14 DAY TRIAL // Google's new found moral fiber in the censorship debacle in China has made a lot of waves and has split opinions on the motives behind the move. The future of its search engine in China is as unclear as when Google made the announcement but, as the dust begins to settle, some details are beginning to shape up.
Last week, Google announced that it decided to stop censoring results on its local search engine in China and that if it can't meet a mutually beneficial compromise with the authorities it is prepared to close down the site altogether instead of blocking certain sensitive topics for the Chinese government. While many were quick to congratulate Google for its stance, a first for any large Western company in China, just as many were wondering what it means for the company's operations in the country which employ more than 1,000 people.
It turns out that, with a bit of luck, the blow may be a lot softer than many had anticipated. In fact, in the best case scenario, Google would be able to 'do the right thing' while also running several lucrative businesses in China, keeping most of its revenue in the process. There are no clear figures on how much the company makes in China, but most estimates put revenue at $600 million every year. Not small sum but not a crucial amount for a company which brings in about $25 billion in yearly revenue worldwide.
However, when broken down, it looks like actual search ad revenues aren't a significant portion of that, certainly not the largest part, as the New York Times found. The biggest revenue sources are ads served outside of China contracted by Chinese companies. These ads don't rely on Google.cn so they shouldn't be affected. According to a source with inside knowledge of Google's business in China, the second biggest revenue chunk comes from ads served on third-party sites inside the country (think AdSense), which, in theory, shouldn't be affected by the search engine closing down as well.
In the end, if it can keep its remaining interests in the country, the company's bottom line should be significantly affected. At the same time, Google employs a lot of valuable engineers in the country working on a variety of projects not necessarily related to the Chinese market. Closing down all operations would mean losing most of the talent as well. We should know the fate of the company soon enough though, as Google executives are now in talks with Chinese representatives quite possibly over this very issue.