Is Google Really Ready to Make a Comeback in China?

GOOGL - Is Google Really Ready to Make a Comeback in China?

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On Oct. 14, the CEO of Google (parent company, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) ) Sundar Pichai acknowledged the company’s plans of launching a censored search app for China. However, GOOGL is still considering whether to launch a censored version of its search engine in China. The company’s plans to return to China, a market it abandoned over censorship issues eight years ago, were first reported in August.

Although GOOGL’s core services, Google Search, Gmail and YouTube, remain blocked in China, the company is involved in providing digital tools and support to large a number of Chinese app developers and manufacturers, mobile companies and advertisers, who want to reach out to their global customers.

However, Pichai said that the plan was in “very early” stages and may not progress. That said, there are challenges aplenty for GOOGL in China, which the company needs to overcome. Moreover, the news comes at a time when tech and internet companies are being punished by investors amid renewed concerns over user data privacy and security.

Can GOOGL Return to China?

On Oct. 14, Pichai acknowledged Google’s leaked plans of creating a censored search app for China. He said that the censored search app could serve over “99% of queries”. However, Pichai also said that the plan was in very early stages and may not take off. That Google was trying to make a possible return to China was reported initially in August. The proposal had drawn criticism from employees.

The company also publicly confirmed the existence of such a project during a Senate committee hearing in late September. Although Google’s core services, Google Search, Gmail and YouTube remain blocked in China, the company has played a key role in supporting local tech companies. GOOGL provides digital tools and support to a large number of Chinese app manufacturers, developers and advertisers, who want to reach out to global customers.

The search engine giant decided to pull out of China in 2010 over censorship issues. However, it has been providing its digital services and tools to many local companies.

Bigger Challenges for GOOGL Stock

Pichai’s comments come at a time when tech and internet giants are reeling under pressure of a trade war. Moreover, renewed concerns over user data privacy and security after breaches and vulnerabilities by the likes of Facebook (NASDAQ:FB) and Google are also affecting tech companies. This has seen tech companies led by the FANG stocks, which include, Facebook, Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Google, taking a beating in recent times.

In fact, on Oct. 8, Google announced that it will be shutting down its Google+ social network. The decision comes after The Wall Street Journal reported that the company did not disclose that private data of hundreds of thousands of users of Google+ was potentially exposed due to a bug from 2015.

Concerns of a regulatory clampdown on how tech and internet companies handle user data, has been looming large on a number of companies. A regulatory clampdown means restricted use or ad-free paid service, which will weigh on the companies as they tend to lose users, who can’t afford pair service.

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