Google reveals stake in Chinese social Web Tianya
SHANGHAI (Reuters) - Google Inc (GOOG.O: Quote, Profile, Research) revealed on Monday that it had acquired a stake in Chinese community Web site Tianya.cn, indicating a foray by the global search leader into social networking in the world's second-largest Internet market.
Context & Ripple Effects
The stake disclosure caps a busy stretch for Google in China. In June 2007 the company won praise for winning a Chinese 'taste test' against domestic rivals, and the Tianya.cn equity position arrives alongside the confirmed launch of Wenda, a question-and-answers service powered by Google in cooperation with Tianya and built on the framework of Google's earlier efforts.
The move matters because search leadership alone has not translated into community lock-in for Google in the world's second-largest Internet market: rather than build its own forum from scratch, it is buying into one of China's established net communities and layering its own product on top.
First-order effects
- Google gains a ready-made user community in China overnight — Tianya's forums become both a distribution channel for Wenda and a hedge against Google's thin local social graph.
- Tianya gets Google technology and, implicitly, a deep-pocketed backer, at the cost of aligning a homegrown Chinese community site with a foreign platform.
Second-order effects
- Chinese community and Q&A sites that had treated forums as their own franchise now face a rival pairing Google's search traffic with Tianya's existing membership, forcing them to defend engagement rather than just content volume.
- A minority-stake-plus-cooperation template gives other foreign internet firms a cheaper entry route into China than outright acquisition, pressuring valuations for local sites with large registered-user bases.
Third-order effects
- If the pattern holds, foreign platforms entering China will favor embedded stakes in local operators over building standalone brands — a structure that leaves their fortunes tied to a partner they do not fully control.
- Equity positions in local communities also entangle global firms more deeply with Chinese regulators, since a stakeholder shares responsibility for what the community hosts.
The trend: Global internet companies are entering China's social-web market by taking stakes in established local communities rather than building their own audiences from zero.