Over the last two months with Google threatening to leave China because of censorship and intrusions by Chinese hackers, it officially happened today. According to their blog they said they would close their China-based Web site and instead direct Chinese users to a Hong Kong-based uncensored version of its service, which may get blocked in mainland China.
What makes this move so stunning is that they are essentially turning their back on the world’s largest Internet market, with nearly 400 million Web users.
Google’s decision to scale back operations in China ends a nearly four-year bet by top executives, that even if censored, it would help bring more information to Chinese citizens and loosen the government’s controls on the Internet. Apparently that has backfired because Chinese authorities have actually tightened their grip on the Internet in recent years.
Despite its size and reputation for innovation, Google trails its main Chinese rival, Baidu.com, which was modeled on Google, with 33 percent market share to Baidu’s 63 percent.
The decision to shut down its China-based search engine won’t have a huge financial impact on Google. China accounted for a small fraction of Google’s $23.6 billion in global revenues last year. However, abandoning a direct search engine presence in the largest Internet market in the world could have long term implications in their global presence.
Did they make the right decision?
