Will China Let Google Back in? - MacroPolo Will China Let Google Back in? - MacroPolo
Will China Let Google Back in?

Last week The Intercept dropped a bombshell based on leaked documents: Google is planning to launch a censored search engine for China within the next six to nine months, pending approval from Chinese officials. Most reporting and analysis has focused on the first half of that revelation (Google’s willingness to censor search results), but that commentary has largely skipped over the crucial question in the second half: will the Chinese government actually let Google back in?

Despite Google’s professed willingness to play ball on content controls, I believe it remains highly unlikely that the internet giant will receive approval to relaunch its search engine in China. Google’s current difficulty in gaining those approvals is being blamed on the US-China trade war, but in reality Google’s challenge in China runs much deeper: the Chinese Communist Party (CCP) believes it doesn’t need Google’s help to run a highly innovative, productive and profitable internet economy. In other words, what would Google’s reentry offer the Chinese state that it can’t achieve by cultivating its own dynamic domestic internet?

To understand how the balance of negotiating power between China and Google has shifted over the past decade, it’s important to review the history of this uneasy relationship. That history can be broken down into three periods: Google China 1.0 (2006-2009), Exit and Standoff (2010-2014), and the New Courtship (2015-2018).

Google China 1.0

Complying with Chinese censorship isn’t exactly new to Google. During Google China 1.0, the American internet company operated its search engine in accordance with Chinese government requirements on content restrictions. That search engine struggled for a number of reasons: constant frictions with Chinese officials over content, limited autonomy or ability to localize due to the need for approvals from Google headquarters, and fierce competition from domestic rival Baidu. Despite those hurdles, Google China scratched and clawed its way to around a one-third share of China’s search market.

And then, on January 12, 2010 Google abruptly announced it would no longer be censoring search results in China. That decision is often described today as a principled stand against censorship, but as Google wrote on its official blog at the time, the primary motivation was the company’s discovery a month earlier of an extensive China-based hacking attack that targeted Google’s intellectual property, as well as the Gmail accounts of human rights activists in the United States.

A tense standoff ensued, revolving around a central question: who needed who more? Did Google need access to China’s growing internet market, or did China need a company like Google to help build a thriving internet economy? At the time, many American analysts argued that the US internet giant had the upper hand. When compared with Silicon Valley, China’s internet market was still a backwater populated by throngs of copycat companies that didn’t know how to innovate. Google was seen as crucial in both helping internet users obtain the information they needed, and in training up a generation of Chinese engineers and entrepreneurs.

Exit and Standoff

But the more global attention the incident attracted, the more the CCP dug in its heels. It gave no real ground in negotiations, and instead rolled out a series of blocks that eventually covered virtually all Google products. Left with little choice, the American company retreated from the Chinese search market, maintaining only a small engineering and ad sales team in Beijing.

For the next few years, Google remained in a holding pattern, making no public forays into China, instead hoping that some change on the Chinese side would lead to concessions. In 2012, Google’s then-Chairman Eric Schmidt gave voice to those hopes with a prediction that China’s extensive censorship regime would stunt the country’s growth and eventually collapse.

“I personally believe that you cannot build a modern knowledge society with that kind of behavior, that is my opinion,” Schmidt told Foreign Policy at the time. “I think most people at Google would agree with that. The natural next question is when [will China change], and no one knows the answer to that question. [But] in a long enough time period, do I think that this kind of regime approach will end? I think absolutely.”

An Unlikely Boom and The New Courtship

But instead of withering under tightening censorship restrictions, China’s domestic internet economy flourished. A once-sleepy startup scene began to buzz with activity. Tencent’s WeChat took the country by storm as a digital Swiss Army Knife for life in China. Alibaba broke records in its debut on the New York Stock Exchange. Chinese engineers in Silicon Valley flocked back to China in droves to chase better opportunities. On-demand services transformed Chinese cities, and the country became a global heavyweight in artificial intelligence. The Chinese government had held firm, and it was rewarded with an internet economy that was both highly productive and securely under CCP control.

With a new CEO in charge—and its bargaining power severely diminished—Google began a new courtship by extending a series of olive branches. In 2015, it reportedly offered to work with a Chinese partner to launch a censored version of its Google Play app store for China. It invested in and partnered with a Chinese startup founded by an ex-Googler to offer voice search on wearable devices like watches. In early 2017, rumors again circulated about reintroducing Google Play or Google Scholar, but neither panned out. Instead, it settled for bringing AlphaGo to China for much-hyped (and then censored) matches against the world Go champion. (For a near-complete list of Google’s actions in China, see this Twitter thread.)

