A Google-Tencent alliance makes for murky politics—but great business


Google appears to be making a concerted attempt to return to mainland China, where it has largely been absent after it shuttered its search engine in 2010 due to concerns about censorship and cyberattacks. The search giant has plans to launch a search engine, a news aggregator (paywall), and cloud services in China, according to reports in recent days. Having a well-connected Chinese tech ally might help.

Google already has ties to one Chinese tech giant that could be the perfect partner in its comebackTencent, the gaming and social media empire that includes WeChat, China’s chat app of choice. The two firms have patent-sharing agreements, jointly launched a game, and co-invested in companies together within the past year. This week Tencent was named as a potential partner for Google’s cloud services  in China.

There are many unknowns surrounding Google’s reported plans to re-enter China—including whether they will happen. Chinese state media articles and a cool reception at a government-sponsored tech event this year suggest Beijing isn’t rolling out the red carpet. Meanwhile, re-entering China would make Google compliant with some of the world’s most restrictive policies on information freedom, opening it to pushback from the public, US lawmakers, and its own employees.

But politics aside, there’s a sound business case to be made for Google launching these three services in China. And that’s especially true if Google and Tencent work together.

Search and destroy

While Baidu dominates China’s search engine sector, it’s not uniformly beloved by Chinese consumers. Users often complain about the quality of its rankings and fraudulent advertisements that appear in search results. In 2016, the company suffered from a major public backlash when a cancer-stricken 21-year-old, after losing 200,000 yuan (about $28,000) to a hospital that advertised on Baidu, accused it of offering ads for fake medical treatments. After an investigation, China’s government required Baidu to remove all listings for hospitals not approved by regulators.

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Early reactions from Chinese internet users to news of a possible Google search engine re-launch have been mixed—some express indifference given Google’s offering will be censored much like Baidu, while others anticipate that Google will provide a better service than its domestic rival.

Tencent, meanwhile, makes most of its money through games. But it has flirted with launching a search engine. A vibrant media landscape exists within the confines of WeChat, and much of it is not easily accessible within Baidu. Last year, the chat app introduced a search feature inside its app that lets users discover some of the content published by writers. Google, with its expertise in search, could help Tencent improve this feature—and monetize it with advertisements.

Of course, no search engine in China can exist without censoring search results—that means showing no stories about topics the ruling Communist Party considers sensitive. Google will have to prepare itself for severe pushback from free speech and open internet advocates if it’s serious about re-launching a search engine in China.

News that’s fit to push

Google is also reportedly working on a news app that resembles Toutiao, a wildly popular media aggregator run by Beijing-based Bytedance, according to the Information. While it’s not clear if this app would involve Tencent, a news app would fit in with some of Tencent’s fledgling business initiatives, especially as it faces a new Chinese rival.

Much as internet users turn to Facebook to get their news, many Chinese consumers read news and blogs directly on WeChat. However, for a long time, the chat app offered no algorithm-powered, scrolling feed to aggregate content. Toutiao surged in popularity by offering a Facebook News Feed-esque feed that adapts to the taste of the user—and often leans toward clickbait.

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Earlier this year, WeChat introduced a feature that closely mimics Toutiao’s news feed. Since then, Tencent and Toutiao’s CEOs have recently been locked in a war of words, going so far as to file lawsuits against one another. With its expertise in aggregating news, Google could help Tencent improve this feature—and perhaps beat its competitor, according to Matthew Brennan, who tracks Tencent at China Channel, a Shenzhen-based marketing agency.

“It’s no secret that Bytedance’s apps are taking attention away from Tencent properties. The secret sauce of ByteDance is their algorithms are so good,” he told Quartz. “Google is one of the few companies that can go toe-to-toe with them.”

Yet Google might want to think twice before getting involved in the news business in China, despite the potentially enormous following it could gather. Media is one of the most tightly-controlled industries in China, and Bytedance itself has faced government scrutiny for its influence on consumers’ news consumption habits. Earlier this year, the authorities shut down Toutiao for 24-hours for posting “pornographic and vulgar content.” The company responded by pledging to hire 2,000 individuals to monitor content (human censors, in essence)—on top of the existing 4,000 it already employs.

Up in the clouds

Over the weekend, Bloomberg reported that Google is in talks with Tencent to help launch a cloud service in China. That’s a sector where both companies have room for improvement.

In China, Tencent ranks as the number-three cloud service provider—behind Alibaba and state-owned China Telecom, but ahead of Baidu and other players.

Google, meanwhile, has a mere 5% share of the global cloud service market, according to Synergy Research Group. It’s possible that while Google might be able to help Tencent in search and news, Tencent would return the favor to Google by giving its cloud business a boost from exposure to China.

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Daniel Liu, who tracks the cloud industry at research firm Canalys, told Quartz that while Tencent can help Google in China for cloud, the company faces fierce competition. “The market has already clustered many local and foreign vendors,” he says. “Google needs to show its differentiation for local cloud users, although being hosted on Tencent’s infrastructure can help resolve the regulation challenge. It could focus on global companies’ entities in China, and attract the Chinese firms which plan to expand overseas.”

This business comes with political consequences as well for Google. Chinese regulations requires tech companies to store user data within China’s borders, which ensures that authorities can access it. Apple faced a public backlash when it announced it would have its Chinese iCloud user data managed by Guizhou-Cloud Big Data, a state-affiliated data storage company. While Tencent is not formally affiliated with the Chinese government, there are already examples of certain users suddenly finding themselves in trouble with authorities after sharing information on WeChat.





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