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July 11, 2010

Cloud removed by China on Google Android platform

Google said it was “very pleased” that the Chinese government has renewed its ICP licence, thereby resolving a six-month stand-off. Had it not done so, it would not have had the platform to develop and market Android on the mainland.

Google’s ICP licence now runs to 2012, subject to annual renewals. On the strength of this agreement, Google rose in Nasdaq trading as the company avoided being expelled from the world’s largest internet market. “We look forward to continuing to provide web search and local products to our users in China,” the company said on its blog last Friday.

Google’s stance has been rigid since January this year, when it announced it was no longer willing to censor results on The company previously announced: “We currently automatically redirect everyone using to, our Hong Kong search engine. This redirect, which offers unfiltered search in simplified Chinese, has been working well for our users and for Google.”

Now, they have changed their tune and this time it not solely because of its entry into China’s search market. This time its decisions seem more to be based on the mobile market. As Credit Suisse analyst Wallace Cheung said, he expected Android to become the most popular mobile operating system in China, beating out Apple’s popular iPhone. From evidence uncovered by Reuters, it seems mobile was its key motivation in its mission statement reversal.

While Google has struggled to build market share in online search in China, its Android device has a real opportunity to capture a significant share of the mobile market. According to a report by Chinaknowledge, there are an estimated 786.5 million mobile users in the country, and the first quarter of 2010 saw 39.12 million new mobile phone users delivered.

Google’s statement goes some way in explaining the decision: “…It is clear from conversations we have had with Chinese government officials that they find the redirect unacceptable — and that if we continue redirecting users our Internet Content Provider license will not be renewed (it’s up for renewal on June 30). Without an ICP license, we can’t operate a commercial website like — so Google would effectively go dark in China.”

The dispute began in January this year, when Google said it was no longer willing to comply with Chinese regulations to self-censor content. But the strategic importance Google places on its involvement in China — from the candlelight vigils outside of its headquarters to the sheer number of users in China — Google is deemed important enough to the Chinese people that the government went back to the negotiating table.

Google chief executive Eric Schmidt said last Thursday that he expected China to renew the company’s revised application to deliver web services in the country after defying the government in March by ending self-censorship of the Chinese search engine and redirecting users to their Hong Kong site.

Following the announcement, Reuters chimed in with: “Google’s current search business in China accounts for a tiny slice of its $24 billion in annual revenue, with analysts putting its annual China revenue at $300-$400 million. But the long-term growth prospects are key. For one, Google is keen to provide non-search functions on the site, such as music search and text translation.”

As China is the world’s largest internet market with nearly 400 million users, the potential is huge. But with an internet penetration rate of 25 percent, China’s online sector is still developing, compared to Japan and South Korea that have penetration rates between 70 to 80 percent.

But it wasn’t just a story about corporate intransigence, cyber attacks on the company’s infrastructure and the data mining of Gmail accounts of China-based activists, together with the attempts to further impede free speech on the web, that led Google to conclude that they would have to review the feasibility of their business operations in China.

A veteran former telecom engineer and analyst, Ed Snyder, argues that the momentum belongs to Google’s Android system, suggesting that music is the application that could provide Google’s open-source Android OS the chance to leap over Apple. He also predicts that the next-generation music platform, which is likely to be cloud-based, will be the major battlefield in the smartphone war.

Google recently revealed that it is activating about 160,000 Android devices a day — more than 14 million a quarter. This statistic demonstrates Android’s power to attract users. And with Apple’s reluctance to upgrade iTunes to a radically different concept, there is a golden opportunity for Google to undercut Apple, offering free premium features to users, like streaming services.

The license renewal allows Google to continue to operate in the mainland market, in which the search engine can offer up products and services that do not require censorship, as well as continue to sell advertising on the site in a country with some 400 million Internet users.

It also removes a cloud over other Google business interests, in particular the licensing of its Android mobile phone operating system that in the future could be a strong source of advertising revenue in a nation of nearly 800 million mobile phone subscribers.

V9 Design and Build produce tasteful web design in Bangkok, Thailand, including ecommerce shopping cart solutions, with functionality that allows owners to set up and maintain their online stores. As Flash web designers we create interactive animated websites and, as back-end developers, we provide content management