Google’s new plan for China
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Google’s new plan for China

Google famously left China over seven years ago, amid a furor over internet censorship. Now, the search engine giant wants to re-enter the country – but not as a search engine. Instead, Google is pinning its hopes on artificial intelligence (AI). The company is pushing TensorFlow software to China, which makes it easier to build AI systems. This is a move that directly targets high-status Chinese decision makers outside the government: academics and big tech companies. Google’s parent Alphabet is also adding more people to its roster with the express aim of finding suitable AI investments within China’s borders.

Alphabet’s share price is up by 32% so far this year

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SOURCE: Yahoo Finance

Kai Fu Lee, the former head of Google’s operations in China prior to its 2010 exit from the market, says that data from Chinese internet surfing “can be used to advance products, especially those relating to artificial intelligence”. As such, it is no surprise Google wants back in – Lee continues “China is a tremendous opportunity for any company because it is by far the single largest homogenous market.”

It is worth noting that Asia has as many internet users as all other global regions combined. And China has the most internet users of any country (by a long shot) at 738,539,792. This is despite the fact that China has a relatively low (at 53%) internet penetration rate. In short: China has the most users online, and plenty of room to grow even bigger.

Google’s latest China initiative runs deeper than a simple product launch – it’s a grass roots attempt to become an integral part of the country’s internet scene. This suggests a long view over the country, and a willingness to do whatever needs to be done. As CEO Sundar Pichai said in a recent interview: “I’m committed to engaging more in China. We’ll thoughtfully figure out how to engage deeper, and I don’t know what the answers are.”

An attendee at Google’s TensorFlow event, Chinese web developer Jiang Jun, thinks that Google is putting profitability second in the country – and that’s a good thing. He told Bloomberg:

“Before this year, Google didn’t pay too much attention to doing activities in China because, although they know China has a large market size, they know they can’t do a lot of things because of the firewall. So when Google comes to China to introduce TensorFlow it is, in my opinion, more pure because it cannot get that much money. But all of us developers are always waiting for Google to come to China to introduce more TensorFlow technologies and products. Google’s cloud solutions are so cool and its tools are so convenient.”

Disclosure

Dominion holds Alphabet, the parent company of Google, in its Global Trends Managed Fund.


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