Google's threat to pull out of China: What does it have to lose?

So Google threatens to pull out of China.

What does it stand to lose? The most obvious answer is it loses out on 1.3 billion people to click on Google ads. Like any business Google has to weigh the cost of complying with local regulation versus the profit or potential profit.

Cost can mean direct costs but cost can also mean PR cost. There seems a growing backlash against Google in the West. The perception it's growing too powerful, getting its tendrils in too many facets of daily life. People are naturally suspicious of that. Google has long been able to coast on the public perception that Microsoft is the big evil company that is the enemy to all right thinking people. And the enemy of my enemy is my friend. Google also saddled itself with one of the all time great mission statements:

Don't be evil.

Does anyone know the mission statement of GM? Or Starbucks?

Google is becoming the bearded Spock now. And when bearded Spock Google becomes, quite literally, the subject of toilet humor [opens a toilet humor flash movie], you know it might be time for Google to make a PR play.

So, it might be the case Google is seeing the hand writing on the wall: the local Chinese search engine Baidu.com is getting all the breaks from the government. It's the old Asian development model employed successfully by Japan and then Korea. The government bets on local winners and gives them special access. In turn, foreign companies have to jump through too many hoops. Finally, the rule of law simply isn't there to challenge anything. For example, IP cases that would seem an obvious win for the IP holder actually come down on the side of locals.

So at the cost of a small Chinese market share and small income from China, Google feels it can re-establish its cred in the West as the company that said no to China and held true to its "do no evil" motto.

Google turns a route into a victory.

-- Karl Mamer