Strategic growth often dictates that companies capture as much market share as possible. Yet, true strategic clarity sometimes requires abandoning a massive user base when the conditions of participation cross fundamental operational lines.

The Cost of Compliance

Wikipedia's current-events log for March 22, 2010, recorded that Google stopped censoring its search results in China, redirecting users to its Hong Kong site. The company announced that it stopped censoring its search services (Google Search, Google News, and Google Images) on Google.cn. Users visiting Google.cn were redirected to Google.com.hk. At that destination, the company offered uncensored search in simplified Chinese.

The New York Times reported that China was the world's largest Internet market, with nearly 400 million Web users. Google trailed its main Chinese rival, Baidu.com, which was modeled on Google. Google had a 33 percent market share to Baidu's 63 percent.

Defining Organizational Boundaries

Stepping back from the world's largest Internet market may be an unusual move for a publicly traded technology firm. Companies often aim for scale and may treat local rules as a cost of doing business. In general, redirecting users rather than closing a service outright might be read as a middle path.

Giving up the main local domain in such a large market may hand an advantage to local competitors, perhaps including a rival modeled on the departing company. When a business environment requires compromises that an organization is unwilling to make, the most decisive action may simply be to exit the immediate constraints of that environment, even at a steep competitive penalty.

Perhaps market share is worth less when the cost of holding it reaches the foundations of the business.

Sources

  • Decision Making
  • Systems Thinking

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