Google announced yesterday it was seeking permission from the Chinese government to operate an unfiltered search engine. Google further stated that if unsuccessful, it would consider shutting down its filtered Google.cn website to protest Chinese censorship rules and recent cyber attacks.
Is this threat an effective negotiation tactic for Google?
A threat is simply a very aggressive way of telling the other side you can make its Plan B very bad. So let’s evaluate both sides’ Plan Bs if an agreement isn’t reached and Google shuts down its Chinese website.
Google will lose access to the Chinese market which, although currently a minor revenue source, does have over 300 million internet users and is growing quickly. Google will, however, be praised by human-rights groups and freedom of speech advocates, which will generate positive goodwill for the company in the larger United States, European and pro-western markets.
China will receive further bad press and other companies may follow Google’s lead. Baidu.com, one of China’s highest valued companies, which currently controls the majority of China’s search engine market and willingly adheres to China’s censorship requirements, will benefit in the short-term. However, it and China may be harmed in the long run from the lack of direct competition and decreased incentive to innovate.
From my perspective, the downsides to China’s Plan B are not severe enough to trump China’s interest in maintaining control over its citizen’s access to the internet (a huge deal to them). I would thus predict that China will not allow Google to operate an unfiltered search engine. By the way, I believe Google knows this and is making their threat, in effect, just to put the final decision and focus on this issue back onto the Chinese government.