Net value judgements

Reaction to Google’s move into China highlights the challenges faced by global brands when entering new markets – particularly how to manage their image, an issue that rival Microsoft is all too conscious of. Perhaps it’s time Google returned to marketing basics. By Nathalie Kilby

Google is experiencing a backlash as never before. The launch of its new service in China last week prompted accusations of hypocrisy and kowtowing to a repressive political regime. The clamour was perhaps made louder because Google’s stated objective is to facilitate access to information for all, and its informal company motto is “Don’t be evil”.

In the same week, Microsoft founder and chairman Bill Gates donated $600m (&£337m) to help tackle tuberculosis across the globe, and his company rolled out a $120bn (&£67m) a year campaign highlighting its role in development projects worldwide (MW last week). According to a company spokesman, the campaign is intended to dispel the negative image that for some observers goes hand-in-hand with Microsoft’s status as a US-based corporate giant. This marketing push begs the question/ can companies that wield such global commercial might as Google and Microsoft really be all things to all men?

In the past, both companies have been accused of using “bullying tactics”. Google was criticised for scrapping agency commission across Europe (MW November 10, 2005) and using “confused” pricing structures. Microsoft, meanwhile, was fined &£340m two years ago by the European Commission (EC) for failing to comply with anti-trust laws; last week it agreed to allow rivals partial access to source codes behind its Windows operating system. It is a move that still might not be enough for the EC, which last month threatened to fine the company further. The secrecy over its operating system has provoked criticism from all quarters, and is an issue that won’t die quickly.

This disaffection has not gone unnoticed. Microsoft may have a monopoly in the PC software market, but it is being forced to release its grip by government bodies and user action. Clearly, the company sees a need to shine a positive light on itself. A source who previously worked on Microsoft’s advertising account states: “It is obsessive about its public image, deeply concerned about how it is perceived.

“It does charity work, but has always liked to talk about it. I’m not sure people care how much money it ploughs into charity, as the sum pales into insignificance compared to its earnings.”

This last point is rebuffed by Interbrand director of brand valuation Nick Liddell: “It is unfair to think of Microsoft’s efforts in those terms. Microsoft is the second-most valuable brand in the world, after Coca-Cola. It has been to court over some policies, but you can’t blame it for wanting to communicate its good deeds.”

He thinks, however, that criticism levelled at Google is fair: “With its motto, it was dealing in absolutes. That’s fine if you can live up to them. It is destabilising for the brand when you can’t.”

Rob Forshaw, strategic partner at agency Grand Union and previously account manager on Nike at Wieden & Kennedy, agrees: “In terms of credibility Google has undermined and compromised its brand.”

One brand conscious of consumers’ perceptions of how it operates online is AOL. Its UK-only “Discuss” campaign, created by Grey and rolled out in January, addresses issues such as censorship and freedom of speech. AOL UK senior communications manager Phil Hale explains that while AOL is not imposing its own view, it feels it is important to address concerns surrounding the Net. He notes: “The campaign has generated a huge response: a quarter of a million unique visitors to the Discuss site already. It’s a reflection of the strength of feeling about what is and is not available online.”

FREEDOM OF INFORMATION?

On the issue of censorship, Hale says AOL is keen to preserve freedoms on the Net, but that it works to “protect the vulnerable”. He adds: “We will block access to certain sites such as paedophile sites, while if someone were to say search for suicide sites – a controversial topic – the top of our search listings would direct people to where they might find help, for instance The Samaritans.”

AOL does not operate in China, but Yahoo! and MSN entered in 2004 and 2005 respectively, so Google is somewhat late to the party.

Both MSN and Yahoo! have come under fire for their decisions and subsequent actions in compliance with the Chinese government. They both censor results: MSN closed down reporter Zhao Jing’s blog, and Yahoo! handed details of another blogger to the authorities.

Google already had a toe in the market via a three per cent stake in Chinese search engine Baidu and was operating a Chinese-language Google.com site. Google’s share of Chinese user searches last year rose to 26.9 per cent, from 22.4 per cent in 2004 (iResearch in Shanghai). Baidu.com is the market leader in China, with a share of 46.5 per cent, up from 33 per cent in 2004.

Google, Microsoft and Yahoo! want a slice of a rapidly growing market. There are over 100 million internet users in China, expected to rise to 187 million by 2007 (China Internet Network Information Center), while it is estimated that China’s search engine market will be worth 3bn yuan (&£207m) by 2007.

All three companies argue their presence will encourage freedom of speech and political change within China. Google says its decision is “right”, and Kate Burns, managing director of advertising sales for Google UK, adds: “While filtering search results is inconsistent with our mission and values, providing no information is also inconsistent.

“We have devoted considerable time and attention to identify an approach to China. Google.cn will comply with relevant laws and regulations, and international standards. We intend to disclose to users when information has been removed from their search results.”

Despite this stance, many detractors say Google is colluding with an “abhorrent political regime”. Yet others support the decision. Amanda Jones, head of i-level Search, says: “Obviously Google’s primary motivation is commercial – China is the fastest-growing economy, after all. But with US shareholders providing political clout, entering China will, in the long-term, drive economic change, and encourage more information sharing and freedom of speech.

“This has been a long time coming, so I am a little bewildered by the sudden outcry – Google has been trying to break through the great firewall of China for a couple of years.”

Commercial reality may have driven the decision at Google, but Interbrand’s Liddell is concerned it has “sacrificed longer-term goals for short-term success”. Forshaw says Google is unlikely to see much downturn in usage (the search engine itself predicts a fall of two per cent). But he warns that in an age of “citizen journalism” and blogging, individual perceptions of brands will become more important, especially as consumer-driven content on the Web increases.

REPUTATION IS EVEYTHING

Despite their powerful status, reputation is everything for Google and Microsoft. Google’s decision may have dented consumer trust, something that observers argue Microsoft never had. Although Google may be refusing to comply with US authorities’ demands to disclose information about users’ search terms, the seeming capitulation to China has undoubtedly had a negative effect on its image – despite Gates telling the World Economic Forum in Davos last week that “the internet is contributing to Chinese political engagement⦠access to the outside world is preventing more censorship.”

Burns says: “No matter how fast we expand, we remain true to our original commitment to organise the world’s information and make it universally accessible. One of the great things Google has done is to democratise information.”

But the company is no longer just two young men with idealist dreams. Shareholders matter, and commercial realities will dictate policy. Google has shied away from brand communication before, but the China crisis shows it needs to rethink its strategy and demonstrate to consumers what it really stands for.

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