Does Google need to return to China? It’s complicated.

by: Simon HillApril 17, 2015
922

china-android

There are more than one billion mobile phone users in China, and somewhere over 40% of them are using smartphones. China became the world’s biggest smartphone market way back in 2011 or 2012, depending on which analysts you believe. It’s still growing. IDC says the 107.5 million smartphones shipped to China in the last quarter of 2014 represent 2% growth on the same quarter in 2013.

You know who’s doing really well in China? Apple.

IDC put Apple on a 12.3% market share in China for Q4, 2014, ahead of Huawei, Lenovo, and Samsung. Only Xiaomi had a larger share at 13.7%.

The iPhone 6 and iPhone 6 Plus are selling really well in China.

If we look at the App Annie Index Market Q1 2015 report we find that China is now Apple’s biggest market for iOS App Store downloads, ahead of the United States. In the revenue chart we still find that the U.S. is top, but China has climbed to third place ahead of the United Kingdom.

ios china app annie

That’s a lot of people and a lot of revenue that Google is missing out on.

Where is Google?

Google launched search in China back in 2006 with results subject to censorship by the Chinese government. It was an uncomfortable and controversial agreement which collapsed in 2010 when Google stated it was no longer willing to continue censoring results. This was ostensibly a response to alleged Chinese government hacking, into, among other things, Gmail accounts of Chinese human rights activists.

Since then Google services have been blocked or hobbled in China. That includes Google’s Play Store. It’s unclear what, if any, talks are ongoing between Google and Chinese companies or the government itself. But the rows continue, most recently over Google’s decision not to recognize safety certificates of trust for Chinese websites, as reported by CNBC.

china app stores

Sundar Pichai, Senior Vice President at Google, where he oversees Android, Chrome, and Google Apps, did comment on China briefly at MWC this year, suggesting that the search giant is working with local companies to bring the Play Store back to China, because there is clear demand due to the low quality of alternative app stores and the prevalence of malware. But no roadmap was revealed and it’s far from a sure thing.

The malware question

You can find some statistics in Google’s Android Security 2014 Year in Review report about the risk of potentially harmful apps (PHAs). The overall outlook for Android is good. Less than 1% of all Android devices had a PHA installed, and that drops to 0.15% for devices that only download from Google Play.

The vast majority of the malware reports about Android fail to advertise the fact that most of the malware is coming from third-party app stores in countries like China, where the Play Store isn’t dominant. You can see why people might want access to Google Play, just on security grounds.

Fears over malware and/or a poor user experience with third-party app stores could also be another reason behind the surge in Apple’s popularity in China. What choice do people have in Google’s absence?

A real Android experience

Many of us are daily users of Google’s services and have trouble imagining Android without it. There’s little doubt that Android is a less attractive prospect without Google. Imagine no Google Search, no Google Maps, no Gmail, and no Play Store.

They say absence makes the heart grow fonder, so Google could be welcomed back with open arms by ordinary Chinese people. That same App Annie report shows the biggest growth for Google Play in the app downloads chart has been in Brazil, India, Russia, and Mexico, now 2nd, 3rd, 4th, and 5th respectively, behind the U.S. in the top spot.

huawei honor 6 plus review aa (17 of 29)

Are the rumors about a Nexus phone made by Huawei related to Google’s potential return to China?

If the Play Store was operating in China who is to say it wouldn’t be the biggest market for app downloads? For a company like Google, so intent on increasing its user base, and working hard to tempt the online audience onto its services, China is a massive audience to lose. With over 640 million internet users, according to Internet Live Stats, China is by far the biggest audience out there. To give a comparison the U.S. is in second place and has around 280 million internet users.

How does it happen?

We’ve wondered before whether Google Play may be coming to China, but the truth is that we don’t know. It seems like a no-brainer for Google from a business perspective, and there would be obvious benefits for the Chinese people, but the situation between Google and the Chinese government is obviously complicated.

It seems unlikely that Chinese government policy is going to change in the immediate future. Realistically that means the original reasons Google pulled out are still valid. Five years ago German paper, Der Spiegel, asked Sergei Brin “Do you now fear that you will lose China, a huge potential future market?” and he said:

“If you adopt that point of view then you would agree to completely arbitrary limitations and distortion. If you take the point of view that you have to be friendly with the Chinese government and they can make arbitrary demands of you, then you can’t really run a business. I really don’t think that is a practicable way to proceed.”

It wasn’t really a business decision that took Google out of China. Is the fear of lost business enough to take it back? Has anything really changed?

