Google’s Choices in China

Google’s got quite a predicament in China to contend with.

Perhaps most importantly from Google’s perspective, its locally operated Internet search engine (found here) is losing market share to Baidu, China’s No. 1 Internet search engine.

Combined with its declining fortunes, Google’s also in a showdown right now with the Chinese government about whether it should continue to censor search results. It’s a clash Google seems destined to lose.

So what’s a Google to do?

Handicapping scenarios like this is quite the inexact science. But it just seems like everything’s adding up to Google continuing to operate a locally generated search engine in China, which means continuing to censor Web sites the government objects to.

There are a few major reasons to think this way. For one, Google’s already poured a lot of money, time and effort into reaching the Chinese Internet audience, which ,while substantial already, is only just now emerging.

Also, Google’s major rivals, Yahoo and Microsoft, have come under fire for supposedly helping Chinese authorities in ways arguably more onerous than censorship. So, in a way, Google’s the lesser of three evils.

Also, perhaps most importantly, Google’s determined to stay its course in China, even in the face of adversity, or so Google’s CEO recently inferred.

“It’s too early to tell how successful these new strategies are,” Eric Schmidt said earlier this month. In response to a financial analyst’s question about Google’s travails in China, he added: “Let’s give them some time to bring out the product. We don’t see a need to change what we’ve done.”

Schmidt commented before Google co-founder Sergey Brin expressed regrets about censorship. Yet his words are still germane nonetheless because they point to Google’s willingness to give a strategy time to mature before judging it harshly.

But let’s say Google’s conscience finally gets to it. That means Plan B: Google cutting bait and pulling out of China.

It’s very unlikely to happen, though it would be quite the opportunity to bow out gracefully, tail between the legs, but with a bit of nobility.

Google’s decision to censor results in China has always bothered Google’s hierarchy because it so clearly violates company principles, according to comments Brin made to reporters earlier this week.

So that sets up a rather easy-to-swallow exit scenario.

But all that potential revenue makes it more likely that Google is in China for the time being.