The Chinese government hasn't been so keen on Google (NASDAQ: GOOGL ) these days. The time, China has grown concerned that Android commands roughly two-thirds of the Chinese smartphone market. Last Friday, China's Ministry of Industry released a white paper saying how China has grown far too dependent on Android and how Google maintains too much control of the road map, despite it being open-source software. The white paper goes as far as to claim that Google discriminates against Chinese companies by delaying the sharing of codes and uses contracts to restrain the development of Chinese mobile devices. Given China's strong history of protectionism, it's easy to see how this could become a bit of a problem for Google in the world's largest smartphone market.
Google Chairman Eric Schmidt recently visited Bejing to speak in front of 3,000 developers in an area of the city that's known to locals as "Geek Park," which is more or less China's attempt at creating its own version of Silicon Valley. Schmidt's agenda was to persuade local Chinese developers to write applications for the Android platform and to educate them about Google's larger mobile strategy. Despite China's reservations about Google, the company clearly wants more Chinese developer support since developers could become Google's ticket to increased Chinese monetization.
Beneath the surface, there's a big motivator of why Google needs Chinese developers on its side. When the company abandoned its mainland Chinese search business in 2010, many Chinese smartphone OEMs ditched Google Search for Baidu as the default search engine on their Android devices. As a result, Google has been largely unable to capitalize on the fact that Android has been wildly popular in China since search remains Google's bread-and-butter business.
Although China represents a tremendous smartphone opportunity for Google, it remains hindered without the help of Google Search on its side. This challenge has forced Google to get creative by enlisting the help of Chinese developers to drive future monetization to the Android platform. Sure, it's a seemingly backdoor approach, which is fine and dandy, unless the Chinese government decides to proceed against Android. Given Google's history of bad breaks, I wouldn't be putting too much emphasis on Android's Chinese business prospects right now.
It's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.