Has Google (NASDAQ:GOOG) China Strategy Backfired?

Saturday, March 27th, 2010

When Google (NASDAQ:GOOG) decided to leave China, don't think it wasn't a calculated strategy to curry favor among the media and others. It was all of that and probably more. The problem for Google is it may have backfired for them, and now they are out of the largest market in the world with little hope of ever entering it again.

Now Google is of course attempting to position itself as a hero here against the totalitarian regime, but that's nonsense, and most of the rest of the business world know it; the reason there hasn't been much support for Google in the move they made.

The major reason why is everyone knows what they get when they enter China to do business. There is no confusion or ambiguity in that sense, so to make it look shocking and outrageous that there was some censorship of the search engine isn't even believable, as Google knew it coming in.

The other thing is Google is looking like a bad guy here too, attempting to dictate their will on an entire country. It sounds arrogant that they went on the offensive, attempting to color the country as something they have long been moving away from. This would have maybe made sense 15 to 20 years ago, but in today's China, it just doesn't fly, and isn't believable.

Leaders of Google have misread the situation in my estimation, and have made a huge mistake. They seem to have based their decision on a China of long ago rather than the China of today. And even with the censorship, who are they to tell a country they should adapt to who they are and what they want. Google is sounding like an arm of the American government rather than a company doing business.

That's the long-term backlash I see coming for Google, and if I was their competitors I would hammer them with it. Google attempting to act like they're a sovereign nation or being persuaded to take these actions by the United States government is a huge gift handed to them if they're willing to take it and do it the right way.

But that's just the PR side of things. Google has lost a ton of business that opens things wide up for their competitors, and I'm wondering if eventually shareholders won't sue them into oblivion for the stupidity of their actions. That's a real possibility and one they would deserve. They have a legal obligation to do what's best for shareholders, and there's no doubt they failed completely in that obligation here.

Short term this will look like a great move by Google, as the bloggers pat them on the back for the "principled" stand. But as the smoke clears, we'll find this could be one of the stupidest decisions by the leadership of a company in a long time.

Article by Gary B

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com

Tags: china , google

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Ryein Goddard (March 29, 2010 8:55 AM)
Horrible article! Biggest market? Who cares. It is about the people. Finally some one with money has some common sense. If everyone did what Google is doing right now our country wouldn't be in such horrible shape.
Pete Evans (March 27, 2010 5:13 PM)
I disagree with both your comments below me, i think everyone forgets how far China has come in a short amount of time. They have implemented many capitalist reforms and many other changes that people forget quite quickly. Im not sure if this is entirely good move on Googles part, you HAVE to respect another countries laws even if they are ridiculous. I understand the US has to try meddle how everyone else runs there country but they should look at the there own local US laws. Maybe Google wants to influence citizens and China isnt letting them so boohoo to Google, they should maybe have influenced healthcare reform in the US instead. Thousands were dying here EACH year with no healthcare reform(which just scraped through after a year of trying) but they are worried about another countries laws. I think no one over there would care if Google was gone. Let me all ask you a question, how many of you care at the decline of hotbot, infoseek, altavista and lycos.
Jafar (March 27, 2010 1:58 PM)
Hey Gary B. Thanks to Google not censoring content, I was able to find your dumb ass article against Google. What moron you are.Period.
Zachary d (March 27, 2010 12:13 PM)
Yeah. Respect a country's censorship as you write with your freedom of speech. Get a grip man.
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