Google and the Chinese Government - Case Analysis

Google and the Chinese Government - Case Analysis

Overview:

Google is a cutting edge Silicon Valley based Internet Company; known world wide for being a titan in the internet industry was admired for their ethical business standards and their distinguished and celebrated corporate motto, “Don’t be evil.” Google had established itself as one of the most visited sites in the world. Google was rapidly expanding as more than half its user traffic came from outside the US. Though Google.com was accessible to Chinese users, there were many issues related to many of Google’s search contents being blocked by Chinese regulations and slow unreliable service. Realizing the potential for growth in the Chinese market, Google attempted to purchase a minority stake in the Chinese search engine company Baidu. However, Chinese law prohibited Google from holding more than a minority stake in Baidu therefore; the next logical step was to expand its own presence in China. To assist Google with establishing a permanent presence in China, they enlisted the help of world renowned computer scientist Dr. Kai-fu Lee, who was highly regarded in China and in the Chinese high-tech community. The next step was for Google to negotiate with the Chinese government to allow uncensored access by Chinese citizens to a high-speed Chinese version of the Google search engine.

Central Issue:

How might Google reach and agreement with the Chinese Government that would allow them to successfully enter the Chinese market?

Significant Factors:

• Agreeing to Censorship of a “Google.china” search engine could have been viewed as a violation of Google’s famous principle, “Don’t be evil.”

• Current Chinese law prohibited Google from holding more than a minority stake in Baidu.

• The “Great Wall of China” allows the government to block and censor any information that the Chinese government sees as “unfit.”

• Google needed to place servers in China to improve speed and performance to compete with other Chinese search engines.

• Chinese consumers are naturalistic and were less willing to accept foreign brands if a Chinese alternative existed.

• China is one of the largest growing economies, therefore losing the Chinese market would damage Google global strategy.

• Setting and research facility in China would give Chinese engineers access to Google’s proprietary research technology, create jobs for Chinese citizens, and also prevent “brain drain” of Chinese talent to the US.

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