Google vs China

In this exercise we had to put ourselves in Google’s shoes in 2005 when the company was negotiating with China to gain a .cn domain.

There were three main issues for both parties: internet access, censorship and technology.

But first of all, why negotiate? In this case, negotiating allows Google to get a better reputation (and avoid what happened to Yahoo – it allowed China’s government to censor the search results in China and this angered Yahoo’s North American client base) and it allows China to gain technological knowledge that they will not have if they keep Baidu (Google has a powerful algorithm envied by its competitors).

In order be well prepared for the negotiation it is important to find out what are each other’s positions and interests. Interests are more difficult to figure out, and they might reveal themselves during the negotiation so it is necessary to adapt accordingly. After doing this, we need to define our priorities and our adversary’s priorities. Doing so allows us to know which one is less important and that we would be willing to trade or give up.


1) Internet Access

Google
→ Position: Get a .cn domain
→ Interest: Faster internet access to increase its number of users. This makes for more ad revenue and thus more profit

China
→ Position: Allow a .cn domain
→ Interest: Look open to foreign businesses. Get access to foreign technologies. Make the country look stronger.

2) Censorship

Google
→ Position: No censorship
→ Interest: Build trust with users, in order to increase client loyalty to the brand. Distinguish themselves (not be like Yahoo).

China
→ Position: For censorship
→ Interest: Maintain the government’s power (communist party). Remain independent politically, economically, diplomatically. Controlling the population (and media). China does not want to be “westernised”.

3) Technology

Google
→ Position: Okay to share, but it has reservations.
→ Interest: Being able to get more market share (China is a big and growing market). Ultimately, make more profit.

China
→ Position: Get that technology.
→ Interest: Curtail the brain drain (China’s great minds have moved to other countries, including the US).

In case negotiation fails, each party has other alternatives:
→ Google’s BATNA: Keep the .com domain or get more shares in Baidu (but Google will not be allowed to get more than a certain amount)
→ China’s BATNA: Continue with Baidu (knowing it will not have access to new technology).


Several outcomes are possible for this negotiation. The most likely to happen is Google will accept some censorship in exchange for a .cn domain, because China will stand its ground on that subject. Even if Google loses some users in the US in the aftermath of such a deal, like Yahoo did, it will gain a huge market that, more importantly, is growing.


In real life, Google did just that, but refused to offer some of its services (namely blogging and discussion services – to avoid people from being persecuted for speaking their minds). It also included the message “these results are censored by law” in its search results in order to make people aware they were not getting full information. However they did this without asking the government’s permission beforehand, so it was kicked out of the country. The Chinese government felt cheated, and afterwards refused access to other western websites. 

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