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Harvard Case - Google: Should "Dragonfly" Fly?

"Google: Should "Dragonfly" Fly?" Harvard business case study is written by Veena Keshav Pailwar. It deals with the challenges in the field of Strategy. The case study is 10 page(s) long and it was first published on : Sep 12, 2019

At Fern Fort University, we recommend that Google proceed with caution regarding the launch of "Dragonfly" in China. While the potential market opportunity is significant, the ethical and political risks associated with censorship and data privacy are substantial. Google should prioritize a phased approach that focuses on building trust with the Chinese government and users while ensuring compliance with local regulations. This approach should involve strategic partnerships, product customization, and transparency to mitigate potential risks and foster a sustainable presence in the Chinese market.

2. Background

This case study examines Google's dilemma regarding the launch of 'Dragonfly,' a censored search engine designed specifically for the Chinese market. The project sparked internal debate and public scrutiny due to its potential implications for freedom of expression, user privacy, and Google's core values.

The main protagonists are:

  • Sundar Pichai: Google's CEO, who must navigate the complex ethical and business considerations surrounding Dragonfly.
  • Google's employees: Many employees expressed concern about the project's potential impact on Google's values and reputation.
  • The Chinese government: The Chinese government requires censorship and data localization, posing significant challenges for Google's operations.
  • Chinese users: The potential user base in China is vast, but users may be wary of a censored search engine.

3. Analysis of the Case Study

This case study can be analyzed using several frameworks:

1. Porter's Five Forces:

  • Threat of New Entrants: High, as local Chinese companies are already well-established in the search market.
  • Bargaining Power of Buyers: High, as users have numerous alternatives and can easily switch between search engines.
  • Bargaining Power of Suppliers: Low, as Google relies on technology and infrastructure that is readily available.
  • Threat of Substitutes: High, as alternative search engines and information sources are readily accessible.
  • Competitive Rivalry: High, as the Chinese search market is dominated by Baidu and other local players.

2. SWOT Analysis:

Strengths:

  • Brand recognition: Google has a strong global brand and a reputation for innovation.
  • Technology and infrastructure: Google possesses advanced technology and infrastructure for search and data management.
  • Global reach: Google has a vast user base and experience operating in diverse markets.

Weaknesses:

  • Ethical concerns: Censorship and data privacy issues raise concerns about Google's values and reputation.
  • Lack of local expertise: Google may lack deep understanding of the Chinese market and its specific needs.
  • Potential for backlash: Public backlash and negative press could damage Google's brand image.

Opportunities:

  • Large market potential: China represents a significant market opportunity for search and advertising services.
  • Growth in mobile internet: The Chinese mobile internet market is rapidly expanding, offering new avenues for growth.
  • Potential for innovation: The Chinese market presents opportunities for Google to develop new products and services tailored to local needs.

Threats:

  • Government regulations: The Chinese government's strict censorship and data localization policies pose significant challenges.
  • Competition from local players: Baidu and other local companies are well-established and have strong market share.
  • Geopolitical tensions: Political tensions between the US and China could create an unfavorable environment for Google's operations.

3. Value Chain Analysis:

Google's value chain in China would need to be adapted to comply with local regulations and address the specific needs of Chinese users. This would involve:

  • Inbound logistics: Sourcing and managing data and technology infrastructure in compliance with local regulations.
  • Operations: Developing and maintaining a censored search engine that complies with Chinese censorship requirements.
  • Outbound logistics: Distributing search results and advertising services to Chinese users.
  • Marketing and sales: Adapting marketing strategies to reach Chinese users and build trust.
  • Service: Providing customer support and addressing user inquiries in the Chinese language.

4. Recommendations

Google should adopt a phased approach to entering the Chinese market with 'Dragonfly.' This approach should prioritize building trust with the Chinese government and users while ensuring compliance with local regulations.

