Three weeks into January and it’s already been a rollercoaster year for Google. The US Internet giant started 2010 by taking the wraps off its self-styled ‘superphone’ – the Nexus One – its first own-branded device based on its Android platform. As well as being talked up as the most serious competitor to the iPhone to date, Nexus One represents a radical new approach to distribution by being immediately available for purchase over the web and outside of an airtime contract.
Nexus One should have been the focus for Google-watchers for the foreseeable future. But a week later Google dramatically announced it is set to pull out of the Chinese market due to rising levels of censorship and security concerns.
Launching a fancy new smartphone is one thing; becoming the catalyst for a potential breakdown in US/Chinese economic relations is quite another.
Google and China have always been uneasy bedfellows. Launched in 2007, Google China’s decision to bow to Beijing’s demands over censorship on its search engine left Google’s reputation as a defender of the free and open Internet severely compromised (a Google China search on “Tiananmen Square” famously returns no mention of the events of June 1989). According to Google, government meddling has steadily increased in the years since, culminating in last week’s allegations that government-backed hackers have been attempting to break into Google’s email service (Gmail) to spy on communications between those deemed political dissidents.
If Google does quit China the ramifications could be massive, not only for its regional search business (where it competes with Microsoft and local player Baidu) but also for its burgeoning mobile ambitions in the world’s largest mobile market. China has over twice as many mobile users as fixed-line Internet connections (roughly 700 million to 330 million), and it is unlikely that Google’s local mobile activities will be unaffected if it goes through with its threat to shut down its Chinese search engine.
Indeed, Beijing already appears to exert similar levels of influence over foreign firms’ dealings with China’s three main mobile operators, which are all state-controlled to varying degrees. Apple and China Mobile squabbled for over a year regarding the launch of the iPhone in the country, before Apple walked away and secured a deal with a smaller rival (China Unicom); a battle for control over content and distribution was at the heart of the stalemate. Similarly, Google appeared to make a number of compromises when launching Android in the country, allowing China Mobile to build its own proprietary version of the platform called ‘Open Mobile System’ over which the operator has complete control.
The risk for Google is that China could make life difficult for the firm just as it is looking to step-up its mobile efforts in the country. Nexus One is unlikely to be allowed to sell in China without some form of operator partnership and any delay could lead to a flood of the devices onto China’s large grey and black markets, as happened with the iPhone. Nexus One is already shipping unlocked to neighbouring Hong Kong and Singapore and reports suggest that unauthorised devices are now available on the streets of mainland China.
Google should be highly commended for (belatedly) standing by its free speech principles in China, but it’s a decision that could have far-reaching implications for its mobile ambitions in the region.
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members
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