Google Gets A Reprieve From China

It is like one of those rare things you don’t see often: a Black actor in a Woody Allen movie – this is what it is like for the Chinese to change their mind concerning an issue affecting “state’s interests.” Recently, I wrote about China’s revocation of Google’s license because the latter refused its search engine to be censored. Bloomberg is reporting of this reprieve, saying that there were no formal negotiations, which allowed Google to continue to have access to the Chinese markets. I supposed the founders of Google will not look this gift horse in the mouth… in light of the fact this change of heart is a rarity in China concerning an issue of such import - this import being that China partially owns  Google’s main competitor, Baidu.

Google must still be walking on egg shells because the Chinese duration of the restored license is only good until 2012. So presumably, the license can be revoked at China’s leisure after that date The decision will be visited annually, but note the caveat, that the Chinese officials can summarily revoke the license if they deemed that Google is not in compliance. This not ‘in compliance” term used in the Bloomberg article can be so broad, benefiting a country governed by autocrats.

Google has economic incentives to have its license restored because it can in turn restore the shares lost to Baidu (partially owned by the Chinese and the Japanese); woo back advertisers who were standing on the sidelines until the dispute settled; and restoring operations that were put off due to the censorship spat. Google’s spoke person, Jessica Powell, declined to say whether Google agreed to any preconditions to get its license restored.

This is potentially what is at stake revenue wise for Google: as of 2009, there were over 384 million Internet users in China and it is expected to increase to 814 million by 2013 - think of the revenues that can be had with just a slice of that audience? Last year, alone, Google’s estimated revenues from China was $335 million and note this is with Baidu having a large chunk of the Internet users. The potential investor might take into consideration this pertinent information when contemplating investing in the search engine, Google.