Google in China Case Study

The University of San Diego

Google In China

Swastik Mukherjee

GSBA 516

Dr. Seth Ellis

15 December 2014

1. Why did Google issue the statement of January 12?

Google issued the January 12 statement to: 1) put its foot down to censorship controls in China and 2) to issue the threat of its exit from China. The fact that the government in China picks and chooses what sort of information is available to the general public goes completely against Google’s principles of “do no evil”. Misstatement and inaccuracy of facts is basically what is happening in China due to the harsh censorship rules. This is not what Google wants. Despite making it seem like Google is concerned for cyber-safety, this is Google’s way of saying that the recent hacking attacks are the final straw. It has violated its own principles for too long and having received the decision from its United States headquarters, it has decided to take the ugly step of removing its existence from China.

1. Can Google take comfort from the reactions of stakeholders so far?

The case presents us with differing views on this by giving us reactions of different types of stakeholders and in my opinion, a move like this is definitely likely to have opinions on both ends of the spectrum – those that see this as Google’s rallying cry against information censorship and those that see it as Google’s own folly and giving up on a cash cow, that is China. There were positive reactions coming from human rights activists as well as political parties but there was also negative impact on the stock price after this announcement. The stock price took a dip after this announcement that led to lowered revenue for the company.

1. Given the information in front of you, just from the case, would you recommend that

Google should exit China?

Although Google’s stance is admirable, I do not agree to it. Google has stuck to its principles of “do no evil” and “democracy on the web” and has decided to issue the threat to exit China statement. On paper, this looks and sounds noble but practically, I do not think this is a smart move. China, having the world’s largest population with Internet users growing exponentially every month, is one of the top markets in the world. By exiting the country, Google is jeopardizing the 700 odd employees in China, its partners, users and turning its back on a potential cash cow, even though currently only 1% of its revenues come from China.

The stock price went down after this announcement and that also hurt the investors and shareholders. Also, if Google thinks that a threat to exit China is going to solve the impasse, then it may be wrong. I do not think China is going to soften its stance on censorship, with or without Google. In fact, China already has a substitute for Google in the form of Baidu and it may choose to support Baidu if Google executes its threat. In a way, it is a lose-lose situation for Google. It is not a position to negotiate, since it has only a 31% market share in the search engine space, second to Baidu’s 64%.