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The impact of Google pulling out from China


After hackers attack on Google China, the company had announced its intention to pull out from China, a move which could well benefit other search engine players including Microsoft Yahoo and Baidu.

Popular search engines Microsoft Yahoo and Baidu may see their profits soaring in the coming months. Google has indicated it may cease to operate in China and according to Warren Cowan, CEO at UK-based independent search marketing agency Greenlight, this will result in greater dependency of advertisers on foreign operators.

Google is considering this move following a cyber attack designed to gather information on human rights activists. Their retreat from this fast-growing economic region will leave the field open for Microsoft, Yahoo, and Baidu that will become the primary sources for accessing the Chinese search audience.

Loss of Advertising Revenue
Greenlight speculates that if Google leaves China, advertisers will have no choice but to depend on foreign operators and all advertising revenue generated through this online source will go overseas. Currently, the advertising space is shared among Microsoft, Yahoo, Baidu, and Google. Baidu has the major chunk of the market (59 percent), Google has 30 percent, Yahoo has 6 percent, Bing 4.5 percent and 1 percent is for other small players.

In future, Google’s 30 percent share will be redistributed between the other two players and most likely, Baidu will grab the leading position.

New Ties
Baidu may gain a major share but the remaining revenue may not be evenly distributed through Bing and Yahoo users. These two players may have to fight a tough battle to retain their position or increase revenues in the months ahead.

A large number of advertisers are used to working with Google and its leaving the country will cause them to form new ties with less familiar foreign operators. These operators are obviously less integrated with their ad operations and it may take them a while to form smooth working relations.

According to Greenlight, the revenue generated from the US and global advertising industry will go into Chinese pockets and not contribute significantly to the US economy.

Source: PC World

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