, the level of difficulty with working in the Chinese market is related to the service. The Internet remains a touchy subject for the government. The Chinese engage in little e-commerce, which greatly reduces the amount of profit for companies like Google. Having experienced operational difficulties in penetrating the Chinese market at first, Google should have realized it as a signal of market difficulties later on. From user difficulty in spelling the domain name, blocking of Google through filters against sites hosted abroad, their road has been bumpy. It is not surprising that such difficulty could translate into Googles current critique of the Chinese government. However, in attacking the Chinese government they are not promoting their own growth or overcoming their own financial difficulties in the Chinese market, they are instead simply throwing up a smoke screen that solves little.