Competitive and Regulatory Environment of Google in China - Essay Example

? Introduction Google Inc is the leader in technology sector with virtual monopoly over the search engine services. Over the period of time, Google has also started to dominate other markets including mobile phones, online advertising, cloud services as well as the global mapping services. Due to diverse range of services offered by Google, it is also subject to regulations in different countries of the world where it operates. Its history in China specially has not been good as since beginning, Google was forced to comply with the regulations from the government in terms of censorship and other aspects. Its YouTube services were completely blocked in China besides other services such as Picasa, blogger etc were altered to suit the regulatory environment of the country. (LaFRANIERE, 2010) Though China has emerged as one of the leading economies with the world due to its openness of trade however, it still is a central economy. The resources are virtually under the control of government and due to ideological foundations of the country, Chinese government maintains strong control over internet, media and other channels of communication. The regulatory environment of the country therefore, sometimes, compels even firms like Google to comply with its regulations in order to operate in the region. Google has also been subject to the anti-trust laws because of its monopoly over the search engine market. EU and US governments are vigorously perusing this issue to decide the fate of Google in its primary segment of the market i.e. search engine services. This paper will discuss the development and implementation of corporate strategy which Google has adapted in regulated environment of China. It will also detailed out the linkages between the competition as well as regulation while at the same time discussing the same within the perspective of Porter analysis (five forces), Sun Tzu principles, organizational structure, industry segmentation structure, competition and value chain analysis. Competitive and Regulatory Environment of Google in China Google initially started as a search engine service offering internet searching services to the users without charging them anything. Initially, it competed against the search engine services of Yahoo Inc however, due to its superior design and technology; it soon surpassed all other search engine services and became the leading service provider in the world. Over the period of time, Google has diversified itself and started to offer other services like Google Maps, online video sharing service with the name of YouTube, social networking services with the name of Orkut besides offering other paid and free services. Google’s competitive strategy has remained focused on the growth achieved through constant acquisition of new and promising businesses. Over the period of time, Google has not only grew organically but it has also been able to make some strategic acquisitions which added variety to its services besides offering it an opportunity to compete on many fronts. Google is now also planning to launch its own operating system for PCs whereas its operating system for touch screen mobile phones and tablet PCs has already hit the market. In this segment of the market, Google is facing competition from Apple as well as Microsoft with both the companies having their own operating system for mobile platforms. Despite such diversification, Google still remains the most dominating player in the search engine services and has developed a virtual monopoly over this market. Google’s primary market was US at the start of its services however, due to expansion of its services across the globe and very nature of internet services, Google has been subjected to different regulatory environments. In a competitive environment where competition is multi-faceted, it is critical for Google to comply with the regulatory requirements while at the same time, ensuring that it remains competitive against its major competitors. (Crofts, 2009) Since external environment affects an organization and subsequently its strategies, therefore Google too, in order to enter into Chinese market, modified its strategy to work in this market. Due to strict censor requirements, Google had to filter its content on its search engine services while it was not able to offer YouTube Services to its Chinese users. It is however, important to note that Google subsequently stopped filtering its services and also faced planned attacks on its site. Google accused Chinese government for such intrusion into its services and also threatened to go in Court against the Chinese Government. Google also did not allow its Chinese employees to have an access to its production code which was available to all of its employees in different locations of the world. (THOMPSON, 2006) It is also important to note that Google is also subject to investigation from the Federal Trade Commission in US for monopolizing the search engine market. It is argued that due to very nature and size of Google’s business, it may be subjected to frequent regulatory requirements. The success of Google and its business model, based on offering free services, is built around the inherent promise that it may explode to the global monopoly due to its very nature. (Vise, 2005) Google’s current strategy to tackle the regulatory and competitive issues has been to take such issues head on. Google went on to threaten the Chinese government also to curtail its services in the region besides taking on the government in the court of law. Initially, Google apparently gave its node to the Chinese government however, later on as the issues started to become more complicated, Google and Chinese government started to engage themselves into legal and verbal battles. Google’s response to the actions taken by EU and US governments is however, relatively different. Google is subject to the investigation by the authorities in these countries for monopolizing the search engine market. This therefore outlines that Google may be further subject to the strict regulations in the backdrop of the anti-trust laws as Google as been subject to these regulations on more than just search engine market. Its project of digitalizing the books is also under scrutiny as the law makers are assessing the potential impact of the same on the market practices. (Manne & Wright, 2011) Recommendations The very nature of the economics of Google’s business as well as the industry structure, Google can afford to take on governments in legal battles. Since Google offers most of its services free of cost therefore buyers have no bargaining power available. Same is also the case with the suppliers whereas technological sophistication can create natural barriers to entry for the new entrants. Due to presence of the very few competitors, the overall competition therefore is relatively negligent. This suggests that Google can afford to take on the legal battle against the governments in terms of proving that most of its services are offered free of cost. It is also important to note that major source of revenue is advertising therefore Google can engage into an offensive strategy. Based on its industry segmentation and low cost of entry into the market, Google can actually take on the principle of striking the weak. (Tzu, 2007). This has been the practice of Google over the period of time because it has intentionally acquired smaller firms in order to reduce competition in different segments of the market. Since Google offers services which are virtual in nature therefore its overall value chain cycle is not complete in its traditional sense. Google therefore can engage into the offensive strategy and utilize its overall market strength and brand power to nullify or lessen the impact of regulations on its overall operations. Since these services are offered free of cost therefore Google can take advantage of this aspect of doing business in this industry. Bibliography Crofts, S. (2009). Going beyond Google: The Invisible Web in Learning and Teaching. Program: electronic library and information systems, , 43 (4), 449 - 451. LaFRANIERE, S. (2010, March 10). China Issues Warning to Major Partners of Google. Retrieved June 19, 2011, from New York Times: http://www.nytimes.com/2010/03/15/world/asia/15google.html Manne, G. A., & Wright, J. D. (2011). Google and the limits of antitrust: the case against the case against Google. Retrieved June 19, 2011, from findarticles.com: http://findarticles.com/p/articles/mi_go2782/is_1_34/ai_n56679493/pg_2/?tag=mantle_skin;content THOMPSON, C. (2006, April 03). Google's China Problem (and China's Google Problem) . Retrieved June 19, 2011, from New York Times: http://www.nytimes.com/2006/04/23/magazine/23google.html Tzu, S. (2007). The Art Of War. New York: Filiquarian . Vise, D. A. (2005). The Google Story. New York: Delacorte Press . Read More