If Google Inc. decides to close the door on its search engine in China, it might open a door for Microsoft Corp. The software giant's Bing search engine is among the potential beneficiaries if Google goes ahead with its threat to close its Google.cn site amid a dispute with the Chinese government over censorship. Although Bing has struggled to gain traction in China, Microsoft has already hired away at least three people from Google's China business, after aggressively pursuing them following Google's threat, according to a person familiar with the matter. Reuters Google's threat to close its Chinese search engine gives Microsoft an opportunity to push Bing. In the wake of Google's announcement, Microsoft's leaders, including Chief Executive Steve Ballmer and Chairman Bill Gates, have said they intend to remain in China and will continue to comply with local regulations, which means filtering out certain political content and other sensitive material. A Microsoft spokesman said the company will compete in whatever markets it is in, including China. "If we do a great job with the product, then we will hopefully attract more share," he said. Microsoft needs Beijing's cooperation on combating rampant software piracy in China, which has hobbled sales in the country of the company's two big profit machines: Windows and Office. Google in China
Yet Microsoft could face political heat in the U.S. for appearing too eager to fill Google's void, groups that focus on human rights say. The fate of the Google.cn site has been clouded since January. Google, citing Beijing's tightening limits on expression and a series of cyber attacks on it and other foreign companies, said it would no longer filter search results on the site. That move set off private negotiations with Chinese officials, which the company said are continuing. A Google spokesman on Monday said the company was "in active discussions with the Chinese government." Google.cn still appeared to be accessible on Monday, and search-engine results continued to be filtered. A person familiar with Google's plans said the company hasn't yet changed its approach to filtering. A closure of Google.cn wouldn't necessarily spell the end of the company's business in China. On Monday, the company's chief financial officer, Patrick Pichette, said Google's Android mobile operating system "should flourish" in China. He noted that Android is open-source software available to a variety of partners and should do well in that country. If Google.cn closes, some of its existing traffic could shift to Google.com servers run outside of China, assuming that the government doesn't block all access to the site. Currently, Chinese users can access Google.com, although searches for certain sensitive terms return just error messages. Google accounts for about 36% of search revenue in China, with Baidu Inc. holding 58%, according to Analysys International. On Monday, Baidu shares gained 4.8% in trading on the Nasdaq Stock Market, closing at $576.84. Shares in Google slipped 2.8%, closing at $563.18. Microsoft, meanwhile, has been gaining a bit of ground on Google in the search market outside China. Since the company unveiled Bing last May, the company's share of searches conducted in the U.S. has risen from 8% to 11.5% in February, according to research company comScore Inc. Google's share went from 65% to 65.5% over that period, the research firm said. In China, however, Microsoft has made little headway. Microsoft launched cn.Bing.com in June, but it doesn't show up on the Analysys ranking of search-engine revenue in the country as of the fourth quarter—meaning it has less than 1% of the market, according to the researcher. Among the hurdles that Microsoft has faced as it tries to build up its search business in China is the Bing name itself. The word "bing" means sick, cold or pancake in Chinese, depending on the tone with which the word is pronounced. Microsoft changed the name to "bi ying," which means must respond. As part of efforts to expand in China, Motorola Inc. last week announced a deal with Microsoft to include Bing on the cellphones Motorola sells in China, which run on Google's software. Regarding the issue of censorship, Microsoft would be "rather rash" if it didn't learn from Google's experience in China, said Sharon Hom, the executive director of the New York-based Human Rights in China. "It should have a full answer to how it will address the very well-known risks," she said. "They cannot just say we are here and have to abide by the local law." Chinese authorities on Friday told local news Web sites that Google's Chinese site is likely to close and that, if it does, the news sites will be required to use only official accounts of the situation, rather than publish stories from anywhere else, according to a person familiar with the order. Several of Google's Chinese partners say they're preparing for the possible closing, but say it isn't likely to shake up the market. The director of public relations at Sina.com, a Web portal that is one of China's most popular sites, said he doesn't expect the closure of Google.cn would have a significant impact on his own business. Sina features a Google search bar at the top of its home page, which leads users to Google.cn. But the spokesman said only a small portion of its revenue comes from Web search, and in addition, Sina has its own search engine called iask. Closure of Google.cn "will have an impact on our business, but the impact won't be big," said Xing Ming, chief executive of Google partner Tianya, a popular online forum in which Google owns a stake. "We will continue to move forward," he said, adding, "I believe that Google will take responsibility for its partners and customers." |
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