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Google comes to the Middle East
Perhaps it’s for the freedom of speech? As another tech giant eyes the region, Kipp takes a look at why the Middle East may appeal when China didn’t.
December 19, 2010 3:14 by Samuel Potter
The news that Google is planning new offices for the MENA region is accompanied in the National by images of the company’s funky offices in Washington. The article suggests that free food and table football tournaments will abound as one of the world’s favourite employers rolls into a town near you soon.
The reason behind Google’s move? Money, and lots of it. “Next year in the Middle East and North Africa, we hope to open between two to three offices,” said Carlo d’Asaro Biondo, Google’s vice president for southern and eastern Europe, the Middle East and Africa. “The advertising market in the Middle East is not huge … We believe in an acceleration of the growth of the advertising market online here,” he said. “The potential for growth should be twice the pace we see in Europe.” The article goes on to say that the digital ad market is growing by 30 to 40 percent a year over the past four to five years, and Google wants a slice of the action.
But how will Google handle the constraints on freedom of speech prevalent in the Middle East? After all, didn’t the company pull out of China because of a lack of freedoms? Well, no, as it turns out.
According to Forbes, Google’s decision to abandon censored search in China was about business rather than ethics. The company was displeased with a 31 percent market share after several years, given that its local rival Baidu owned 64 percent of the market. Apparently, Baidu understands the market better, but better than that its search technology was superior to Google’s in Mandarin. “No matter the global brand name, the maximized effort and the financial resources, Google’s Chinese search engine couldn’t trump Baidu,” writes Rebecca Fannin for Forbes.
The Financial Times recently agreed, after Millward Brown, a research affiliate, surveyed 35,000 Chinese consumers and found more brand bonding and perceptions of brand advantage for Baidu than for Google. Google still operates in China – the government said it renewed the company’s internet license after it agreed to allow regulators to supervise its content. But the company seems to have given up on breaking Baidu’s iron grip on the market.
Google plays down the role of censorship here in the Middle East. In July, the company said it would not be hindered by government-backed censorship in the region. “We tend to operate in a very, very competitive industry, so users are generally one click away from changing their preferences,” Ari Kesisoglu, manager for Google Middle East, said in a Bloomberg Television interview in Dubai. “We are not censoring our own information, and we’ve never been asked to.”
He distanced any comparisons with the China situation. “Whatever happened in China is completely exceptional and it doesn’t result in us making any decisions globally,” Kesisoglu said. But Jin Yoon, an analyst at Nomura Holdings Inc. in Hong Kong, pointed out the parallels to Bloomberg. “If you want to play ball in China or the Middle East or basically any other country outside, you’ve got to play by the local rules,” he said. “If you don’t play by the local rules, you essentially have to mark yourself out of the market.”
But Google is very much in the market, so it is clearly prepared to play by the rules. The bottom line is, censorship or not, the Middle East digital world may still be young enough for Google to take the market, and that’s why it will expand here. Yahoo made its move with the Maktoob purchase last year, and Google will be anxious not to fall too far behind.
Competition would make Google think twice, censorship will not.