And then, at the end of 2017, Google’s activities in China ticked up substantially. Google CEO Sundar Pichai attended China’s World Internet Conference, and the company announced it would set up a new artificial intelligence (AI) research lab in Beijing. Over the subsequent six months, Google struck a patent licensing deal with Tencent, made a $550 million strategic investment in e-commerce giant (and Tencent ally) JD, and launched a popular AI-powered drawing game on Tencent’s WeChat. (That confluence led tech writer Elliot Zaagman to argue that Tencent is likely the Chinese partner for Google’s re-entry alluded to in the leaked plans.)

Meanwhile, Pichai was quietly working behind the scenes on the biggest move of all: bringing Google Search back to China. According to what was leaked to The Intercept, the project was code-named “Dragonfly” and began in spring of 2017. In December 2017, Pichai flew to Beijing for a private meeting with Wang Huning, a member of the Politburo Standing Committee and head of propaganda, a trip that Pichai deemed a success. Google has reportedly demonstrated the censored search app for Chinese officials, and employees have been told they must be ready to launch the app on short notice should they receive approval from Chinese officials.

The Propaganda Economy of Google’s Return

Whether Google ultimately wins those approvals is contingent on the Chinese government’s assessment of the risks and rewards of letting Google search re-enter mainland China. So what are the upsides and downsides from Beijing’s perspective?

I see two main upsides from the CCP’s point of view: a propaganda coup and a path to global expansion. On the propaganda front, Google’s re-entry can easily be spun as a de facto endorsement or legitimization of China’s internet controls by perhaps the most respected technology company in the world. It would act as a signal that China’s internet sector is open for business, so long as you “play by the rules.” Finally, if Google were to partner with a company like Tencent, it could help China’s most important technology company—and the hundreds of companies within Tencent’s ecosystem—in their global expansion, an area where Chinese companies have struggled to execute.

But what about the potential downsides?

I believe the answer to that question goes back to the controversial conclusion of Google China 1.0. When Google left China in a huff in 2010, it thrust the Chinese government into a highly embarrassing position. Google’s defiance put China’s internet censorship regime on very public trial, rubbing the restrictions in the face of over a hundred million Chinese people who regularly used Google Search and woke up one day to find it gone.

If the Chinese government allowed Google Search to re-enter China, they would be running the risk of repeating that embarrassing episode. By agreeing to censor search results, Google would subject itself to an ongoing public relations firestorm at home, potentially even risking legislative action from an increasingly hostile US Congress. Big tech is already becoming a popular punching bag in Washington, DC, and a move like this would throw gasoline on the fire. What if, under intensified pressure, Google reversed course as they did in 2010? The risk of that loss of face—all for a modest propaganda gain—is likely too high to tolerate for risk-averse Chinese officials working within a punitive bureaucracy.

The propaganda win argument looks even weaker when considering that the major Silicon Valley technology companies have already granted plenty of legitimacy to the Chinese internet model through their actions. They regularly shower praise on the Chinese technology sector, open prestigious research centers there, attend Chinese government conferences, build censored versions of their apps for the country, and—in Mark Zuckerberg’s case—even learn Chinese. How much more legitimacy does the government need from these companies?

Most of all, Chinese officials likely feel that the Google-free status quo is working great. The Chinese internet economy is thriving, driven largely by domestic companies over which the government has greater leverage. Domestic giants like Baidu, Alibaba, and Tencent are driving innovation and economic transformation even while kept on a short leash. Outside of China, Beijing can still exert substantial influence over US internet companies by dangling the prospect of market access, occasionally giving them some hope allowing non-sensitive apps or research centers to enter China. If anything, the ongoing trade spat provides excellent cover for the Chinese leadership to sit on approvals they never intended to grant, all the while deflecting blame for the deal’s collapse on the US side.

All That Said…

To be clear, nothing is certain when it comes to Google’s prospects in China. Those outside the Google C-suite and the Politburo Standing Committee are likely only seeing the tip of a massive iceberg of political maneuvering. Dynamics could change, and there is certainly far more to Beijing’s calculus than I’ve outlined here. Perhaps the CCP believes granting Google entry would drive a useful wedge between the company and President Trump, or maybe the upside of leveraging Google for global expansion outweighs the other considerations.

None of this can be ruled out at this stage. But given what we know about the history and Chinese bureaucratic interests, Google’s “return” to China requires far more than just complying with censorship demands. It needs to prove itself useful to a government that believes it has gotten on fine without it.