Regulator provides directions for Google and Microsoft

Updated: 2011-07-09 09:15

By Chen Limin (China Daily)

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BEIJING - China's industry regulator will not shut down online mapping services provided by Google Inc and Microsoft Corp, the State Bureau of Surveying and Mapping said on Friday.

The remarks - the first time the regulator has firmly denied that it intended to close the companies' online mapping services - has banished concerns that Google may have to cancel its service in China, which has been losing market share.

"We will not investigate or shut down the websites that have submitted their applications and are under examination," the State Bureau of Surveying and Mapping said in an e-mailed reply to queries from China Daily. It added that it has received applications to provide services from the Chinese divisions of Google and Microsoft.

Companies have to obtain a license from the bureau to provide online mapping services in China. The bureau said earlier that it began closing down unqualified websites, and those that have failed to apply for a license, from July 1.

Many observers saw this as a threat to Google, which has yet to receive a license for its mapping business.

The bureau's remark send out a good signal to the US search engine, said analysts.

"It's just a matter of when it will get the license, not whether it will," said Yan Xiaojia from the domestic research company, Analysys International. A change in the bureau's requirements hinted at this, he added.

Previous regulations stipulated that in order to provide online mapping services, a foreign company had to form a joint venture with a Chinese counterpart, with the domestic company owning a controlling stake. However, this requirement was changed in June, when it was decided that the Chinese enterprise did not have to control the company.

Yan said the regulatory change is good news for companies such as Google China, a 50-50 enterprise.

A spokesperson for Google China, Marsha Wang, declined to comment on the issue, but reiterated the company's earlier response: "We're in discussions with the government about how we can offer a mapping product in China."

However, an increasing number of Google's corporate users, such as travel and transport information websites, have already turned to its competitors.

Sohu.com Inc said "thousands" of websites have used its online mapping service in the month or so that the data has been available, and that many of those sites had previously used Google's service.

According to Analysys International, Google leads the market in terms of mobile map applications for individual users. Meanwhile, 80 percent of corporate customers made use of the US company's data last year.

Analysts said that although the company has a lead in the market, it may lose more customers before it obtains a license.

The US search engine has seen its position in China weaken since it redirected its mainland traffic to Hong Kong last year. Its share of the market reached its high point in the fourth quarter of 2009, when it stood at 35.9 percent. At the same time, Google's rival Baidu Inc registered 58.8 percent