Alphabet is making moves to re-enter the China market, but at least one prominent expert thinks it's a lost cause.
Alphabet (GOOGL - Get Report) is testing a censored version of Google Search to launch in China, as first reported by The Intercept. Codenamed Dragonfly, the engine would deliver search results tailored to the specifications of government officials, and it's part of an effort by Google CEO Sundar Pichai to recapture the massive market. Google pulled its search engine from China in 2010 after tussling with Chinese regulators.
Speaking at TechCrunch Disrupt conference in San Francisco, venture capitalist Kai-Fu Lee said that re-entering China will be very difficult. "You're either acknowledging you did it the wrong way or not," he said.
Lee, a well-known AI expert who's previously held executive roles at Google, Apple (AAPL - Get Report) and Microsoft (MSFT - Get Report) , had praise for his former employer but warned that Internet companies going after the Chinese market will face a glass ceiling.
The reason? They're not needed, he suggested.
"China has bifurcated into a parallel universe...people aren't looking for another search engine or app store," Lee said. "I don't think American companies have a high chance of succeeding in this market."
In Alphabet's absence, Baidu (BIDU - Get Report) -- China's biggest search engine -- has exploded into a multinational giant with extensive reach across the Chinese internet sector. Other companies, such as Tencent (TCEHY) and Alibaba (BABA - Get Report) , have evolved into complex platforms comparable to U.S. counterparts like Facebook (FB - Get Report) , Amazon (AMZN - Get Report) and Alphabet.
Perhaps contrary to assumptions, the primary issue isn't Chinese state control over the internet, Lee said: "The fundamental issue isn't a government issue, it's a competition issue."
That competition was evident elsewhere at the conference, with Baidu showing off its AI initiatives as U.S. tech firms compete fiercely for talent, resources and eyeballs focused on how artificial intelligence will create value.
"For us, as a very strong AI company in China, we want to make sure that other folks in the U.S. know that we're an AI company as well," said Brian Mun, who works in business development at Baidu's Silicon Valley office.
One of Baidu's AI projects is called EZDL, an AI training system comparable to Google Cloud's AutoML platform. Both are software services aimed at small or medium businesses, and make it possible to build basic machine learning tools with little or no coding experience. Amazon and Microsoft have comparable services as well, and each are also competing for another finite resource -- developers.
"That's why you see companies like Google, Amazon or Apple cater to developers, and we follow a similar strategy," Mun added.
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