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What Google Moving Back To China Could Mean

The internet giant is returning, but can everything be forgiven & forgotten?

21Sep

Google’s five year exile from China could be about to come to an end. The firm made the decision to remove its search engine services in 2010 following a disagreement with the country’s government over censorship of search results, as well as cyber-attacks against Gmail users by people with apparent ties to the government. China's ruling body subsequently blocked Google Mobile Services in early 2010, meaning that Google never got to establish an app store for Chinese Android device users. However, according to an article in The Information, the internet behemoth is now seeking approval from the Chinese government for a special China version of its Google Play mobile app store for Android smartphones in the country. The company is also expected to make an announcement regarding Android Wear later this month, which would likely also be a special version of the software that's optimized for the region.

Since Google’s departure from the Chinese market, mobile use in the country has swelled at a rapid rate. According to Xinhua, citing a research report from the China Internet Network Information Center (CINIC), there was a 36.79 million increase in the amount of internet traffic through mobile devices in the first six months of 2015, taking the total number accessing the web through smartphones to 594 million. China will this year also become the world's largest mobile gaming market by revenue, earning more than $6 billion. One of Google’s chief competitors, Apple, which complies with local laws, made $13.2 billion last quarter in Greater China, and as of Q1 2015, iOS App Store worldwide revenue was roughly 70% higher than on Google Play, up from 60% in Q3 2014.

As Andy Tian, CEO of Asia Innovations, a Chinese app developer and former Google executive, noted, ’Google needs to be in China, period.’ Google Play is their foot in the door, and it should allow them to expand into other services.

However, is Google arriving too late to the party? China now has three primary app stores - Qihoo, Tencent and Baidu. These firms account for two thirds of the market, and they are unlikely to cede market share without a fight. There is still massive space for expansion in China though, with over 700 million - predominantly in rural areas - lacking access to mobile. Competition is exceptionally fierce, and Google will have to convince developers that a single market place is a boon to them if it wants to grow its presence in the country. As a company that is used to having things its own way, it may struggle to re-establish itself.

There is also the issue of rebuilding a relationship with the government following its acrimonious falling out in 2010. Google Play is likely to be seen by Chinese regulators as less threatening than Search and Gmail though, reducing the frequency of government-led probes, and Google has already said it is willing to block apps that the Chinese government does not approve of.

Should Google be successful in its attempt to introduce Play to China, it is likely that it will pave the way for further moves in the country. This would be undeniably beneficial to Google’s already substantial coffers, but it could also help diversify app technology in a country that at the moment sees just 10% of the revenue generated by the top-100 games in China go to publishers outside China.

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