The other Google-China beef

Ever since the Great Sino-Google Meltdown of 2010 began in January with a massive Chinese cyberattack on Google’s e-mail service — to which Google retaliated by lifting the filter on its mainland search results — international observers have framed the standoff between the two giants as a dispute over corporate morality and the freedom of ...

Ever since the Great Sino-Google Meltdown of 2010 began in January with a massive Chinese cyberattack on Google's e-mail service -- to which Google retaliated by lifting the filter on its mainland search results -- international observers have framed the standoff between the two giants as a dispute over corporate morality and the freedom of information. Now that China's renewed the Internet company's license to operate Google.cn, the same observers are hailing the saga's final chapter as a victory for compromise.

The license renewal is big news, but from the start, I've always regarded the fight over search as secondary to the bigger battleground, which is mobile advertising. It's a sector that's been oddly ignored amid the commentary over the China-Google spat, but it's a strategic one. Why? Let's count the ways:

Google may be allowed to continue operating its Chinese site, but the Sino-Google meltdown is nothing but bad news for attracting new users. Google is already playing catch-up when it comes to the Chinese search market; its main rival, Baidu, dominates some 70 percent of the total. Even if Google were able to close the gap with Baidu, the unresolved issues of censorship and search-filtering would likely trigger another meltdown with the goverment long before it succeeded. Search in China is probably a dead-end for Google.

Ever since the Great Sino-Google Meltdown of 2010 began in January with a massive Chinese cyberattack on Google’s e-mail service — to which Google retaliated by lifting the filter on its mainland search results — international observers have framed the standoff between the two giants as a dispute over corporate morality and the freedom of information. Now that China’s renewed the Internet company’s license to operate Google.cn, the same observers are hailing the saga’s final chapter as a victory for compromise.

The license renewal is big news, but from the start, I’ve always regarded the fight over search as secondary to the bigger battleground, which is mobile advertising. It’s a sector that’s been oddly ignored amid the commentary over the China-Google spat, but it’s a strategic one. Why? Let’s count the ways:

Google may be allowed to continue operating its Chinese site, but the Sino-Google meltdown is nothing but bad news for attracting new users. Google is already playing catch-up when it comes to the Chinese search market; its main rival, Baidu, dominates some 70 percent of the total. Even if Google were able to close the gap with Baidu, the unresolved issues of censorship and search-filtering would likely trigger another meltdown with the goverment long before it succeeded. Search in China is probably a dead-end for Google.

In fact, the market for search may soon take a backseat in general. Google’s expansion into the mobile phone industry — with products like Android and the Nexus One — reflect a growing realization that handheld devices make great advertising platforms. Google’s not the only one who’s seen the writing on the wall. With its proprietary iAds service, Apple isn’t far behind, and both Facebook and Twitter have plans to get in on the mobile ad business, too.

Finally, China already boasts nearly 800 million mobile phone subscribers. It’s a giant market with giant potential, and Google is in a strong position to transplant its mobile strategy there. Why shouldn’t it?

It’s hard to imagine mobile advertising being excluded from Google’s long-term China strategy. Google’s growing invovlement with mobile raises all the stakes, and it’s affected by all of the company’s choices there. But for whatever reason, it hasn’t made it into the broader narrative about censorship and free speech. And it should.

Brian Fung is an editorial researcher at FP.
Tag: China

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