Google's Greater China president steps down

BEIJING Mon Jul 15, 2013 6:45pm IST

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The Google offices are seen near the city centre in Dublin July 8, 2013.

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BEIJING (Reuters) - Google Inc (GOOG.O) said on Monday that its vice-president and Greater China president, Liu Yun, has stepped down to pursue other opportunities.

His replacement will be Scott Beaumont, who currently runs the company's partnerships business in Europe.

Google's share of the search engine market in China has been slipping, spurred by its decision to no longer censor its searches on the mainland and move its servers to Hong Kong in March 2010, just months after Liu took over.

Google held 8 percent of market in terms of page views in June 2011, coming second to Baidu (BIDU.O) with 81 percent, according to Chinese data firm CNZZ. Its share has fallen 6 percentage points over two years according to last month's data, dropping to fifth place. New entrant Qihoo 360 (QIHU.N) already holds 15 percent of market share.

"Once they made the decision to move their servers out of mainland China their prospects here dimmed considerably," said Mark Natkin, managing director of Marbridge Consulting, a China technology research firm.

Google's Android operating system has also proven difficult to monetise, despite its success in terms of take-up in China.

For the three months ending in April this year 69 percent of all smartphones sales were on the Android system. Phones using Apple's (AAPL.O) iOS, Android's closest competitor, made up 25 percent of sales in the same period, according to data from Kantar, a market research group.

The ways the company usually monetises Android, like its app store, often get stripped out of the software in China when it is remade for the local market, said Natkin.

The prevalence of Android in China drew the ire of its political system in a March report by the state-controlled think tank China Academy of Telecommunications Research, which operates under the Ministry of Industry and Information Technology.

The report said that Google had too much control over China's smartphone sector, which had become dependent on Android, and had discriminated against certain local firms.

The paper suggested that the government would throw its full support behind a viable domestic challenger to Google.

"Google's biggest challenge remains how to penetrate China," said Elinor Leung, Hong Kong-based head of Asia telecom and internet research at CLSA.

"Their servers have been moved to Hong Kong and their Android operating system has been localised," she said, adding that Liu's departure and the arrival of Beaumont would likely have little impact.

(Reporting by Paul Carsten in Beijing; Editing by Louise Heavens)

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