Google censored search app in China costs and benefits 


Market share struggles aside, launching a search app in China today would be less attractive from a financial viewpoint than it used to be.

Already, Google hasn’t had major success wooing advertisers for its display ads business in China — it’s a distant fourth behind Tencent, Alibaba, and Baidu, says James Lee, managing director of research at Mizuho Securities.

Not only would Google need to significantly increase its investment in its sales team, but it would be doing so for a business that’s becoming less important.

“The China search market has grown slowly over the past few years as users are moving to social media apps like Wechat,” Lee says.

Overall, search engine share of Chinese advertising dollars have been falling, as video and e-commerce ads increasingly dominate.

“Newsfeed has been cannibalizing search ads market share,” agrees Shawn Yang, China-based executive director of Blue Lotus Capital Advisors. In the second quarter of 2018, one-sixth of Baidu’s mobile traffic came from video, he says.

He estimates that if Google did launch in censored search in China, it could reach around 10 percent of Baidu’s search revenue. Baidu doesn’t break out its search revenue but Blue Lotus estimates that it’s 2018 yearly search revenue will be 61 billion Chinese yuan. By that estimate, Google would stand to make between $800 million and $1 billion at current numbers.

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