Michael J. Marquis
Digital Marketing
June 18, 2013
Case Study # 2: Google in China
Summary of Key Elements
Google’s company mission statement is as follows: “To organize the world’s information and
make it universally accessible and useful (Quelch & Jocz, 2011).” By launching its China-based website,
Google.cn in 2006, the company has faced numerous challenges ranging from account hacking to search
engine censorship by the Chinese government. Google’s core principle which focuses on the “need for
information crossing all borders” has been challenged in China. In a January 12th, 2010 memo titled “A
New Approach to China,” Google makes mention of removing its business operations from China due to
continued efforts by the government to censor search results from its growing user-base. “These attacks
and the surveillance they have uncovered – combined with the attempts over the past year further limit
free speech on the web – have led us to conclude that we should review the feasibility of our business
operations in China (Quelch & Jocz, 2011).” Google, in the memo, confirms China’s propensity to limit
free speech; and at the same time, seeks to “initiate discussions with the Chinese government to operate
Google.cn without censorship; it would exit China if its conditions were not met (Quelch & Jocz, 2011).”
There seems to be a wide sampling of both critics as well as proponents of Google’s public threat
to remove its operations from China. Many questions on the direction of Google, the company, have
come into question due to its stance on censorship. “Should Google have made a public threat to an
authoritarian government (Quelch & Jocz, 2011)?” If yes, what type of impact will it have on the
company’s major stakeholders especially if Google’s mission focuses on global expansion of its search
engine technology? Will Google reap the benefits from following their own ethical compass in regards to
censorship of its users? Or are they limiting the scope of their global dominance by not being “flexible”
with non-westernized countries? Without question, these are difficult questions that Google must face in
the upcoming years especially if it’s concerned with longevity within a highly competitive global
marketplace.
Reactions from both the business, political and academic fields have confirmed the complexities
of the situation. According to Jonathan Zittrain, Harvard University Berkman Center for Internet &
Society, “Drawing a line is both the right move and a brilliant one. It helps realign Google’s business with
its ethos, and masterfully recasts the firm in a place it will feel more comfortable: supporting the free and
open dissemination of information rather than metering it out according to undesirable (and capricious)
government standards (Quelch & Jocz, 2011).” Zittrain, an ardent defender of Google’s stance on
censorship, feels as if the company identity is predicated on its ability to provide free-flowing information
globally without governmental interference. He is a firm believer that Google must align itself with its
ethics; and by doing so, will become a stronger company for the future. Conversely, Chinese Foreign
Ministry Spokesman Ma Zhaoxue, speaking on behalf of his government, talks about Google’s
responsibilities while doing business in China: “Foreign firms in China should respect China’s laws and
regulations, and respect China’s public customs and traditions, and assume the corresponding social
responsibilities, and of course Google is no exception (Quelch & Jocz, 2011).” This analysis will examine
the difficult balancing act Google must face in its quest to provide an information search engine platform
across all borders; and at the same time, still adhere to its ethical principles. China, without question, is a
large, powerful marketplace; without its users, Google may find itself cut off by new competition that
may adhere to China’s censorship regulations. Google must find the balance between catering to China’s
ever-growing users; and at the same time, follow its guiding principles of spreading searchable
information worldwide.
Integrated Marketing Terms/Key Factors
Founded in 1998 by Stanford graduate students Larry Page and Sergey Brin, Google mantra is
“the need for information crosses all borders.” Page said, “Our company was founded in California, but
our mission is to facilitate access to information for the entire world, and in every language (Quelch &
Jocz, 2011).” From its original search offerings in Chinese, Japanese, and Korean back in 2000 to its
expansion to 110 languages by 2009, it was apparent to all stakeholders, that the company’s mission
statement was being followed to a tee. Without an actual operation in China, Google’s main connection to
Chinese users was through its language version. There were early signs of censorship that baffled Google
executives. “Content on Google.com was subject to filtering by Chinese Internal Service Providers, and
access to the site was slow; about 10% of the time the site was unavailable to Chinese users (Quelch &
Jocz, 2011).” From 2006 to 2009, Google launched not only its China-based website Google.cn but it also
“grew its workforce in China to some 700 people and revenues grew to an estimated $300 million
(Quelch & Jocz, 2011).” According to Google executives, “about one-third of these revenues came from
Chinese companies placing ads on the Chinese version of Google.com rather than on Google.cn.” To
better understand the instant impact of Google on Chinese users, In 2009 “Google held a market share in
searches of about 31%, compared with Baidu, the leading search engine, and less than 1% apiece for the
remaining competitors (Quelch & Jocz, 2011).”
