Google confident it can weather US recession

Eric Schmidt, chairman and CEO of Google, takes in the view after announcing that his company is greatly increasing its investment in Australia in a press conference at the Sydney Opera House yesterday. Schmidt said he believed that Google was well placed to survive the current economic turmoil. PHOTO: AFP

Google Inc's position as the most popular Internet search site and sales from fast-growing Asian markets such as China will help the company weather any US recession, chief executive officer Eric Schmidt said.

"One of the very good sources for Google is the very rapid growth in Asia," Schmidt said on Monday at a briefing in Beijing.

Historically, people tend to shift their money to the most "highly measured" advertiser when there are "economic difficulties," he said.

Google, which generates about half its sales outside the US, said operations overseas, including China, are "well positioned" to cope with a US slowdown.

Google's shares have fallen 39 percent this year, after climbing 50 percent last year, amid concern the world's largest economy is in recession.

"The Chinese online advertising market is one of the best places to be," said Elinor Leung (梁向奕), an analyst at CLSA Ltd in Hong Kong. "Even if the US slows, China is still going to see quite strong economic growth."

Leung has a "buy" rating on Baidu.com Inc (百度), China's biggest search site.

Web search sales for China, which Google said on Monday overtook the US as the biggest online market by users, may almost double to 5 billion yuan (US$706 million) this year and climb to 22.1 billion yuan by 2012, researcher BDA China Ltd projected.

Schmidt declined to provide figures for Google's sales growth in Asia or China. The company probably generated 501 million yuan from China last year, Credit Suisse estimated, or less than 1 percent of revenue.

Google's local investments and partnerships with Chinese Web sites have failed to help it close the twofold market-share lead Baidu has in the nation.

Baidu expanded its market share to 60 percent in the fourth quarter from 58 percent a year earlier, while Google's rose to 26 percent from 17 percent, researcher Analysys International said.

Google's decision in 2006 to introduce a local search site that excludes information prohibited by China's government has drawn criticism from US lawmakers and human rights groups such as Amnesty International.

Access to the company's YouTube video-sharing site has been blocked in China since at least Saturday, after Tibet's biggest protest in almost 20 years began last week.

Searches on the Google.cn site for "Tibet" direct users to tourism Web sites, while similar queries on the international site, Google.com, offer links to the Web site of the Dalai Lama, Tibet's spiritual leader.

"We made a decision some years ago that it was more important to give whatever information we could to the citizens of China while observing the realities of local laws," Schmidt said, when asked whether the inaccessibility of YouTube in China was linked to the protests in Tibet.

The company is "working to ensure" the service is restored as soon as possible, Marsha Wang, a spokeswoman in Beijing for Google, said in an e-mail.