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.