Google's fight

Google threatens to pull out of China after it claims content cencorship is imposed by the government. The US government is also involved in the act. An economical dispute has been escalated into a political one. Where is the fight heading?

Google China plays a small roll in Google's earning, just $600M in 2009. But investment in China since early this century is huge. Google had been in disputes with Chinese authorities in the past: porn contents and copy right issues on Google Books. It can hardly say smooth along the path. But on Google's standpoint and management structure, China isn't an important pawn. After Kai-Fu Lee leaves Google China, no new role was appointed.

Both sides are standing firm on their stance. Chinese government releases to press that all internet businesses must obey local rules, as a public response. It seems Google's retreat is unavoidable. Is that so?

Chinese policy is rigid but not unchangable. Recall the HD DVD format back a few years ago, China wanted to bypass royalty charges from other manufacturer alliance so that they initiatiated their own standard. After a couple unsuccessful years attempt, their call was not a good call. Intel, a few years ago, collided with China on WiFi standard. Finally, China dropped their requirement on Intel. A most recent case was the mandatory internet censoring software installation. Chinese authority eventually released a statement that it is a voluntary software. Someone in the authority has been making mistakes all the way. They don't know the industry well enough.

The issue may be settled when more parties are involved because many foreign investment are using Google in their chinese operation. The stakes on the Chinese side is bigger than Google's, both economical and political. The presence of Google in China is not an issue. The most important issue, however, is that the broken relationship may take much longer to fix.