International Business

Case Study 1 - Google In China

Group 2 Section A
14004 - Abhijit Vijayan
14030 - Aysush Bhakre
14053 - Gaurav Srivastava
14076 - Mathew Stephen
14103 - Prakhar Sharma
14123 - Rohit Pradeep Chipre
14150 - Shweta Chaudhary
14167 - Swaroop G

Q1. Why did Google issue the statement of January 12?

Google had issued two statements on the 12th of Jan.
One was with regards to the copyright infringement accusation on google by the China
Written Works Copyright Society.
The US, French and German publishers' and authors' groups also had filed lawsuits
alleging that Google's plan disregarded the intellectual property rights by digitizing and
storing books which were still under copyright.
They had accused google of failing to inform and not paying the authors of the books
whose works google was digitizing.
In response to this the head of Google books in Asia had issued an apology to the 8000
members of the Chinese Writers Association, acknowledging that google had indeed
communicated poorly with authors regarding their approval and permission.
Google also agreed to turn over to the association a list of books it had scanned

The other statement of Google was its threat to pull out of China since
Google could no longer tolerate the censorship conditions imposed by China.
The Chinese government was determined to control the flow of
information in the Internet and insisted on the removal of certain politically
objectionable search results.
This went against the Google's policy of "principles before profit".
The other big reason for Google's pull out was the sophisticated cyberattacks on its corporate infrastructure originating in China that resulted in
the theft of intellectual property.
It was these attacks combined with the attempts to curb free speech on
the web that had led to Google's decision to review the feasibility of its
business operations in China.

Q2. Can Google take comfort from the reactions of

stakeholders so far? Justify your answer.
No, it is unlikely that Google could take comfort from the reactions of
stakeholders.
Googles stock closed at USD 590.48 on January 12, 2010, and at USD
587.90 on January 13, after falling as low as USD 574.46.
Googles main competitor Baidus stock rose 11% on January 13, from USD
386.49 to USD 428.19.
Thirty companies like Google who are believed to have been targeted by
Chinese computer hackers were unwilling to come forward and confirm to the
public that they were the hacked.
Key international players in the Chinese market such as Microsoft and GM
have been lukewarm in their response to the change in Googles stance
regarding censorship of search results.
They are willing toe the line of the Chinese government regarding what is
acceptable to china because of the growing potential of the Chinese market

 Steve Ballmer said that the situation was Googles problem and discounted
the seriousness of the hack saying it was happening to all large institutions.
GM in its statement said that the reports of hacking was not a major concern
for it.
These companies have reiterated that they will keep their policies in lines
with the demands of the Chinese government and have refrained from
supporting google.
Many commentators observed that China is a very attractive market for
global players since its economy was booming and not being present in China
at this time would be a lost opportunity to make profits.

Q3. Do you expect Google to exit China? Justify your answer?

It is difficult to predict whether google would exit China at this point of time.
This is because it all depends upon if Googles major objective of providing uncensored search
results to its Chinese users is legally possible. This will depend upon the fate of the talks with the
Chinese government over the coming weeks regarding providing unfiltered access to its users.
If google is forced to continue censoring search results, it has made its position very clear that it
will no longer be willing to compromise on its principles. Hence, this may lead to Googles exit
from China.
The speculation that google will postpone or cancel the launch of its two new phones made by
Motorola and Samsung through China Unicom further goes to show that Google wants to be sure
of its future in China before taking a decision to release its phones.
The issue of hacking is unlikely to play an important factor in deciding if google continued its
operations in China.
This is because the sophisticated hacks originating from China resulted in Google making
infrastructure and architectural improvements that enhanced the security of Google and its users.
It was also making users aware about how they can increase their cyber-security.