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August, 2018

Google's risky return to China

Original article: Tech News

Google plans to formally reenter the China market by making its search engine compliant with Chinese cyberspace regulations. Google representatives have reportedly been meeting with Chinese officials to discuss details of the process. If Google can meet all of Beijing's requirements, a Google mobile app may be available in China by early 2019.

Analysis:

As far as flip-flops go, this is a big one: Google exited China in 2010 amidst security problems with Gmail and a stand-off with Beijing over requirements to censor its search results. Observers said that Google was standing up for free speech. To evade censors, Google redirected its China search results to Google Hong Kong. By 2014, Beijing had completely blocked access to Google and Gmail on the Chinese internet.  


Fast forward to August 2018: Google is eager to reenter the China market. This is the same firm that has positioned itself as a champion of progressivism, highlighted by the slogan "Don't be evil" in its code of conduct - at least until recently. In June, Google announced that it would not renew its contract with the U.S. military to develop AI image recognition software for drones. 


The company's decision came amidst revolt in the ranks. More than 4,000 employees signed a public petition calling for Google to sever ties with the Department of Defense. "We believe that Google should not be in the business of war," the letter stated.


Fair enough. The company's employees have a valid point about ethical use of artificial intelligence (AI). But there are ethical issues around censorship too. By wavering on its professed core values, Google is weakening its brand. And the political optics are poor. Trade tensions are running high between Washington and Beijing. The U.S. is restricting Chinese investment in U.S. technology for national-security reasons. The Trump administration and Congress could move to scrutinize Google's ties with China. 


In an August letter, a bipartisan group of six U.S. senators asked Google CEO Sundar Pichai to explain in detail the company's plan to reenter China. Complying with "onerous censorship requirements...would set a worrying precedent for other companies seeking to do business in China without compromising their core values," the senators wrote. 


Others say that Google's overtures to Beijing could complicate the Trump administration's efforts to win concessions in the trade dispute. "The Trump administration’s drive to stop China’s forced technology transfer and intellectual property theft was the impetus for the current trade war," notes an August 11 commentary in The Post and Courier, a South Carolina newspaper. "Having one of the United States’ largest tech giants strike a side deal with Beijing undermines the entire effort." 


Moreover, in the time that Google has been absent from China, a formidable domestic tech ecosystem has emerged dominated by Alibaba, Tencent and Baidu. Microsoft is ubiquitous in desktop computing, but that's the exception, not the rule. There is no alternative, much as Chinese smartphone vendors have no alternative to Google's Android operating system. 


However, Baidu has long been China's king of search. Many Chinese internet users have little or no experience using Google. A virtual-private network (VPN) is required to access Google's search engine in China, but most Chinese netizens don't have VPNs. 


A recent Sina survey of 17,500 Chinese internet users cited by Wired found that 72.8% respondents would prefer Google to Baidu. That sounds promising for Google. Yet Beijing has long shielded its internet companies from global competitors. By simply complying with the laws of Chinese cyberspace, will Google enjoy unfettered freedom to operate its search engine in China? 


Analysts say that Google also has its eye on China's vast cloud-computing market, the world's second largest, which is dominated by local companies. In January, Google signed a patent-sharing deal with Tencent. The two companies agreed to jointly develop "future technologies."


Google needs to be careful. China's IPR protection environment remains inconsistent. With Sino-U.S. relations strained, the economic-espionage risk is considerable. Just ask Apple, whose self-driving car secrets were stolen by a former employee - a Chinese national - from the firm’s Cupertino headquarters in April. Meanwhile, Google has established an AI R&D center in Beijing and is sharing AI software with local partners. The company reckons such moves will lay the groundwork for an enduring, profitable China business. 


Don't bet the farm on it. "You can never say never, but that is an incredibly tough proposition," Synergy analyst John Dinsdale told Wired, in a reference to Google's chances of success in China's cloud-computing market.

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