Google Says China Is ‘Heart’ of Internet Development

Google Inc. said it has many chances for growth in China, where the company shut down its web-search site in a dispute over censorship, and called the Asian nation the “heart” of the Internet’s future.

Maps and display advertising are areas where Google can expand and innovate in China, even without a search page in the world’s largest Internet market, Alan Eustace, senior vice president of engineering and research, said in Beijing today.

Google, owner of the world’s most popular search engine, has been losing search-market share in China to Beijing-based Baidu Inc. since January, when the Mountain View, California- based company said it was no longer willing to comply with government rules on content. Website operators in China are required to self-censor information on topics such as the Tiananmen Square crackdown in 1989 and Tibet independence.

“Search is only one piece of our business,” Eustace told reporters after the Google Innovation conference. “There are lots of areas we can innovate. It’s not a narrow slice.”

In March, Google shut its Chinese search service and redirected local users to its unfiltered Hong Kong site. China renewed Google’s Internet license in July, after the company stopped automatically redirecting users to the Hong Kong site and put in place a so-called landing page that requires users to opt for the alternative service.

‘Force for Good’

The Internet “can be a huge force for good in the world,” Eustace said in a speech. “We’re at the very beginning and China, in my opinion, will lead much of that revolution.” The nation is “the heart of the future of the Internet.”

Google’s share of China’s Internet search-engine market dropped to 24.6 percent in the third quarter from 26.8 percent in the previous three months, according to iResearch. That was the lowest level since the fourth quarter of 2007, the Shanghai- based research company said.

Baidu’s market share increased to 72.9 percent in the third quarter from 71 percent, according to iResearch. China had an estimated 420 million Internet users at the end of June, data from the government-sponsored China Internet Network Information Center show.

Search Speed

He Di, a Beijing-based Web designer who attended the Google conference, said he has turned to Baidu more since Google started directing Chinese users to its Hong Kong site.

“Compared to a year ago, I use Google less because the search results and search speed are affected,” He said. “Baidu has launched some new functions that are very convenient.”

China’s State Bureau of Surveying and Mapping in May required companies operating online map services in the nation to apply for a license from the bureau to continue business, citing national security.

Companies have until July 1 to apply for a license, the China Daily newspaper reported last month. The government agency in October started a competing service called “Map World.”

Eustace said Google has no first-hand knowledge of claims on the whistle-blowing website, WikiLeaks.org, that China’s government directed Internet attacks against the company.

Hackers backed by Chinese authorities conducted extensive computer hacking on U.S. government agencies and companies, including networks of Google, the New York Times reported.

--Edmond Lococo, Mark Lee. With assistance from Stephen Engle in Beijing. Editors: Lena Lee, Chua Kong Ho.

To contact Bloomberg News staff on this story: Edmond Lococo in Beijing at +86-10-6649-7507 or elococo@bloomberg.net; Mark Lee in Hong Kong at +852-2977-6909 or wlee37@bloomberg.net.

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net.

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