Will Google's soon-to-be-vacant China offices present an opportunity for Microsoft?
As Google prepares for what appears to be an imminent departure, other IT firms are considering the impact. Microsoft, already a large presence in China, has already voiced concern over Chinese regulations towards technological developments in China. The American Chamber of Commerce of China released a report today (March 22) regarding these concerns: "China’s new rules to encourage home-grown technology are eroding sales at U.S. companies and raising concern these losses may multiply, according to an American Chamber of Commerce survey released today in Beijing."Twenty-eight percent of 203 members responding to the survey said they are losing business because of the policy. Among technology companies, 37 percent said they are already being hurt and 57 percent predicted they would be disadvantaged in the future."Foreign companies with operations in China are concerned the rules are discriminatory and may extend beyond the 599 billion yuan ($87.8 billion) government-procurement market to orders from state-owned enterprises, which last year had combined revenue of 22.5 trillion yuan. The chamber represents companies including Microsoft Corp., JPMorgan Chase & Co. and United Technologies Corp.“Many foreign companies are starting to believe that the future China business opportunity is shrinking,” said James McGregor, a senior counselor in Beijing at APCO Worldwide, a public affairs company. “This indigenous innovation policy seems clearly aimed at forcing foreign technology here so that Chinese companies can tweak it and call it their own.”"The report comes as Mountain View, California-based Google Inc., the owner of the world’s most popular Internet search engine, considers withdrawing from China because of censorship restrictions."You can read the entire article here: http://www.businessweek.com/news/2010-03-22/china-rules-hurt-u-s-companies-as-google-exit-looms-update1-.htmlCNN provides a similar story: http://edition.cnn.com/2010/BUSINESS/03/22/china.amchan.survey/index.html?hpt=C1Another article on March 5, indicates Microsoft's views on the Google spat. "Microsoft has kept a relatively low profile in China since Google announced its decision to potentially withdraw from the market over censorship issues and following an attack on its systems that it believes originated in China."Microsoft chief executive Steve Ballmer previously said his company had no plans to pull out of China, indicating it was unlikely to follow Google's lead in challenging a Chinese system that forces Internet companies to self censor their sites on sensitive topics."Regardless of whether or not Google stays, we will aggressively promote our search and cloud computing (in China)," Zhang Yaqin, chairman of Microsoft's Asia-Pacific R&D Group, told Reuters on Friday, on the sidelines of the opening of the National People's Congress, China's parliament, in Beijing.{skip material}"Google launched its China search site in 2006, and complies with local laws requiring censorship of certain content such as pornography and sensitive subjects such as the banned Fulun Gong spiritual movement and Tibetan independence."Microsoft and local players, including Baidu, China's search leader, and Sohu.com, must also comply with those laws. Google controls about 31.3 percent of the Chinese Web search market, compared with 63.9 percent for Baidu, according to Analysys International."By comparison, Microsoft is a bit player in a market that was worth 2 billion yuan ($293 million) in the third quarter, but has high hopes there following the launch of a beta Chinese version of its highly hyped Bing search site launched last June."We hope to achieve a relatively important place in the China search market," Zhang said. "But we must be very patient, we still need a lot of time.""Zhang added that other key development areas for Microsoft in China this year would include search and advertising platform technologies, and development of mobile platforms and cloud computing technologies."Microsoft considers China a vital market for its Web search business, and is hoping to duplicate early progress for the U.S. version of Bing in China, the world's largest Internet market by users with more than 350 million."Zhang added that Microsoft planned to spend about $500 million on research and development in China this year, and another $150 million on outsourced projects."The entire article can be found here: http://www.reuters.com/article/idUSTRE6240V620100305
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