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CNBC

By Jordan Novet
In its bid to compete with Amazon Web Services, Google has opened data centres in four countries outside the U.S. this year and has plans to launch in five more before 2019.
But one big market is not on the list: China.
Google’s absence, which stems from a long-standing feud with the world’s second-biggest economy, is costing the company business and making it harder to challenge AWS and Microsoft Azure in the rapidly expanding cloud infrastructure market.
Earlier this year, one of Google’s marquee cloud clients, Snap, cited the service’s unavailability in China as a reason that it may not be able to enter the market. Days later, Snap disclosed a deal with AWS, which opened a region of data centres in Beijing in 2014.
Snap didn’t say if China played into the AWS deal, but it’s clear that Alphabet’s cloud business is missing out on one of the biggest areas of growth in tech.
China’s market for cloud infrastructure and software will more than quadruple by 2021 to US$9.8 billion from US$2.4 billion last year, according to IDC. To build a presence there, AWS partnered with a local company, Beijing Sinnet Technology, as did Microsoft, which teamed up with 21Vianet for data centres in Beijing and Shanghai. Internet data center licenses in China can’t be granted to foreign companies.
The market leader, according to Gartner, is Chinese e-commerce giant Alibaba , which said last week that its cloud revenue for the latest quarter almost doubled to US$359 million. Chinese internet companies Baidu and Tencent also have cloud offerings.
Without a physical presence in China, Google is at a major disadvantage in trying to serve emerging businesses that are turning to the cloud for computing, storage and a growing number of applications and features. Its closest data centres are in Taiwan and Singapore.
AWS, meanwhile, is in the process of setting up a second Chinese region — in Ningxia — as well as opening a Hong Kong region.
Google already has a big gap to close. According to Synergy Research, Google is fourth in global cloud infrastructure with five per cent of the market, trailing AWS, Azure and IBM . With such a small presence, Google has plenty of places it can grow and is opening cloud locations in countries including India and Brazil.
“Google today is in so few countries — they have a lot of other fish to go fry,” said Lydia Leong, an analyst at Gartner, in an interview.

Google previously explored opening a data centre in Hong Kong, but in 2013 the company told the Wall Street Journal that it altered its plans. Google executives have told partners that the company would like to set up a China-based cloud service “eventually,” tech website The Information reported in January.
Google didn’t answer several questions about its strategy for China, and offered only the following statement by e-mail: “No plans to bring Google Cloud to China.”
To understand why Google is a no-show in the Chinese cloud market, you have to rewind the clock to 2010.
That year, Google made a radical change in its operations in China, breaking with the country’s practices of censoring internet content. Google shut down the local service, redirecting visitors from Google.cn (the mainland site) to the uncensored Google.com.hk in Hong Kong. When the Chinese government objected, Google put up a landing page telling users to navigate to the Hong Kong site.
‘Have to cooperate’
“We heard about Google’s plan of returning to China but so far there is not any clear message,” said Richard Zhao, a senior research manager at IDC and an expert in China’s IT market. If they’re going to open, “they have to cooperate with local partners to run public cloud services,” he said.
It seems unlikely that Google Cloud would make a big push in China without the prospect of core services like search and Google Maps going live there as well.
But in recent months, under the leadership of Diane Greene, Google’s cloud business has shown a heightened level of autonomy. It was Greene who announced in June that Google would stop scanning Gmail users’ emails to personalise ads. And in the first half of 2017, Alphabet’s biggest growth in headcount was in cloud.
Ruth Porat, Google’s finance chief, told analysts that the cloud growth is “consistent with the priority we place on this business.”
Clearly, that priority has yet to reach China.
Read the original article at CNBC


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No cloud business in China means Google lags behind Amazon

Diane Greene, Sr. Vice President for Google's Cloud businesses. Photo: Google

Photo: CNBC

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Google’s acrimonious history with China is creating a challenge for the company’s cloud business


Google

Amazon

No cloud business in China means Google lags behind Amazon

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Google’s acrimonious history with China is creating a challenge for the company’s cloud business

Google’s acrimonious history with China is creating a challenge for the company’s cloud business