When will Google return to China

Google is targeting China more - Baidu in danger?

8 years ago, Google withdrew from the Chinese search engine market. The cause were the censorship demands of the Chinese authorities, which the Alphabet subsidiary did not want to bow to.

Now there is apparently a turnaround. As reported by US media, Google wants to return to China with the “Dragonfly” project and a censored search engine. However, there is resistance from the ranks of the employees who speak out in an open letter against Google's plans for China.

Many investors are naturally wondering how promising a return of Google to the Chinese search engine market would be and whether Google actually poses a great threat to China's leading search engine Baidu. A quick look at the history.

Google with notable successes, but Baidu remained number 1

Although Google was able to gain market share in the Chinese search engine market after its market launch in China in 2005, the big breakthrough did not materialize. Despite numerous efforts such as recruiting ex-Microsoft manager Kai-Fu Lee and more than 100 software engineers and language specialists, Google never exceeded a market share of around 31% in China.

Baidu, on the other hand, was able to further increase its market share in the Chinese search engine market, from 58% in mid-2007 to around 64% (source: Silicon Dragon) when Google announced its withdrawal from China in 2010.

Market observers attributed the partial success of Google in China to the strength of Baidu, because the Chinese search engine algorithm got along better with the Chinese language (Mandarin), and the Baidu search results also included social media chats and video clips.

Baidu reacts calmly to a possible Google return

So it comes as no surprise that Baidu boss Robin Li is calm about a possible return from Google to China. In the verified WeChat account, Li was very confident that they would beat Google again.

The hope of the Baidu boss is not unfounded, as Baidu has further expanded its position of power in China. Baidu's market share in the Chinese search engine market has now grown to over 70%.

Should Google actually return to China with its own search engine, it is expected that it will be censored and automatically filter websites that are blocked in China. In addition, sensitive search queries are likely to end up on a "black list" and therefore not be carried out, suspect those in the know. This means that Google would only offer a few advantages over Baidu for groups of people who alternatively want to get information on the web.

Conclusion: Baidu has something to lose, Google can only win in China

According to a survey, many Chinese internet users would welcome a return from Google to China for more alternatives when it comes to web search. For Baidu, a return from Google poses a certain risk if the market leader could lose its dominant market position in China as a result.

In any case, Baidu is currently fighting tougher competition on several fronts after the e-commerce giant Alibaba has now captured a market share of around 15% with its Shenma search engine.

But Baidu does not only have to adjust to more competition in the search engine market; when it comes to autonomous driving, there is also a threat of more competition from abroad. The Google subsidiary Waymo recently registered a subsidiary in China in order to gain a foothold here.

In short: Baidu has to shift up a gear when it comes to innovations if the search engine market leader wants to maintain its leading position in the search engine market and in autonomous driving including artificial intelligence (AI). The Google and Alphabet shares, on the other hand, remain interesting for long-term investors, as the Americans in China have little to lose.

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