Google has overlooked any competitive and moral qualms it has had with Qihoo because it’s really scared of Baidu.com, Inc. (NASDAQ:BIDU).
Taking a step back, Qihoo’s advances into creating a complete ecosystem are far from done. The company has outsourced its maps and its mobile operating system is far from encompassing. So any advances Qihoo may have in search may only be in search, not into other growth areas.
On the other hand, Baidu has outdoor and indoor maps, launched several smartphones, and released several versions of its mobile operating system. Recently, the company reached a huge milestone in December when it released its Lenovo Phone, which has a slick, Nexus-killing design and revamped Baidu Cloud operating system. In short, Google’s afraid that Baidu’s technological ecosystem may force the Mountain View giant to close its Chinese doors soon. But before it does, Google had to try something, even if that meant working with Qihoo.
Nonetheless, Google may be a profitable “menace”
If China is as terrible as Eric Schmidt thinks it is, then I’m surprised that Google would continue on its newfound immoral path. By essentially self-censoring itself, Google has abandoned would-be underground revolutionaries looking to plot the next anti-government demonstration. And by partnering with the “unfair” Qihoo, Google forfeits any credibility it has in wanting to “do good” in the world. Rather, Google seems to simply be looking out for the bottom line in China: Do anything to beat out Baidu — even if that means becoming a “menace.”
Of course, you can’t blame Google. It is a profit-seeking company, after all. And from an investment standpoint, it makes sense. Although Google’s Android platform is on about 90% of smartphones in China, that hasn’t translated well to increased revenue. By playing by China’s rules and gaining access to more search data through Qihoo, Google may be able to make itself a real player in the future. Maybe then, Google might remember its motto: “Don’t be evil.”
The article Why Google — Not Qihoo — Is a “Menace” in China originally appeared on Fool.com and is written by Kevin Chen.
Fool contributor Kevin Chen has no position in any stocks mentioned. You can follow him at @TMFKang or on Google+. The Motley Fool recommends Baidu and Google. The Motley Fool owns shares of Baidu and Google.
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