Phase 1: Strategic Partnerships and Product Customization

  • Partner with local companies: Collaborate with Chinese technology companies to gain access to local expertise and resources.
  • Customize 'Dragonfly' for the Chinese market: Tailor the search engine to meet the specific needs and preferences of Chinese users.
  • Focus on specific verticals: Begin with niche markets like education, healthcare, or e-commerce, where censorship concerns may be less pronounced.

Phase 2: Transparency and User Engagement

  • Be transparent about censorship practices: Explain to users how 'Dragonfly' operates and why certain content is blocked.
  • Engage with users and address concerns: Actively listen to user feedback and address concerns about censorship and data privacy.
  • Develop a robust user privacy policy: Clearly outline how user data is collected, used, and protected.

Phase 3: Gradual Expansion and Market Penetration

  • Gradually expand 'Dragonfly's' reach: Expand into new markets and verticals as trust and user acceptance grow.
  • Monitor user behavior and feedback: Continuously analyze user data and feedback to improve the search engine's performance and user experience.
  • Invest in research and development: Continuously innovate and develop new features and functionalities to enhance 'Dragonfly's' capabilities.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  • Core competencies and consistency with mission: Google's core competency lies in search technology and innovation. While entering the Chinese market requires adaptation, the core principles of providing relevant and reliable information should be maintained.
  • External customers and internal clients: The recommendations address the concerns of both external customers (Chinese users) and internal clients (Google employees) by prioritizing transparency, user engagement, and ethical considerations.
  • Competitors: The recommendations acknowledge the competitive landscape in China and emphasize the need for strategic partnerships and product customization to differentiate 'Dragonfly' from local competitors.
  • Attractiveness: While the Chinese market presents significant opportunities, the risks associated with censorship and data privacy need to be carefully considered. The phased approach allows for a gradual and measured entry, mitigating risks and maximizing potential returns.

6. Conclusion

Google's decision to launch 'Dragonfly' in China presents a complex ethical and business challenge. By adopting a phased approach that prioritizes trust, transparency, and user engagement, Google can navigate the complex regulatory environment and potentially establish a sustainable presence in the Chinese market while remaining true to its core values.

7. Discussion

Alternative options include:

  • Abandoning 'Dragonfly' entirely: This would avoid the ethical and political risks but also forgo the potential market opportunity.
  • Launching 'Dragonfly' without any modifications: This would be a risky approach, potentially leading to public backlash and regulatory scrutiny.

Key risks and assumptions:

  • Government regulations may change: The Chinese government's policies regarding censorship and data privacy could change, impacting Google's operations.
  • User acceptance may be limited: Chinese users may be hesitant to use a censored search engine, limiting 'Dragonfly's' adoption.
  • Competition may intensify: Local competitors could respond aggressively to Google's entry, making it difficult to gain market share.

8. Next Steps

Google should take the following steps to implement these recommendations:

  • Form a dedicated team: Assemble a team of experts in China, technology, and ethics to oversee the 'Dragonfly' project.
  • Conduct thorough due diligence: Conduct a comprehensive assessment of the Chinese market, regulatory environment, and potential risks.
  • Develop a detailed implementation plan: Define clear milestones, timelines, and metrics for each phase of the project.
  • Engage with stakeholders: Communicate openly with employees, users, and government officials to build trust and address concerns.

By carefully considering the ethical and business implications of 'Dragonfly,' Google can navigate the complex landscape of the Chinese market and potentially achieve both commercial success and social responsibility.

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Case Description

In 2018, China was the biggest market for Internet services in the world. Along with the country's huge market size, its comparatively low penetration made it an immensely attractive market for search engine services. To capture this market, Google was planning to re-enter the Chinese market-after leaving in 2010-with a censored search engine codenamed "Dragonfly." The move was opposed by human rights activists, Google's own employees, and the U.S. government. Google had the opportunity to improve its share in the global search-engine segment if it could somehow tap into the vast Chinese market. But the tight control over Internet services by the Chinese government on one hand, and the protests by various interest groups on the other, had put Google in a tight spot. Google had to decide if it should go ahead with the plan to offer Dragonfly in China. Should Google instead explore other market and non-market strategies to re-enter the Chinese market?

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