[hnphillipj]

Given how trash of a search engine Baidu is, Google would likely achieve market share dominance in China within a couple years - should they move forward with Dragonfly. Complying with demands of the Chinese gov't is the only way they can penetrate the Chinese market.

Search engine advertising constitutes close to 85% of Google's revenue. And unlike Project Maven, which was ended due to internal resistance from employees, doing business with the second largest economy in the world isn't an expendable venture.

Curious to see how they move forward. My guess is they will: human outrage never really lasts long, especially when their livelihoods are far from in jeopardy.

[admax88q]

> Google would likely achieve dominant search engine market share in China within a few years

You assume that the government would ever let a foreign company get dominant market share over a domestic one.

China is no where close to a free market, the winners are chosen.

[ocdtrekkie]

China has a vested interest in spreading it's influence globally, the same way the United States has (and is receding from a bit under the current administration). It would be far more valuable to China to get a global company like Google propagating their censorship requirements than continuing to prop up their own state-run option. If Google caves, other countries might ask for the same demands as well, which supports the notion that China's way of doing things is the 'right' way. In short, having global companies doing China's bidding expands China's influence.

Reading a bit about the Belt and Road Initiative is probably a good primer on some of China's global interests right now.

[bronco21016]

I don’t understand why this is being downvoted.

Google is dominant nearly worldwide. If China is able to get Google to cave and build the censorship machine then what barrier is there to turning the feature ‘on’ for other countries that ask for it? There are plenty of oppressive regimes interested in a censored Google but they don’t have the pull to get Google to build it right now. Once it’s built though why wouldn’t Google’s response just be shrugs “sure why not?”

I think it is indeed a slippery slope and legitimizes China’s plan to influence the internet for the worse.

[abecedarius]

Further, once Google depends on its China operations for revenue, what's to stop the Chinese state from leaning on them further? With enough leverage, they won't scruple at affecting what Google does in the west as well.

[infogulch]

Any company that adds a customer that becomes the source of ~20% of the company's revenue implicitly gives the customer power over the company, the bigger share of revenue the more power. Google would be insane to give this much power over itself to China, ignoring that developing this technology sets the precedent for oppressive regimes to demand flipping on the "more speech suppression" switch.

[Spooky23]

You are spot on, and there already is a track record of this with telecom.

Remember all of the handwringing about BBM messages being difficult to intercept? Then the crying suddenly went away, and a few months later you heard about police breaking up organizers of riots.

[5874-4b22-a4e0]

Why not let these companies in, let them operate for a few years, then migrate the ownership to a state owned company?

[memory_grep]

> Complying with demands of the Chinese gov't is the only way they can penetrate the Chinese market.

You completely missed the point and failed to address any of the serious ethical problems they raised in the letter. We would be living in a dark dystopia if everyone's biggest priority was penetrating markets.

Tech workers are in high demand and have great salaries. Their livelihoods are not in jeapordy; they have their pick of where to work.

[mtgx]

> Given how trash of a search engine Baidu is, Google would likely achieve market share dominance in China within a couple years

You can't be serious. Don't ever underestimate brand inertia, especially in a "super-patriotic" country like China. If Google had any chance at all, and assuming the Chinese government or Baidu's friends in the government wouldn't interfere with the "free market" in China to hurt Google at every turn, it would still take at least 5-7 years for Google to even get close to Baidu's market share.

Also this assumes this wouldn't catch a fire under Baidu's ass to start innovating and investing more into its search software and server farms.

I still believe it would be all but impossible for Google to beat Baidu in China. I just don't ever see it happening. If it was so easy, why hasn't even happened in Russia, where Google actually had significantly larger market share, had to deal with fewer political games than in China, and its Chrome browser I think was actually the most popular there until recently (or it may still be the most popular there).

If Google can't beat Yandex, it absolutely can't beat Baidu, no matter how much it "complies" with the Chinese governments' rules.

[snaky]

> Don't ever underestimate brand inertia, especially in a "super-patriotic" country like China.

OTOH Chinese consumers are recently obsessed with western products actually. Not with iPhones (you can buy Xiaomi smartphone, laptop, and Bluetooth headset for the price of iPhone), but with clothes, food, and many other goods.

> If Google can't beat Yandex, it absolutely can't beat Baidu

Don't underestimate Yandex.

[nradov]

Baidu currently has no real competitors so they can afford to be a bit lazy. If Google enters the Chinese search engine market then Baidu won't just surrender, they'll improve their product to compete. They certainly have the capital and resources to do so if they make it a priority.

[barry-cotter]

Baidu has been worse than Google at Chinese language search for its entire existence and only got traction because it was the best way to get porn and Google’s performance was highly degraded by package dropping. Google has no competitors in search. It’s so much better that the other search engines are just comical.

[onion2k]

doing business with the second largest economy in the world isn't an expendable venture

Google could continue to operate profitably without doing business in China, so what makes your statement true?

[notyourwork]

Businesses are not in the business of simply being profitable, they are usually in the business of increasing revenue and profits beyond the current state.

[oceanplexian]

Is there even a market for Google? The median income in China is like $12k, and most Chinese net worth is tied up in property that's widely considered to be in a massive bubble. Not sure it would be profitable at all for Google. I work in the industry and we don't even waste our time in China, Russia, etc, since the advertising dollars are worthless.

[onion2k]

Nothing about my question suggests Google wouldn't be able to continue to grow by focusing on the 80% of the world that isn't China.

