Google's return to China poses a moral and financial dilemma. Censors forced the web giant to withdraw from the People's Republic in 2010. It might be planning a comeback with a Chinese version of its mobile app store. But harsh regulation will test its principles, while competition makes profit harder to come by.
Five years ago, Google's decision to stop censoring results on its flagship search engine seemed to signal a definitive exit from the People's Republic. Yet, the group has maintained a toehold. Its Chinese homepage remains online, and the company employs 500 engineers and salespeople in China.
Offering the Google Play app store to mainland users seems overdue. Chinese consumers bought more than 400 million smartphones last year, around three-quarters of which run Google's Android operating system. China accounted for 60 per cent of global app downloads in 2014, according to Juniper Research but local players such as Baidu and Tencent control more than 80 per cent of the market. It's a lucrative business: market leader Baidu doesn't break out its revenues but Qihoo 360 - which managed roughly half as many downloads as its larger rival last year - is expected to scoop up revenue worth more than $400 million from its app store in 2015, according to Barclays. Meanwhile, Apple saw China app sales rise by 90 per cent in the first quarter of 2015, reckon analysts App Annie.
Google might feel international app developers will favour its familiar platform. It might also have more resources to weed out copy-cat apps and bugs. But even if it can outwit local rivals, Google will still come up against active censors. China's "Great Firewall" is more robust in the era of Xi Jinping, and apps are likely to face increasing scrutiny. Censors can ask app stores to remove products, or block content and updates. That undermines quality and integrity.
Before 2010, Google used to argue that it was better to increase access to information, even if the censor's red pen sets limits. LinkedIn makes a similar case to justify its presence in China today. But, it's hard for Google to argue that its absence leaves Chinese users much worse off. Even if it bends its principles, that will not be a guarantee of future profit.
Five years ago, Google's decision to stop censoring results on its flagship search engine seemed to signal a definitive exit from the People's Republic. Yet, the group has maintained a toehold. Its Chinese homepage remains online, and the company employs 500 engineers and salespeople in China.
Offering the Google Play app store to mainland users seems overdue. Chinese consumers bought more than 400 million smartphones last year, around three-quarters of which run Google's Android operating system. China accounted for 60 per cent of global app downloads in 2014, according to Juniper Research but local players such as Baidu and Tencent control more than 80 per cent of the market. It's a lucrative business: market leader Baidu doesn't break out its revenues but Qihoo 360 - which managed roughly half as many downloads as its larger rival last year - is expected to scoop up revenue worth more than $400 million from its app store in 2015, according to Barclays. Meanwhile, Apple saw China app sales rise by 90 per cent in the first quarter of 2015, reckon analysts App Annie.
Google might feel international app developers will favour its familiar platform. It might also have more resources to weed out copy-cat apps and bugs. But even if it can outwit local rivals, Google will still come up against active censors. China's "Great Firewall" is more robust in the era of Xi Jinping, and apps are likely to face increasing scrutiny. Censors can ask app stores to remove products, or block content and updates. That undermines quality and integrity.
Before 2010, Google used to argue that it was better to increase access to information, even if the censor's red pen sets limits. LinkedIn makes a similar case to justify its presence in China today. But, it's hard for Google to argue that its absence leaves Chinese users much worse off. Even if it bends its principles, that will not be a guarantee of future profit.