Google announced on their blog they will stop censoring search results for Google Search, Google News, and Google Images on Google.cn. Therefore they’ve relocated all the visits to Google China to www.google.hk.com (Google Hong Kong). On Google Hong Kong they will keep offering a Chinese search engine but without the previous censorship. Google considers the possibility that all of Google’s service will be blocked since they’ve launched a page just to update the world on the status of the accessibility of Google’s services for Chinese users. The first Chinese response wasn’t mild either so the chance of getting blocked altogether is real. What is Google putting on the line with this statement?
Google has been growing steadily over the last years in China. In the last quarter of 2009 they had a 35.6% share of the Chinese search market. In comparison with Q3 2007 (23.7% search market share) that’s a major growth in one of the largest search markets in the world (13,278 billion searches monthly). With the risk of getting blocked altogether in China Google risks losing 4,726 billion (35.6% of 13,278 billion) searches per month. Google worldwide is accounting for 87,809 billion searches monthly. That means by pulling this trick on China they risk losing 5% of their whole outlet.
Google’s total revenues in Q4, 2009 were $6.67 billion. With the US providing for 47% of Google’s revenues with a quarter of the searches (22,741 billion) in there’s still $ 3.54 billion of revenues made in the rest of the world quarterly by Google. China takes up 7.26% of the searches in the rest of the world. If the average international revenues per search are evenly spread worldwide that means Google could miss out on $257 million per quarter. That would be $2.81 million per day, or even $32 every second!
Would you consider losing such a large share of your income to make a statement? Well, Google did and I think we should respect them for it.
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Jeroen – Of course the value of the clicks in China is not based on the average! In fact, people in Wall Street seems to think that Google might actually be losing money in China. See the New York Times http://www.nytimes.com/2010/01/15/world/asia/15google.html
@Andy I know I made quite an assumption there. But the investment they did in China, they’re not winning it back by pulling out. That investment could be totally lost if they get blocked. I’m guessing it could easily cost more money to relocate all its resources to Hong Kong than to stay. Now they’re in the insecurity of keeping Google up and running for the Chinese and even investing in developing the service when China can block them any second.
Besides the Chinese search market is still growing along with the Chinese economy. Therefore it has a major potential even for a company that might be losing money right now. All that potential has now been thrown away.
I’m struggling with the maths here – $270 million a quarter doesn’t equate to $32k a second, at least, using the measurements of time that I’m familiar with.
@Matthew Seems you’re right. I little flaw in my last step. Thanks, I corrected it.
[...] second to Baidu with around 63%. But even still, the sheer size of the Chinese market means that 7.26% of Google’s non- US searches are provided by China, providing an estimated $260 million in q… This may not be the end of the world for a company that generated close to 7 billion in Q4 of 2009, [...]