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Google in cloud talks in China: sources

DIFFICULT MARKET:One analyst said it would be ‘incredibly tough’ for the tech giant to gain ground in the world’s second-largest market, which is dominated by local firms

Bloomberg

Google wants to get back into China and is laying the groundwork for a key part of the initiative: bringing its cloud business to the world’s second-largest economy.

The Internet giant is in talks with Tencent Holdings Ltd (騰訊), Inspur Group Ltd (浪潮集團) and other Chinese companies to offer Google cloud services in China, said people familiar with the discussions, who asked not to be identified discussing private matters.

The talks began early this year and Google narrowed partnership candidates to three firms in late March, one of the people said, adding that trade tensions between China and the US now loom over the effort.

It was unclear if the plans would proceed, the person said.

The objective is to run Google Internet-based services — such as Drive and Docs — via the domestic data centers and servers of Chinese providers, similar to the way other US cloud companies access that market.

In most of the rest of the world, Google Cloud rents computing power and storage over the Internet, and sells a collection of workplace productivity apps called G Suite that are run on its own data centers.

China requires digital information to be stored in the country and Google has no data centers in the country, so it needs partnerships with local players.

Google Cloud chief Diane Greene last week said that she wants the business to “be a global cloud,” but declined to comment specifically about China.

Still, it is seeking a Shanghai-based business development manager for its cloud business. The job posting lists “experience in, and knowledge of, the Chinese market” as a preferred qualification.

A tie-up with large Chinese tech firms, like Tencent and Inspur, a major cloud and server provider, would also give Google powerful allies as it attempts a broader return to China, where it pulled its search engine in 2010 over censorship concerns.

After years of slowly rebuilding a presence in China, Google has pressed the accelerator recently. It has been building a cloud data center region in Hong Kong this year and opened an artificial intelligence research center in Beijing in January.

Along with other Alphabet Inc units, it has begun investing more in Chinese companies.

Plans for a censored mobile search app in China surfaced earlier this week, sparking a furious debate about whether Google is putting profit over its mission to “organize the world’s information and make it universally available.”

China is the second-largest cloud market, but local companies dominate, making it difficult for outsiders like Google, Synergy Research Group said.

“You can never say never, but that is an incredibly tough proposition,” Synergy analyst John Dinsdale said.

A June report from Synergy ranked Google fourth in the Asian cloud market, behind Amazon.com Inc, Alibaba Group Holding Ltd (阿里巴巴) and Microsoft Corp.

In January, Google struck a patent-sharing deal with Tencent. The agreement came with an understanding that the two companies would team up on developing future technologies.

Tencent operates its own cloud service and is building an ecosystem of partners that includes Cisco Systems Inc, Nvidia Corp and Deloitte Touche Tohmatsu Ltd, Tencent’s Web site showed.

It already offers a cloud service called the Tencent Kubernetes Engine that is based on a popular Google technology by the same name.

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