beyondbrics

Just a few months ago bloggers were mourning the death of Google China, after the internet search behemoth challenged the government to a game of bluff, by uncensoring previously censored mainland searches, risking being kicked out of the country.

After a tense face-off, it appeared on Friday that the Chinese government had backed down, renewing Google’s internet license to operate in China. One might hear a sigh of relief from Google. But some damage has already been done as research out today shows.

Tech firm iResearch shows China’s search market grew 53 per cent by revenue in the second quarter to Rmb2.64bn  (US$390m). But Google lost a chunk of market share to Baidu, China’s number one search company.

Baidu’s share increased to 70.8 per cent over the quarter to the end of June, up from 67.8 per cent in Q1, whereas Google’s market share fell to 27.3 per cent in Q2, compared to 29.5 per cent in the Q1, according to iResearch.

To throw another spanner in the works, Google’s wildly popular counter to the iPhone platform, Android, is rapidly gaining popularity in China, but China’s officially sanctioned version of Android is using new local ‘flavoured’ platforms, rather than Google applications for the phones, according to TechCrunch, a US blog. And who’s leading the competition for new mobile internet search platforms? Yes, you guessed it, Baidu.

As Chinese developers create new domestic versions of the Android services, Baidu is gaining speed in the race against time to gain as many mobile internet users in China as possible. Motorola, for one, is working alongside the Chinese search engine to create a line of Chinese version Androids.

But there is still plenty of room for a piece of the pie, and Google is likely to be gearing up to regain its hold on the mainland.

TechCrunch says the number of mobile internet users in China at the start of 2010 was 233m, and the projected number for 2014 is 957m. Google last week posted lower-than-expected Q2 earnings.

Baidu will release its Q2 results on July 21.

Nonetheless, things could have been a lot worse for Google.

Related reading:
Beijing set for clash with western companies, FT beyondbrics
Google ends censorship of China site, FT
Google vs China: The (science) geeks will inherit the earth, FT beyondbrics