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Google, which withdrew its Internet search engine from China in 2010 after a disagreement over the country’s censorship rules, “needs to look back to China to bolster its flagging growth,” according to an industry note on Friday from Edison Investment Research analyst Richard Windsor. Edison’s research note comes as Google CEO Sundar Pichai has been on a visit to China involving Google’s AlphaGo artificial intelligence program , according to Chinese media reports. Lacking a search presence in China was initially not a problem because the search giant — now the largest unit within parent company Alphabet ( GOOGL ) — was experiencing quick growth in its core developed markets, said Windsor. With growth in those markets now slowing, “Google needs to look back to China” and that country’s expanding base of Internet users, said Windsor. However, convincing the Chinese government to let Google return will be a tall order, Windsor said, and the tech giant will likely “fail to get any real traction” now that local competitors have come on strong. Baidu ( BIDU ), which was Google’s chief search rival when the U.S. firm was in the Chinese market, is currently China’s largest search provider. “Even if the Chinese authorities let Google back in, they are very likely to place limitations upon Google, such that the home-grown crowd (Baidu, Tencent Holdings ( TCEHY ), Alibaba Group ( BABA ), Xiaomi and China Mobile ( CHL )) have the advantage,” Windsor said. “Secondly, the Chinese have been very busy developing their own ecosystems over the last six years or so, and this is no longer the virgin territory that it once was. Edison in fact estimates that 91% of all China ecosystem users are already using Baidu’s services, with 87% also playing games and chatting with Tencent,” he said. Google will have to fight for market share “even to get a toehold outside of Hong Kong (where Google is not blocked),” he said. “The net result is that the Chinese market will be a tough one for Google to crack, even with a level playing field,” Windsor said, adding that “Google is unlikely to get much more than the position in Hong Kong that it already has.” Still, Windsor said, “The good news for Google is that market expectations for its success in China are almost non-existent, and against that backdrop, the short-term outlook is reasonably rosy.” In 2010, Google said that it refused to self-censor content for Chinese services before closing its local search page and directing users to its website in Hong Kong. Other U.S.-based Internet firms, including professional networking leader LinkedIn ( LNKD ), operate in China and must censor their local content. Facebook ( FB ) and other Western social media, including Twitter ( TWTR ), are banned in China. Alphabet stock was up a fraction in afternoon trading in the stock market today , near 769, while Tencent stock was also up a fraction, near 21, and LinkedIn stock was up more than 1%, near 116. U.S.-listed Baidu stock was down a fraction, near 190, and Alibaba stock was also down a fraction, near 79. Scalper1 News
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