Google made the decision public, via its China blog post, stating that it had to prioritize the development of its products, “The impact of this product is not as great as we expected, so we decided to shift resources to other products,” Yang Wenluo, Google China’s engineering research general manager, wrote on Google China’s blog
Regarding the staff working on the music site, Google Inc (NASDAQ:GOOG) stated that there will be no job cuts, as the affected staff will be assigned to work on other projects. As per the blog, companies streaming and legal MP3 downloads have been terminated, and users are asked to download their playlists by October 19th.
“We have decided to shut down our Google Inc (NASDAQ:GOOG) Music Search service in China … This is part of an ongoing effort across Google to bring greater focus to our portfolio of products,” said a Google spokesman in an emailed statement.
Google Inc (NASDAQ:GOOG) launched its China based music service in March 2009 with a local partner. The service was a legal music search competitor to Baidu.com, Inc. (NASDAQ:BIDU)’s popular music service. Google China partnered with brands, including Warner Music Group Corp. and EMI Group Ltd., to offer songs in return for a share in revenue from banner advertising that appeared, when Chinese Internet users searched for songs. But in early 2010, Google moved its Chinese site to Hong Kong, due to differences over censorship issues with Chinese authorities. Since then, Google’s search market share dwindled, and Baidu captured a large chunk of market share, and also launched a legal music search in a landmark deal with record labels. Baidu.com, Inc. (NASDAQ:BIDU) now controls roughly 80 percent of China’s Internet search market, while Google’s share has fallen to 15 percent from almost one-third of the market.
Despite setbacks, Google Inc (NASDAQ:GOOG) still has a significant presence in China, with its Android mobile operating software and its online advertising business, and is constantly looking for potential growth opportunities.