South China Morning Post: Facebook and Google’s China Dream Will ‘Cost More than It Pays’

It will be tough. One of the reasons Beijing has kept the US internet giants out of China for so long has been to allow home-grown companies to establish near-unassailable positions in the domestic market. For example, while Google commands close to 90 percent of the search market in the US and Europe, in Google’s absence, Baidu has captured three-quarters of all searches behind China’s great firewall.What’s more, Beijing has an impressive array of regulatory instruments it can apply to ensure Chinese companies retain dominant positions in their own domestic market. For example, the authorities fully recognize the economic value of big data, and to make sure foreign players capture as little of that value as possible, all data generated in China must be managed inside the country, and only by Chinese-owned and operated companies.

But Holland notes that Google’s move into Chinese territory should be worrying for those outside of China. If Google successfully sets up shop in the Chinese market it will be under the express permission of the Chinese government, giving them greater influence over Google overall. Holland explains why this could be an issue for users outside of China writing:

Nevertheless, Beijing has a clear incentive to let the likes of Google and Facebook into the country, and to encourage them to think they stand to make handsome returns on their investments in China’s domestic market. This is because, once foreign companies have made a commitment to the Chinese market, Beijing will be in a much stronger position to exert greater influence over their international operations.

If a company is prepared to compromise its much-vaunted principles to operate inside China, it is no great stretch to imagine it might be prepared to make concessions on its international operations to further its ambitions for its new Chinese business.

So, for example, an internet user in Kansas tapping “East Turkestan” into his or her favourite search engine might turn up little or nothing about the ethnic Uygur separatist movement calling for independence from China. A German doing an image search for “Tiananmen” might find no pictures of columns of tanks. And an Indian scanning his news feed may no longer see sympathetic stories about the Dalai Lama, but plenty extolling the merits of the Belt and Road.

Holland finally warns that tech giants should consider whether they should set up shop in a Chinese market before deciding if they could.

As for the Chinese government attempting to exert influence over international search engines and social media news feeds, the prospect can surely surprise no one. Revelations over recent months have exposed the scale of Beijing’s efforts to silence critics around the world, and even to manipulate elections – most notoriously in Australia. After that, no one can doubt that the Chinese government would leap at the chance to influence international search engine results.

So at some point in the near future, international internet giants may well find themselves granted limited access to China’s domestic market. Rather than rushing in, they should consider carefully the price of admission they may be called on to pay. Rather than adding an inch to Chinese shirt tails, in ethical terms, they might end up losing their shirts.

Read the full article in the South China Morning Post here.