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With Google looking increasingly likely to pull out of China, could this be a major opportunity for Yahoo! and Microsoft’s Bing to gain bigger shares of the search market or are they likely to follow to suit?
Despite Google’s seemingly inevitable exit from the Chinese internet market, analysts predict a limited windfall for the two remaining major Western search engine players.
Microsoft has remained tight-lipped about the whole affair, refusing to put anyone forward to discuss its role in China or it views on censorship. The only statement a spokesman would release was the following: “We have no indication that any of our mail properties have been compromised,” a reference to Google’s blog post in which it talks about “at least twenty other large companies from a wide range of businesses including the internet” which have been the victim of “a highly sophisticated and targeted attack on our corporate infrastructure originating from China” and affected users of Gmail.
Yahoo! will not disclose whether its own network has ever been attacked – nor has it said it will exit China, following Google’s lead. All a spokesman has said is: “Yahoo! is committed to protecting human rights, privacy and security. We condemn any attempts to infiltrate company networks to obtain user information. We stand aligned with Google that these kinds of attacks are deeply disturbing and strongly believe that the violation of user privacy is something that we as internet pioneers must all oppose.”
However, a major difference for both of these companies, which trail behind Google’s share of the search market both inside and out of China, is that they have always remained businesses and have no moral high ground to maintain.
“Google put itself on a pedestal and positioned itself as a company with morals that believes in organising the world’s information freely and for the good of all. Microsoft and Yahoo! have never done that. They are just businesses,” said Nate Elliott, a principal analyst at Forrester Research.
“Each company has had to play by the Chinese government’s rules for the last few years and I am sure they were not to each company’s taste or easy to comply with – but it was harder for Google to keep doing so while trying to maintain its morals. Google’s increasingly likely exit from China does open up an opportunity for Microsoft and Yahoo! to win some share.
“I would be surprised if either company sacrificed the chance to exploit a huge developing market – especially when they are both losing the search war so badly to Google in the other major markets.”
However, although an opportunity would present itself to both Microsoft’s Bing and Yahoo! it wouldn’t be a clear pathway to the top of the leader board – Baidu, a Chinese technology company, occupies that top spot, accounting for approximately 60 per cent of the search market, while Google comes second with 30 per cent of the Chinese market. Yahoo! comes in third and Microsoft’s Bing at fourth, according to the 2009 Q3 comScore statistics.
Felix Cohen, a technical consultant from Headshift, a technology and social media consultancy, said: “Undoubtedly the majority of Google’s share of the search market will go to Baidu, if Google pulls out of China. Some may go to Yahoo! and a negligible amount will go to Microsoft, as Bing is still very new and has not penetrated the market.”
However, Mr Cohen believes that there are greater issues at play for both companies, which also prevent them from following Google’s lead.
“Microsoft has a complicated relationship with China at several different levels. It has its web presence and web business but the software side of the company is under threat from China’s high piracy levels. Fake copies of its programmes and operating systems really undermine its efforts in this side of the business – so it needs to keep China onside if it is to successfully lobby the government into introducing effective antipiracy laws.
“Microsoft would be loath to side with Google while trying to have illegal filesharing and piracy regulated in China.”
Yahoo!’s presence is made more complicated in China by the fact that in 2005 it sold its China business to a Chinese company called Alibaba, and while its maintains a 39 per cent shareholding in that company, it no longer has operational control or day-to-day management over the Yahoo! China business.
A senior technology analyst said: “The fact that Yahoo! business in China is totally operated by a local company, has meant that Yahoo! has complied with greater ease to the censorship and restrictions put upon its services by the Chinese government. Yahoo! has totally complied with these restrictions, appeasing the government, as it is eager to do business with China.”
Ultimately, it still remains to be seen if Google will fully pull out of China, but if it does, it seems like it will be doing so alone – leaving Microsoft and Yahoo! to attempt to reap any benefits and keep as open a dialogue as possible with the Chinese government.
“If Google does leave China, it will noticeably hit its global growth levels – as its growth is much larger in developing markets and has stabilised considerably in developed markets such as the UK – where last year during the first three quarters it only grew its business by one per cent,” said Mr Elliott.
Google has always gone with the minimalist approach, and this follows true with the new beta release of iGoogle.
