Alphabet's (GOOGL) non-committal talk on its earnings call related to its controversial return to China is adding to uncertainty both inside and outside the company.
Shares of the tech giant have seesawed throughout the day as the market engaged in a tug of war between buyers and sellers. Alphabet stock finished down 1.8% to $1,083.75 on Friday, a day after the company reported disappointing earnings.
The potential new program to re-enter China since Google's exit in 2010 over censorship concerns, code-named "Dragonfly" in leaked documents, has received press, regulatory, activist and even employee outcry in recent months.
The company has skirted discussion of its Project Dragonfly for many months since an initial report from The Intercept warned that a launch was imminent. A Chinese search engine for Google would necessarily adhere to the Chinese administration's repressive search policies, provoking backlash.
CEO Sundar Pichai sidestepped the topic when questioned by RBC Capital Markets analyst Mark Mahaney during Thursday night's earnings call.
"One, Sundar, could you just update us with your thinking on China. I know Google is already in that market, but the extent to which you want to expand, re-expand your presence there with search," Mahaney asked.
Pichai chose not to address the latter part of the question.
"On China, we obviously, we deeply care about serving Chinese users, we've been investing for many years and especially from developing Android," he responded. "We are constantly looking for ways by which we can better serve Chinese users and that's where we are today."
During a talk last week at the Wired25 conference in San Francisco, Pichai did at least confirm the existence of Project Dragonfly, though he said there is no guarantee that the search engine will ultimately launch.
Country Clash
The defense of a program followed by a non-answer and overall doubt on a launch adds to the uncertainty that was stoked in a Senate hearing in September.
The rumored plans to jump back into China drew a rebuke from U.S. Senator Maggie Hassan, a Democrat from New Hampshire, during a that hearing before the U.S. Senate Committee on Commerce, Science, and Transportation.
The government compliant search engine that has been documented is purported to store personal phone numbers, user searches, and work towards denoting social credit scores for individuals living under Xi Jinping's rule.
Hassan called the potential project a "tool to suppress human rights."
Despite the heated questioning, Google chief privacy officer Keith Enright denied the company was close to a Chinese launch at the time.
"I stand by Google's record on human rights," he said in response to Hassan's pointed questioning. "My understanding is that we are not close to launching a search product in China."
When asked by Hassan in a follow-up where leaks, reports, and letters are coming from, Enright declined to offer an explanation.
"I wouldn't speculate, senator." he answered.
Employee Unrest
Even within Google's own ranks, the decision to re-enter China is a serious concern and has led to organizational disconnect from executives.
"Currently we do not have the information required to make ethically-informed decisions about our work, our projects, and our employment," an employee letter obtained by The Intercept states.
The letter goes on to demand transparency from the company.
"That the decision to build Dragonfly was made in secret, and progressed with the [artificial intelligence] Principles in place, makes clear that the Principles alone are not enough," the letter goes on to say. "We urgently need more transparency, a seat at the table, and a commitment to clear and open processes: Google employees need to know what we're building."
As has been highlighted in the past, a lack of talent in some key areas of tech has put executives between a rock and a hard place if they go against the tide of employee will.
Pichai however, has offered a doctrine of strong leadership.
"Throughout Google's history, we've given our employees a lot of voice and say," he conceded. "But we don't run the company by holding referendums.
Too Big to Ignore?
If the company does indeed expand into China, it will likely be a PR nightmare. Yet, the market might be too compelling to ignore.
"We are compelled by our mission [to] provide information to everyone, and [China is] 20% of the world's population," Pichai said at last week's Wired conference. "We also follow the rule of law in every country."
The California-based company will have its work cut out for it in the market, as after its exit Chinese-based Baidu (BIDU) has gained the lion's share of the 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 in August.
Baidu, China's preferred search option, now controls 74% of the market for search engines in China against Google's 1.7%.
