Yesterday evening the story broke that Google (GOOG) was threatening to cease operations in China.
In his blog post, Google’s Chief Legal Officer David Drummond said the company had discovered a “highly sophisticated and targeted attack on our corporate infrastructure originating from China.”
Drummond goes on to say the Google will “review the feasibility of our business operations in China” and that they would stop censoring its Chinese language search engine, Google.cn, which filters out results that would otherwise be seen in the regular Google site.
The big headline here is that a major company is threatening to leave China in a time where many investors won’t even touch a stock if it doesn’t have exposure in China, a country with some of the biggest growth and opportunities right now.
Unlike in the United States, Google does not dominate the market share in China and it only accounts for a speckle of Google’s overall revenue. The top spot belongs to Baidu (BIDU), which has about 75% compared to Google’s 25%; however, when you put into perspective that there are roughly 330 million Internet users in China, that percentage adds up to a lot.
Does Google need China? No, but to continue to grow and not become stale, Google will eventually need the growing market of China.
It will no doubt be interesting to see what unfolds here. With so much opportunity and a growing market, it would be hard for Google or any company to completely remove itself from China, but will the Chinese government fold?
At the end of the day something will happen. Either the Chinese government will give in, Google will ultimately listen, or perhaps Google really will actually leave. Whatever the result is, it will definitely have an impact on the market going forward.
The video below pretty much sums this whole Google vs. China idea below.
What do you think of Google’s latest move?