Google Says China Is ‘Heart’ of Internet Development

Tuesday, 07 Dec 2010 11:57 AM

(Updates with comment on innovation in fourth paragraph.)

Dec. 7 (Bloomberg) -- Google Inc. said China will lead the Internet’s development as the nation’s online population, the world’s largest, continues to expand.

China is “the heart of the future of the Internet,” said Alan Eustace, a senior vice president of engineering at Google, the world’s most popular search engine. Google still has many areas for innovation in China after shutting its web search in the country this year, Eustace said following a company event in Beijing today.

Google, of Mountain View, California, has been losing search-market share in China to Beijing-based Baidu Inc. since January, when the U.S. 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 said. “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.

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

Smaller Share

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.

Eustace also 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 computer networks of Google Inc., the New York Times reported.

--Edmond Lococo, Mark Lee. Editors: Lena Lee, Vipin Nair.

To contact Bloomberg News staff on this story: Edmond Lococo in Beijing at elococo@bloomberg.net; Mark Lee in Hong Kong at wlee37@bloomberg.net.

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

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