Looking at this another way, Google doesn’t strictly need China. It’s not exactly struggling without a major presence there. But it’s very unusual to see business considerations take a back seat, and you can imagine there must be pressure from certain quarters to go back.

  • Mac11700

    It is a 2 edge sword.

    Cave in and allow the Chinese government to hack anyone they want to… Or.. Take the high ground and stand up for the little guy but forgo 680 million people using your services….

    I applaud Google for doing the honorable thing.

    • Mike Reid

      Little guy ?? !! LOL. Nobody cares about the little guy.

      It’s about China doing what the EU will take years to do, in a very short time and with rigged “courts”.

      China will not allow Google to use it’s business dominance tactics.

    • bridgebuilder78

      Ah no… It’s about Google being forced to choose between obeying the US government or cooperating with the Chinese government. Both governments want total surveillance and backdoors. Google chose it home country, and all the bullshaite about taking a stand against Chinese censor ship is just a cover story.

      • Mac11700

        The US can’t get what they want with out a warrant and even if they did have a back door what ever they got won’t hold up in court.

        China wants this without the safeguards we have.

        If you honestly believe that the US needs a built-in back door your delusional.

        This isn’t a smoke screen it’s a point of honor of Google saying FU to the Chinese communist regimes strong arm tactics.

        • bridgebuilder78

          Are you stupid?

          A warrant is easy to obtain from the FISA court. Why? Because its proceedings (i.e. presentation of probable cause) is not subject to review.

          Get informed, you ignorant fool!

        • Guest

          “communists”
          hahahaha

  • abc905

    They say absence makes the heart grow fonder, so Google could be welcomed “back with open arms by ordinary Chinese people.”

    …not when it never was really present enough to qualify as absent. Google services were never truly present on Android in China… and the Chinese people never adopted Google over Baidu.

  • google china

    If apple managed to release their app store in china by censoring some US based apps/services. why can’t google do the same.

    Google should release their playstore in china without any google services if they want usage from 1.4 Billion people.

    • SamsaraGuru

      Perhaps Google has more integrity than Apple? After all, Tim Cook saw fit to put down an Indiana bakery for suggesting they wouldn’t cater a gay wedding, but had no problems with selling Apple products in one of the most virulently, violent anti gay societies on earth – Saudi Arabia. So, looking the other way for the sake of profits galore in China is hardly going to even be a moment’s worth of quandary on his part.

      Why should he care if China has no regard whatsoever for human rights or life, when their are dollars aplenty waiting for Apple to harvest.

  • simone

    Use this link to join on TSU! https://www.tsu.co/simonetone97

  • David Onter

    Well, they have alternative services tailored to the Chinese market. It’s not such a big deal for the people there. Google is the one missing out…

  • Aaron Mahl

    China is going to matter in mobile more and more as time goes on and Google better do more to capitalize. I mean, has anyone made really good money with AdMob in Asia of late? Airpush and MM have been on fire, aided by new ad formats like Abstract Banners from Airpush ( http://www.airpush.com/introducing-abstract-banners-for-advertisers-get-10-matchback-on-prepaid-deposits/ ). Very soon, China will be solidified as the biggest driver of app downloads and revenue in the world. Developers and advertisers in China deserve more creativity from the ad and social networks that are just standing still and not innovating at a decent pace (I’m looking right at you Google).

  • Chou

    Please don’t mark Hong-kong and Taiwan on the map since Google Play services are available, and Taiwan is even a different country!
    And further more, Taiwan is even one of the top five countries in 2014 by Google Play’s revenue.

    • Nathaniel Zhang

      yeah cool Republic of China, or you call it Taiwan over there?

      • Chou

        Republic of China (official name), so called Taiwan. That’s why the name “Chinese Taipei” is used in the Olympics.
        People’s Republic of China is the one that is usually known as China.

  • Guest

    < col Hiiiiiii Friends….'Start working at home with Google! It's by-far the best job I've had. Last Wednesday I got a brand new BMW since getting a check for $6474 this – 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, go to tech tab for work detail HERE’S MORE DETAIL

    ???????? vvbbvbvb

  • Paolo T.

    Google should not be anywhere near China, not until a drastic change in leadership occurs there anyway. This should be treated more a political issue than a business/technological one.

    Besides, even if Google comes to China NOW, they will have to give up any and every form of control – over Search, Play store, everything. The current Chinese government wants control of EVERYTHING – online discussion, markets control, business decision making, speech and information dissemination, Google cannot function as it functions most everywhere else if it has to give up everything to Xi Jinping and Co. This imposition was why Big G left the country earlier. Big G makes money from how it operates everywhere else, take that system away (like what China imposes) and Google cannot sustain an operation like that…