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  1. Home
  2. / Investing
  3. / Technology

China's Search King Fires Warning Shot as Google Plans Controversial Return

The battle between Baidu and Google will be one to watch.
By KEVIN CURRAN Aug 07, 2018 | 10:23 AM EDT
Stocks quotes in this article: BIDU, GOOGL, TCEHY

Baidu (BIDU) is ready for battle for the world's biggest internet market.

"If Google decides to return to China, we will fight and beat them again," Baidu founder Robin Li declared on popular Chinese social media platform WeChat.

Baidu, China's preferred search option, now controls (GOOGL) 74% of the market for search engines in China, posing a staunch challenge to competitors entering the market.

This is especially true for Google, which only has a 1.69% market share since its retreat from the Chinese mainland market in 2010. Action Alerts PLUS holding Alphabet Inc. (GOOGL) is the holding company that owns Google.

The new censored version of Google, nicknamed Dragonfly, was first reported by The Intercept last week citing leaked Google documents. These suggested Google's re-entry will be run as a part of a joint venture with a local partner, without naming the company.

Google publicly withdrew from mainland China eight years ago amid criticism from politicians, human rights advocates, and the company's own concerns over hacking. Prior to its exit, Google was a major player in the market, controlling 43% of the massive market at the end of 2009.

Prior to their withdrawal, the company reported it had "detected a highly sophisticated and targeted attack on our corporate infrastructure originating from China."

Google subsequently reported that "the primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists."

A Congressional-Executive Commission on China annual report from 2010 cited the affair as a major concern for the U.S.-based search engine working as a tool for the censor-happy Chinese government.

"The controversy between the Chinese government and Google, Inc., over the last year highlighted the potential for Chinese censorship practices to interfere with the free flow of information among Chinese citizens and businesses, and between people and organizations in China and the rest of the world," the report stated.

The company pulled out of the country amid all the uproar, abandoning the 1.4 billion consumers in the market.

Now the U.S. search engine giant is entering the market as tech companies in advanced economies are facing increasing regulatory and public scrutiny.

It appears Google is playing it safe and is looking to offer cloud services via partnerships with local companies like Tencent Holdings Ltd. (TCEHY) , Bloomberg reported.

However, it appears Alphabet may have overcome its concerns with censorship as The People's Daily, the state newspaper in China, welcomed Google back to the country, suggesting the company is ready to comply with the ever-strict Chinese censorship regulations.

As the trade tensions between U.S. and China show no signs of going away, the battle between each country's search leader will be one to watch.

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TAGS: Investing | U.S. Equity | Technology | China | Markets | Politics

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