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Is Google's withdrawal from China a chance for Yahoo! and Bing?

January 14, 2010
Following Google's announcement that it may cease its operations in China following the recent cyber-attacks, analysts are debating the possible benefits for Microsoft and Yahoo!.

The Telegraph reports that neither company has disclosed whether it will choose to take a bigger share of the market, or follow Google's lead and withdraw from China - however, analysts are predicting that the latter scenario is unlikely.

Microsoft has stated that it has no indication that any of its own intellectual property was compromised in the attacks - which Google claimed affected "at least twenty other large companies." Yahoo! has not disclosed whether its own operations were affected, but released the following statement in the wake of the attacks:

"Yahoo! is committed to protecting human rights, privacy and security. We condemn any attempts to infiltrate company networks to obtain user information. We stand aligned with Google that these kinds of attacks are deeply disturbing and strongly believe that the violation of user privacy is something that we as internet pioneers must all oppose."

According to Forrester analyst Nate Elliott, it is likely that both Microsoft and Yahoo! will remain in China, as both have been content to cooperate with the Chinese government's rules in recent years without worrying about maintaining the "moral high ground" of Google.

Mr Elliott explained: "Google put itself on a pedestal and positioned itself as a company with morals that believes in organising the world's information freely and for the good of all. Microsoft and Yahoo! have never done that. They are just businesses.

"Each company has had to play by the Chinese government's rules for the last few years and I am sure they were not to each company's taste or easy to comply with - but it was harder for Google to keep doing so while trying to maintain its morals. Google's increasingly likely exit from China does open up an opportunity for Microsoft and Yahoo! to win some share.

"I would be surprised if either company sacrificed the chance to exploit a huge developing market - especially when they are both losing the search war so badly to Google in the other major markets."

Whether Google's market share would necessarily end up in the hands of its Western competitors is open to debate, as Chinese search engine Baidu still holds the dominant position and 60 per cent of the market. It remains to be seen where Google's 30 per cent share will end up if the company decides to withdraw from China.


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