ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Business deals

Google seeks better China relations via Tencent patent deal

Search for opportunities comes with risks as Beijing steps up Internet censorship

Google CEO Sundar Pichai attends the World Internet Conference in Wuzhen, China, on Dec. 3.   © Reuters

PALO ALTO, U.S./GUANGZHOU -- Alphabet's Google has reached a patent-sharing agreement with Chinese internet giant Tencent Holdings, a move seen as the U.S. search engine behemoth's attempt to mend soured relations with Beijing and regain a stronger presence in China's massive market.

The patent deal announced Thursday would help Google avoid direct competition with Tencent, which dominates China's social networking and games markets, as it pushes to expand operations in the country. Cross-licensing enjoys wide use among cutting-edge businesses looking to access each other's proprietary technology and reduce the risk of patent infringement.

Tencent and Google said they will share various products and technologies but have yet to reveal details. The pair also wish to cooperate on developing revolutionary technology, an indication that they might deepen their relationship in the future.

China has been forging ahead of the U.S. in technologies such as facial recognition and mobile payments while amassing ample artificial intelligence know-how. Google may be looking to tap Chinese technologies through the Tencent partnership to help it roll out services in China.

Tencent noted that the partnership will allow it to provide better products to customers worldwide. The internet giant likely hopes to accelerate product development for global expansion by complementing what it lacks through the sharing agreement with Google. Tencent's overseas sales ratio stands at just 5% today.

'Great Chinese Firewall'

Google launched its search engine service for China in 2000 but grew at odds with the country's government over censorship and other issues. The search engine became inaccessible to mainland users in 2010, marking the U.S. company's effective retreat from the market.

Yet China has proved too juicy for Google to ignore. The company has been working to repair relations with Beijing. Google CEO Sundar Pichai attended an internet-related conference hosted by the Chinese government last month.

China is gradually letting Google through its so-called Great Firewall, approving the use of the Google Translate app for smartphones last March. The U.S. information technology giant in December announced the creation of a Beijing-based AI research center.

But a real thaw in relations depends on Beijing, which tightened its grip on the internet even further in 2017. Many online services offered by Google and other foreign companies are blocked in China. A cybersecurity law that took effect in June forbids foreign companies from sending information they obtained through business activities in China outside the country. This has forced them to store data on servers inside the country.

China seems unlikely to open up extensively to Google and other foreign businesses given Beijing's goal of cultivating domestic information technology companies. Google will have to leverage its new partnership with Tencent to continue its dialogue with officials.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends June 30th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media