The World's Not So Flat After All - ' Linguistic Complexities '
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The company boasts of supporting more than 100 languages and, partly as a result, has recently been rated the top global Web site. But Google's reach in Russia—cofounder Sergey Brin's country of origin—was only 28 percent in 2006, versus 64 percent for the market leader in search services, Yandex, and 53 percent for Rambler, two local competitors that account for 91 percent of the Russian market for ads linked to Web searches. Google's problems reflect, in part, linguistic complexities: Russian nouns have three genders and up to six cases, verbs are very irregular, and the meaning of words can depend on their endings or the context. In addition, local competitors have adapted better to the local context by, for example, developing payment mechanisms through traditional banks to compensate for the dearth of credit cards and online payment infrastructure. And though Google has doubled its reach since 2003, this has required setting up a physical presence in Russia and hiring engineers there, underlining the continued importance of physical location.
Google's highly publicized travails with Chinese censors illustrate a different set of reasons that borders continue to matter: Governments have become more adept at creating closed national networks and enforcing local laws (aided, in part, by Internet geographic identification technologies that continue to improve). Nor is it just totalitarian governments that flex their muscles in such ways. Many experts view the success of the French government's 2000 effort to restrict sales of Nazi memorabilia by Yahoo! as the key legal precedent in this regard. And the intervention that has probably had the biggest economic impact is the U.S. government's 2006 ban on online gambling.
Business decisions cannot be made on either a country-by-country basis or on the one-size-fits-all-countries basis.
Reprinted by permission of Harvard Business School Press. Excerpted from Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter, Copyright © September 2007 (304 pages, $29.95); All Rights Reserved.
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