Ballmer: no China exit for Microsoft's Bing

Let Google play politics

Microsoft is following Google into practically everything - except its threat to pull out of the Chinese search market.

Chief executive Steve Ballmer says Microsoft has no plans to pull MSN or Bing out of China while professing confusion over Google's claimed reason for its threat, Reuters reports.

Last week, Google said it might withdraw following highly targeted attacks that attempted to access the Gmail accounts Chinese human-rights activists. Google, Adobe, and at least 32 other large companies were targeted as part of the attack.

Ballmer is reported to have said "no" when asked whether Microsoft would also pull out of China.

"I don't understand how that helps anything. I don't understand how that helps us and I don't understand how that helps China," Ballmer told Reuters.

"There are attacks every day. I don't think there was anything unusual, so I don't understand...We're attacked every day from all parts of the world and I think everybody else is too. We didn't see anything out of the ordinary."

Microsoft is no stranger to hackers, either on its software like Windows, IIS, Internet Explorer, or Outlook - or its own web properties. It turned out that an already known vulnerability in the company's IE 6 was one of the channels used by hackers to launch their attacks on Google and others last week.

Ballmer is therefore correct in his assessment of the situation from a technology perspective. Simply withdrawing from the market that was the source of the attacks won't make the attackers go away. Hackers go where ever the internet is.

Some have suggested the attacks are being used as an excuse by Google to make an honorable exit from a market where - in a relative sense - it's struggling. The company doesn't enjoy the exalted top slot in China that it does elsewhere. It's a long way behind native search engine Baidu, though market share numbers differ depending on what research outfit you believe.

Google has just 14 per cent versus Baidu's 62 per cent, according to reports that cite stats-house comScore. Analysis International puts Baidu at 61 per cent and Google at 30 per cent.

While things are bad for Google, there are worse places to be than number two with double-digit market share in a market rich with opportunity. Arguments on withdrawal overlook the damaging impact an exit might have on Google's business: JP Morgan has estimated a potential loss of $600m in revenue for Google should it withdraw.

Worse is the potentially damaging impact an exit might have on Google's fortunes against Microsoft. The market share for Bing has been steadily growing since last June's launch, to hit 10.3 per cent in December according to comScore. That's just seven-and-a-half points behind Yahoo! while Google remains out in front.

Microsoft knows growth is important. It is reportedly preparing a Chinese-language version of Bing in June, to accelerate its expansion.

In December, the company told Reuters: "Microsoft is committed to the China market and the search market in China is the most important strategic market for Microsoft."

Like Google, Microsoft has also set up R&D operations in China to "get a deeper understanding of what Chinese users need to be able to deliver the best product to them."

The reasons for Google's statement on pulling out of China will be debated. Likely, it was a display of corporate politics from a US tech giant trying to flex its muscles to bring China's authorities into line by acting against such attacks and their sources in the future.

Microsoft, meanwhile, will leave Google to play politics and won't pull out of China. Far from it, Microsoft will keep on defending its sites and software against attack and persuading people to move off IE 6, while finding a way to work within the parameters of the authorities' rules on censorship. There's too much at stake not to, and an exit by Google will make it even more appealing to stay put. ®