Continued growth generated newfound challenges for Google. The company was seeing revenues
grow exponentially in regards to ad space from Chinese companies; but at the same time, they were
seeing their Chinese search engine competitor Baidu work in concert with the government to censor their
search engine results. “Baidu had the closest ties to the Chinese government and was reputed to cooperate
in blocking websites and censoring search engines on sensitive topics (Quelch & Jocz, 2011).” A great
example of the type of Chinese search engine censorship was illustrated in the case study. “A search for
‘Tiananmen Square,” for example, would generate no reference to the massacre of 1989 (Quelch & Jocz,
2011).” With ad money coming in by leaps and bounds, Chinese internet users grew exponentially to 338
million, and with the online retail industry in its inception, Google had a difficult choice of aligning itself
with its principles versus expanding as the top search engine in China. The one caveat being that the
government would in fact compromise the full access of information to its search engine users. Making
matters even worse, Google had a stake in other Chinese companies poised to reap the benefits of the
information era explosion. “Google’s partnership with Orca Digital, a Chinese company that distributed
music free online but generated advertising revenues that were shared with the major record companies
like Warner Music and EMI (Quelch & Jocz, 2011).” This was a groundbreaking digital company that
was positioned to take over the Chinese music sharing marketplace. It was highly innovative and its
connections with western partners like Google, Warner and EMI had positioned itself as the premier
music sharing company. Google had aligned itself with viable partners hoping to expand its user base.
But the question still remained: Should Google compromise its own company’s principles in exchange for
the global growth opportunities available in China?
Executives at Google, in the hopes of finding an answer to the habitual censorship of its search
engine in China, decided to focus solely on its ever-growing Chinese users. In 2006, Google stated, “By
launching Google.cn and making a major ongoing investment in people, infrastructure, and innovation
within China, we intend to provide the greatest amount of information to the greatest number of Chinese
Internet users (Quelch & Jocz, 2011).” CEO Eric Schmidt, reiterating the message of users being the focal
point for expansion said, “We decided to bet on the Chinese citizen. We decided that engagement was
better than estrangement. If we omit a result, we say the result was omitted. You’ll actually see in Chinese
a statement that the information was suppressed (Quelch & Jocz, 2011).” With the combination of full
disclosure of suppressed information and a user-friendly search engine, Google executives relied heavily
on the voice of its Chinese users and not on governmental interference. China was unrelenting in its
suppression and went as far as blocking access to social media sites Facebook and Twitter on top of the
already filtered Google search results.
Google’s Memo, drafted on January 12th of 2010, reiterated, in a public manner, the company’s
displeasure with Chinese government and its submissive tactics. Within the memo, however, was a last
ditched effort to reach out to the Chinese government in the hopes that they stop their censorship efforts.
From business executives all the way to the top of the political arena, Google’s memo generated varying
opinions about the company’s relationship with China. At the time, U.S. Secretary of State Hillary
Rodham Clinton said, “The ability to operate with confidence in cyberspace is critical in a modern-society
and economy.” Worried about the repercussions, business analyst Rob Enderle of the Enderle Group said,
“If it goes south and China doesn’t capitulate, then they’re (Google) is basically cutting themselves off
from one of the fastest growing economies in the world (Quelch & Jocz, 2011).” From inside the
company walls of Google, to the White House, and all the way to the Chinese Foreign Ministry, strong
opinions concerning which stance the company surfaced. Google has the difficult task of pursuing global
expansion at the expense of its own corporate ethics. By potentially seizing its operations in China, would
the company be turning its back on its stakeholders? Would there be another search engine giant taking
Google’s place more apt to comply with the Chinese government? Without China, would Google’s
longevity be in jeopardy? And will the company fall short of its main mission to “facilitate access to
information for the entire world, and in every language?”
Recommendations for Next Steps
In business, one must always stick to the guiding principles that are at the cornerstone of the
company’s success. The case study concludes with Google’s “Core Principles that Guide their Actions,”
which showcases the top ten mantras that steered them in the direction as the most powerful internet
company in the world. With great success comes an even greater responsibility to be a corporate
watchdog for society – an ethically responsible entity aligning itself with its founding principles. Google
is in the business of delivering information to the world in a user-friendly format. By allowing a
government to stifle, suppress and/or omit the actual services being provided, you, as a company, no
longer have an identity. It will seize to exist in an environment that contradicts the very nature of your
existence. Google was created in a capitalistic, democratic society that encourages innovation. The
owners had a dream to provide a wealth of information to the world in a highly simplistic format. If in
fact there is an outside party that pro-actively decides which parts of the information can delivered, and in
what format, then Google no longer exists – its identity is compromised. It’s foundation, non-existent.
Google should immediate seize its operations in China, if in fact, the Chinese government does
not comply with the company’s demands for no censorship. This, in my opinion, is rather black and
white. To create two platforms that enable one to be uncensored such as Google.com (Chinese version)
and the other platform Google.cn to be censored, would be to succumb to the pressures of a government
bent on suppressing the voice of its people. Google must subscribed to the principles of “Democracy on
the Web Works” and reiterate the message “as the web gets bigger, the approach actually improves, as
each new site is another point of information and another vote to be counted (Quelch & Jocz, 2011).”
Google search engine only grows in it function with the growth of additional information. Chinese users
are going to play a huge part in its continued operation. In order for them to be active contributors; i.e.,
authors of information, they must have access to all information available to them. It is Google’s
responsibility to send that message loud and clear to the Chinese government. The best approach to lift
censorship within an authoritative country such as China, would be to provide a service that everyone in
the world wants. To the point at which if it’s not available in its fullest format, said society would be left
behind and the growth of its people compromised. Through innovation Google will preserver and be in
high-demand globally.
Google, without question, does one thing extremely well: giving people access to information. It
should never entertain or align itself with those entities that oppose its core business function.
References:
Quelch, J. & Jocz, K. (2011). Google in China. Harvard Business School, Case # 9-510-071, March 24,
2011.