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Google mulls return to China, possible with Google Play

Google Play app store is likely to be on top of the list of Google services which will be first available in China. Photo:

Google is itching to re-enter China, a huge market it left five years ago after defying the Chinese censors, with its newly established parent company Alphabet signaling recently that it would bring back some of the technology giant's services to the country.

Sergey Brin, president of Alphabet, said in a recent interview that some of Alphabet's diverse units might do business in China, with each unit free to make decision about where to operate, despite acknowledging difficulties in doing business in China.

The remarks of Brin, also Google's co-founder, were soon echoed by Eric Schmidt, chairman of Alphabet, who said at an innovation forum held in Beijing in November that Google is trying to return to the Chinese market where most of its services are not accessible at present, except for the online advertisement business.

"We have offices in Greater China – in Taiwan and Hong Kong…The interesting thing is that Google never left China," Schmidt said at the forum, referring to the company's uninterrupted contact with the Chinese partners and government about its presence in the country.

Google Chief Executive Officer Sundar Pichai also conveyed earlier this year the hope of resuming Google services for the Chinese Internet users.

Google closed most of its operations in the Chinese mainland in 2010 after a tussle with the Chinese censors over search result screening and a cyber attack on Gmail users which the company blamed on Chinese hackers. At that time, Brin was an outspoken critic of China's censorship rules.

Google's U-turn has fueled speculation that the US search giant is inclined to concede to the Chinese government, which has increasingly grown hard-handed on insubordinate foreign technology companies since Xi Jinping took power in 2012, in exchange for a permission to do business in the country.

In February, American chip maker Qualcomm paid a record fine of $975 million for violating China's anti-trust law after being found guilty of abusing market dominance. It is the largest fine that China has slapped on a foreign multinational.

In contrast, US technology giant Apple appears to be in its element when expanding its presence in China, where it has agreed to store Chinese users' personal data on servers based in China and observed the local Internet regulator's requirement of performing sweeping security audits on its hardware and software products sold in the country. The compliance has assured Apple of an outstanding sales performance in the world's largest consumer market.

Google Play in front

Google has given no further details about what services it will bring to China, but Google Play, the officially authenticated Android app store, is likely to be on top of the list of services which will be first available in the country.

Sources revealed that the Android mobile operating system developer has quietly set up servers and registered Internet domain names in China, which could be seen as a preliminary preparation for a future Chinese version of Google Play.

Industry experts predicted that Google will have a higher probability of gaining regulatory approval to launch Google Play in China, because the Android app store is seen by the Chinese government as less detrimental than its search engine, which previously left search results uncensored in the country which is condemned by foreign rights groups for limiting the freedom of online information flow.

The move is said to be triggered by Google's reaction to the great success of Apple's App Store in China – a country where about 90 percent of its 670 million netizens surf the Internet via smartphones and which is a key driver for the global popularity of app stores.

A new market report by App Annie, an app analyst firm headquartered in San Francisco, California shows that the global revenue from Apple's App Store was 80 percent higher than Google Play in the third quarter of 2015, up from 70 percent in the second quarter, despite the fact that the number of global app downloads on Google Play is on the rise.

Worldwide downloads on Google Play were 90 percent higher than on Apple's App Store in the third quarter of 2015, up from an 85 percent lead in the prior quarter, according to the market report, which depicts China an important "barometer" for the global performance of Apple's App Store because of the popularity of the iPhone among Chinese consumers.

Zhang Yi, chief executive officer of iiMedia Research, a Guangzhou, China-based Internet data provider, said that Google could use its app store as a "vanguard" to break into the Chinese market. "As an officially verified Android app downloading platform, Google Play already has a mature business model, which makes it easier to get close to the operating cash flow," said Zhang.

Cleaning chaotic Android app market

Bringing Google Play back to China will turn the country's fragmented, chaotic Android app market into an orderly app downloading platform with unified standards and better practices, William Long, a pre-eminent technology blogger in China, said in an article.

A large number of third-party Android app stores in China are notorious for their incompetence in protecting app developers' intellectual rights, and are criticized for turning a blind eye to the theft of users' private information for illicit profits.

"It is detrimental to the healthy development of China's mobile industrial chain," said Long, noting that the tolerance for the pirated Android apps with unsatisfactory user experience caused by the in-built rogue programs has compelled users to move to Apple's iOS app store.

"Bringing back the officially verified Google Play app store to China will play a positive role in standardizing China's rough-and-tumble Android app market," said the blogger.

As many as 80 percent of the smartphones run on the Android mobile operating system in China, said a China Daily report.

Long predicted that if Google succeeds in bringing Google Play back to China, it will not meet big problems in having Google Play pre-installed in smartphones produced by Huawei and ZTE because the two big Chinese communications technology solutions providers are members of the Google-led Open Handset Alliance (OHA), which has a mission to promote a unified Android platform.

Huawei has also been authorized to manufacture the Google-branded Nexus 6P smartphone, which Long said will help Google Play steal market share from Apple's App Store in the Chinese market.

"Making Google Play available in the Chinese market will also help Chinese users form the habit of buying copyrighted Android apps as they do on Apple's iOS app store," said Long.

Bumpy road ahead

However, Google Play's future foray into China is not going to be a plain sailing.

Some industry experts have expressed skepticism over Google's ability to control the Chinese market, which has been dominated by several local app stores, some of which are directly owned by well-capitalized smartphone makers.

Take Chinese smartphone maker Xiaomi for instance. In 2014, it sold 60.8 million handsets in the Chinese market, claiming the title of the annual best-selling brand with a 14.97 percent market share, according to statistics from IHS Technology, a global information services company. The shipments guarantee a big user base for Xiaomi's official Android app store named Mi Store, which is pre-installed in its smartphones.

Industry insiders say that smartphone makers like Xiaomi will not willingly accept Google's proposal of paying $1 for each cell phone pre-installed with a version of Google Play, given the tremendous revenues from online advertisement and services based on their own Android app stores.

According to the latest data from the Wall Street Journal, the Android app store owned by Baidu, Google's Chinese search rival, ranked first in the number of active users in September 2015 with 12.3 million people.

"Google should hurry up to re-enter China when it still can get a considerable fan base," said a former Google employee. "Some Chinese college students are not familiar with Google, because they did not use it in the past five years. Before long, younger people may not even know what Google is."

Politically, Google was frustrated by the absence of its chiefs from the business-heavy invitation list, which included Facebook Chief Executive Officer Mark Zuckerberg, Apple Chief Executive Officer Tim Cook and Reid Hoffman, co-founder of LinkedIn, for face-to-face talks with Chinese President Xi during his state visit to the US in September. It means that China still has a grudge against Google for its disobedience to its censorship five years ago.

It seems that the company needs to do much more to mend fences before it can reap benefits from the lucrative Chinese market. 

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