China may be the lowest-hanging fruit of the search and ad market, but surely you're not suggesting Google would shy away from a challenge and only go for the easy win? That doesn't sounds like the Google we all know.

[notyourwork]

If I was a business I would avoid low hanging fruits in favor or more risky ventures that are perhaps less likely to succeed or yield profit. Businesses are in the business of business, not in the business of tacking hard problems just to spite the rest of the world. I think the image of Google being this almighty good intentioned soul is over blown because at the end of the day they answer to share holders, they profit of advertisement and the rest of it is ice cream that goes on their advertisement cake. I love google for the services they provide me but I also am not naive that a business is going got be a business first and a good hearted soul last.

[TheForumTroll]

I'd say it sounds exactly like the google we know.

People want a messenger app? Let's make one! Oh, it takes time and energy. Let's shut it down. Oh wait, people want a messenger app. Let's make one. Oh, it takes [........]

[hnphillipj]

The amount of additional profit Google can extract from an existing consumer pales in comparison to the profits generated from attracting a new user.

[JustSomeNobody]

I don't think this is true. The stock market demands their hockey stick. If Google doesn't go after the Chinese market, their stock value will suffer.

It's all about returning as much money to investors as possible. Period. Otherwise you suffer the consequences.

[barrkel]

This is a universal argument for doing anything that makes a profit in the short term. Usually, apologists for corporate immorality bring up fiduciary duty, as if it explains and justifies things. But the argument falls apart if you poke at it even a little, because it completely omits the other side of the argument.

Why doesn't Google start a restaurant chain, or start making PCs, or selling servers, or licensing software defined networking stacks to other companies, or monetize many of their other assets? Surely they must if they're supposed to make as much money for their investors as possible?

Why don't they sell search data on individuals to repressive regimes, so people can be hunted down, imprisoned, tortured and executed? Would make some decent coin for investors, I expect, lots of repressive governments would probably pay a pretty penny for it.

How about selling searches emanating from US government IPs to the Kremlin, selling tracking data linked to Google accounts, or otherwise monetizing espionage interests?

The problem with doing these things is that it affects the value of the Google brand, both internally to employees and externally to customers. If you can't hire the best employees or encourage customers to trust your software and services, then long or even short term decline is pretty much assured.

And how about swapping cause and effect? You're positing the tail should wag the dog - that the stock market should control what the company does. How about the stock market chooses to invest in companies that are doing things that it believes will make money? From this perspective, the company is free to do whatever, and investors are free to sell the stock if they don't agree. In truth, there's a mutual dependence here - the company can't just fraudulently give away investors' cash, but likewise, if investors knew what was best for companies, we wouldn't need CEOs or leadership of any kind - we'd just advertise choices to the investors / market and go with whatever pushes up the stock most.

[the_jeremy]

I agree, but there is an extent to which these companies by law are forced to operate against the positive value of their brand [0]; see Dodge vs. Ford Motor Co. I realize it's not the same, just that there's some amount of precedent.

0: https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

[barrkel]

And there's been pushback from subsequent cases, from that very article:

The general legal position today is that the business judgment that directors may exercise is expansive. Management decisions will not be challenged where one can point to any rational link to benefiting the corporation as a whole.

[icelancer]

Amazon specifically does not do the last part of your decree, and their stock price seems to be pretty good.

[saosebastiao]

...as long as their revenue keeps increasing.

AMZNs stock price isn't driven by current earnings, but it isnt driven by investor magnanimity either. It's all about the promise of future earnings. If revenues flatline or decline, you can expect their stock prices to fall in line with their peers.

[schalab]

Why dont western companies band together and threaten a boycott until some kind of IP laws are enforced?

They just keep getting picked off one by one.

[barry-cotter]

Because coordination problems are really hard and that’s what governments and the WTO are for. Also, I’d be very surprised if that kind of coordination didn’t bring national competition authorities down like a hammer on all participants.

[dragonwriter]

> Why dont western companies band together and threaten a boycott

Isn't companies banding together and agreeing to restrict business in a market a combination in restraint of trade, which is explicitly illegal?

[garmaine]

Have you used the internet in China? There is no meaningful presence of foreign companies. They’re already kicked out.

[gfo]

Not disagreeing with you, but with a lot of our manufacturing happening in China there is definitely a different kind of presence.

But still, not sure if they would give up the low cost of manufacturing for this. Frankly, the regime makes that possible.

[garmaine]

Are there? You can’t open a business in China without it being majority Chinese owned. There are plenty of companies doing their manufacturing in China, but every example I know of the wforeigb company contracts the Chinese company to do the manufacturing. Often they’re even further removed, such as Apple who works with a Taiwanese company who just happens to have their manufacturing in China.

[virmundi]

Prisoner's dilemma. If one of those companies jumps ship, it will make more money than the others.

[stale2002]

Of all of the good and bad things that China is doing, underminding IP laws is probably the most beneficial to society.

The best way for the world to improve is for all scientific and technology advancements to be freely available.

[icelancer]

The way they undermine them also spreads authoritarianism, which is a side effect you may or may not be okay with.

[scarcely]

You can literally make this argument anywhere.

Any good China does for its people or for other nations? That will just serve to legitimize their totalitarian government and encourage imitations abroad. Ergo it's bad.

In general it's better to state your fundamental premises at the beginning of the argument rather than reveal them midway through

[mc32]

I guess thry could create a new China-venture Google owned company and hire lots of locals in cooperation with other development teams, be they in MTV or other campuses worldwide.

[orblivion]

It also sounds like a strong negotiating position, should they want to change terms.