Motorola drops Google search from phones in China
Motorola Inc., the handset maker that's rebuilding its mobile-phone business around Google Inc.'s Android software, has dropped the U.S. Internet company's search engine from one of its Android phones in China.
Motorola no longer includes Google's search engine in its Zhishang device shipped to China Telecom Corp., David Wolf, acting head of public relations for Asia at the Schaumburg-based handset maker, said in an e-mail today.
Google's decision to stop censoring its Chinese service has spurred speculation that advertisers may switch to rivals such as Baidu Inc., operator of China's biggest search engine. Motorola is adding Baidu as an option on Android phones sold in the country, and this month said Microsoft Corp.'s Bing search and maps service will come preloaded on its China phones.
"If you were partnering with Google in China, your business plans have just fallen apart," said Bertram Lai, head of research at CIMB-GK Securities in Hong Kong. "You need to scramble and find new partners."
Motorola rose 6 cents, or 1 percent, to $7.31 at 9:40 a.m. in New York Stock Exchange composite trading. Google added $6.88 to $564.21 on the Nasdaq Stock Market.
China Unicom (Hong Kong) Ltd. yesterday said it doesn't use Google search on its phones, after billionaire Li Ka-shing's Tom Online Inc. said it stopped using the U.S. firm's link on its portal. Unicom, China's second-biggest wireless carrier, only works with companies that abide by Chinese law, President Lu Yimin told reporters in Hong Kong yesterday. The Beijing-based operator is not working with Google currently, he said.
Chinese partners for Google's search operations need to review their business ties as the U.S. company's Internet service license in China needs to be renewed soon, said Fang Meiqin, research director at BDA China Ltd., a Beijing-based telecommunications industry consultant.
All Internet service providers in China must have their licenses reviewed by the Ministry of Industry and Information Technology in March, though the agency may extend the reviews for some companies into April, Shawn Zhao, Google's managing counsel for greater China, said last week.
Google said in January that it postponed to an unspecified date the sale of two handsets co-developed with Unicom, after the U.S. company said its stand on Internet censorship may lead to its exit from China. Lu denied Unicom was involved in the phones' development.
"Unicom has dropped Google from its handset plans because Google no longer operates within China," Lai, who rates Unicom shares "underperform," said. "It makes sense for them to make the decision immediately" to avoid the costs of reprogramming handsets to remove Google later, he said.
Mountain View, California-based Google, which has partnerships with China Mobile Ltd. and Sina Corp., said March 22 it began routing China-based subscribers to an unfiltered search service on its Hong Kong site, following through on a Jan. 12 statement to end self-censorship of its Google.cn portal.
Google's redirection of its search queries is effectively a pullout from China, reducing the appeal for advertisers, Steven Chang, the Shanghai-based chief executive officer for China at Zenith Optimedia, which buys ads from Google and Baidu on behalf of clients, said in an interview this week.
"If traffic at Google's Hong Kong site is not as good as the Chinese site, advertisers will switch," Elinor Leung, head of Internet research at CLSA Ltd., said this week. Chinese companies including Baidu, Tencent Holdings Ltd., and Sohu.com Inc. will benefit, she said.
Baidu, operator of the country's biggest search engine, rose 2.3 percent to $608.50 on the Nasdaq Stock Market yesterday, while Sohu dropped 1.9 percent.
Elaine Feng, executive vice-president at Tom Online, said the company only works with partners that are compliant with regulations. She said the Chinese Internet company ended its relationship with Google after the expiry of an agreement, without giving details on the timing.
Go Daddy's announcement came two days after Google said it stopped self-censorship. Christine Jones, executive vice president and general counsel of the Scottsdale, Arizona-based registrar, disclosed the company's change in policy at a hearing of a congressionally mandated commission yesterday in Washington.
Google teamed with China Mobile in January 2007 to offer mobile and Internet services in the world's most populous country. The U.S. firm also struck a partnership with Sina to provide search on China's third-most visited Web portal.
Rainie Lei, spokeswoman at China Mobile, didn't reply to e- mail and phone messages seeking comment. Cathy Peng, a spokeswoman at Sina declined to say if the company plans to retain its search agreement with Google.
Baidu, based in Beijing, accounted for 58.6 percent of China's online search market last quarter, compared with 35.6 percent for Google, according to research company Analysys International.