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Viewpoint: A bull in a Chinese market

Tim Maytom

Reports are circulating that Google is hard at work on a search app that will meet the Chinese government's strict censorship laws. But Tim Maytom argues that, in the current market, access to China might not be worth the trouble it causes for tech firms.

Over the course of the last six months, Alphabet and Google have been pushing hard to finally re-enter China. The firm originally left the Chinese market in 2010 over concerns regarding censorship, but the last eight years have seen China become a far more important region as far as the tech world is concerned, and Google is clearly worried about missing out on potential revenue.

Reports have surfaced that the company is working on both a search app and news app that comply with China's censorship laws, and these rumours are hardly the first sign that Google is seeking to return to China.

Since the end of May 2018, we have already seen Google partnering with Chinese smartphone manufacturer Xiaomi to bring its ARCore technology to the Chinese market, launching a file management app on app stores belonging to multiple Chinese smartphone makers, bringing an AI-powered ‘mini app’ to Tencent’s WeChat messaging platform and, most recently, entering discussions with multiple Chinese firms about delivering its cloud services to the nation.

Google isn't the only tech company making overtures at establishing a stronger presence in China. Adobe and Microsoft recently extended their partnership deal to support expansion into China, Buzzfeed has teamed up with Chinese AI-powered content platform Bytedance to deliver its content to Chinese audiences, and even Snap is working on an ad strategy for the country, despite the fact that is app is banned there.

In many ways, China sits at the forefront of mobile. As the country’s growing middle class comes online for the first time, the majority are doing so via mobile devices, leading to a huge generation of mobile-native consumers who are eager to engage with online services and products.

In 2017, Chinese app developers accounted for a quarter of global earnings via Apple's App Store, earning around 112bn yuan (£12.7bn) through paid apps and in-app purchases on iOS. China also represents a massive opportunity for advertisers and ad-tech firms, with programmatic spending climbing by almost 50 per cent year-on-year in China over the course of 2017, and mobile making up 80 per cent of all programmatic spending.

A mobile-first market with a high level of technology and an online population of 772m that is still growing - China must look like heaven to some brands. But a push into China also means contending with the wishes of the government there, and that should cause executives some hesitation.

On Monday, an opinion piece in People's Daily, a Chinese state-backed newspaper wrote that Google was welcome to return to China, but only if it complied with China's laws.

"Regardless of its withdrawal, or whether it can regain access to the mainland, Google has been a politicised brand," writes Yu Ning in the piece. "This is undoubtedly a tragedy for this well-known multinational company. The decision to exit the Chinese market was a huge blunder, which made the company miss golden chances in the mainland's internet development."

Complying with China's laws means embarcing the 'Great Firewall' - the strict censorship rules of the Chinese government that keeps a huge amount of content blocked off within the country, from social media platforms to articles critical of the government's actions.

The 'Great Firewall' isn't the only controversial side of China's digital world. Google's departure in 2010 was in part due to a sophisticated phishing attack on its infrastructure in the country, targeting the information of human rights activists there.

The news that Google may be considering complying with China's rules in order to re-enter the search market there has been met with outcry from human rights and free speech advocates, some of whom have previously praised the firm for taking a strong stand on doing business with the Chinese government.

"It will be a dark day for internet freedom if Google has acquiesced to China's extreme censorship rules to gain market access," said Patrick Poon, China researcher at Amnesty International. "It is impossible to see how such a move is compatible with Google's 'Do the right thing' motto, and we are calling on the company to change course.

"For the world's biggest search engine to adopt such extreme measures would be a gross attack on freedom of information and internet freedom. In putting profits before human rights, Google would be setting a chilling precedent and handing the Chinese government a victory."

Google's re-entry into the Chinese market would be a substantial shift, but it is hardly the only Western company doing business in the country, and it is unlikely to be the last to consider bowing to the Chinese government's demands in order to access consumers in the country.

Tech firms should think twice before rushing into the Chinese market though. Many of the industry's biggest players are already facing criticism and brand damage over their approach towards data privacy, censorship and free speech. Adding in the ethical compromises necessary to access China could prove to be the last straw from consumers who are increasingly aware of the industry's less acceptable practices.