2010 -- A Disastrous Year for Google in China

Will Google Strike Gold in 2011

2010, to put it lightly has been a solemn year for Google in China, and it started exactly a year ago with the cyber attack to Google's Gmail accounts.  Here's a rough chronology of what happened and what didn't go so well. 

• ·      Chinese cyber attack at Google (Jan 2010)

o   Linked to mainland and targeted Chinese human rights workers’ Gmail accounts

• ·      Google announces that it will stop cooperating with China’s censorship  (March 23, 2010)

• ·      Google exits China by moving servers to HK  (Users visiting Google.cn are auto directed to Google.com.hk)  (March 2010)

• ·      China blocks some Google service in mainland.

o   Google’s R&D in China is impacted

o   Google is being criticized for making this move unilaterally (without consulting Chinese staff)

Google advises China users to use VPNs and proxies to access Google sites (that are blocked).

• ·      China’s economy continues to grow at 10 percent

• ·      Google’s competitor: Baidu.com controls 71.7% of market share in China

• ·      China renews Google’s license (to operate in China for one more year) – July 2010

o   Google placated Chinese officials by putting an extra search box on Google.cn which when clicked takes you to Google.com.hk

• ·      Eric Schmidt lobbies for Google to return to China

• ·      Brin and Page decides against Google return to China

• ·      Google Failures in Web 2.0  (Unable to gain traction in the social networking realm)

o   Buzz (Has a huge privacy flaw -- anyone can see who you follow and the people following you)

o   Wave -- too difficult and the trend died quickly

·      Media reports Eric Schmidt loses focus and is accused of not being visionary.

• ·      Facebook gaining tremendous market share (of time spent online) from Google

o  Many Google high-prized engineers jumping ship to Facebook

     Many of the engineers are drawn to a smaller company and ability to shape its growth

o   Zuckerberg visits China (Dec 2010)

o   Facebook valued at $50 Billion

o   Facebook is considered more cool and hip than Google

·      

•      A new feature film called Googled “The End of the World as we Know it” by Ken Auletta is announced.  Adam Sandler to play Sergey Brin. (Aug 2010)

C  China raises interest rates (Dec 2010) putting strain on Asian markets

2011

• Eric Schmidt steps down as Google CEO (Jan 2011)

• ·      President Hu visits US (Jan 2011)
• 
  
•     Yuan hits 17-year high against the dollar
• 
  
•     Hu wants the Yuan to become the world's currency

o   Google CEO not present for State Dinner (Several other CEOs invited)

• ·      China waits and sees how Larry Page will deal with China. Visit portrayed as the beginning of a new era of bilateral relations.

C What's in store for 2011: 

G  Google is focusing on tapping growing revenue from Chinese companies who will advertise on Google's websites.  Although sales will grow, it will slow as more and more users switch over to Baidu.

    China with 800 million mobile phone users is the largest in the world.  And Google has been gaining market share on Apple and Blackberry.  Scalability not search is in fact Google's greatest skillset and best hope to leverage China's booming economy.

It Google succeeded by scaling its search vs Yahoo.  It also won hands down in scaling advertising vs the traditional media companies.  And now, the next battle ground will be mobile -- Will Google scale or fail?