Google is finding a way around China’s Great Firewall by investing in its most promising start-ups

China’s fast growing online gaming sector seen as less politically sensitive and easier for Google to invest in

PUBLISHED : Friday, 05 January, 2018, 6:00pm
UPDATED : Friday, 05 January, 2018, 11:14pm

Google has invested in a Chinese live-streaming mobile game platform as it looks for alternative ways to tap into the mainland China market after being shut out for the past several years.

The US company led a US$120 million series D investment in Chushou, an online e-sports platform which lets users live-stream their mobile games. Google said in a statement that it will help the Chinese company expand its services and grow its base of overseas viewers.

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The investment is Google’s second in a Chinese start-up, as it seeks new paths into the country following its exit from the Chinese mainland in 2010. At the time, Google had clashed with Chinese government over censorship of search results and a cyberattack on users of its Gmail email service. China subsequently blocked Google’s services on the mainland.

“Being unable to operate the world’s most populous country is problematic for Google, and the investment in Chushou is somewhat akin to a comeback to the Chinese market that it left seven years ago,” said Neil Wang, the Greater China president of consultancy firm Frost and Sullivan.

By investing in Chushou, Google is also eyeing China’s US$24.4 billion gaming market, one of the fastest-growing industries on the mainland.

“With e-sports becoming a high-potential industry in China, Google sees an opportunity in this industry,” said IDC China managing director Kitty Fok.

Fok added that gaming is an industry that is less politically sensitive and easier for Google to invest in.

Google previously made a bid for US live-streaming gaming platform Twitch, but eventually lost out to Amazon, which offered US$970 million to acquire the company.

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Frank Lin, Google’s head of corporate development in North Asia, said Chushou has built an “impressive platform, with a dedicated and quickly growing base of content creators and consumers, and smart expansion plans”.

“Although Google doesn’t run its key search business directly in China, it still … has an interest in the Chinese market,” said Wang Xiaofeng, a senior analyst at market research firm Forrester.

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Google made its first mainland investment in Chinese artificial intelligence start-up Mobvoi in 2015, taking a minority stake in the firm.

In February last year, media reported that Google was in talks with NetEase, China’s second-largest operator of online games, to form a venture to launch Google’s app store in China.

In December Google’s parent Alphabet said it had opened a Google AI China Centre in Beijing, as it seeks to harness China’s growing artificial intelligence talent pool.