Chinese company says they are bringing Google Cloud to China then swiftly denies the news

Sep 5, 2018

Capital Online (首都在线), a China-based cloud solution provider, announced in an official WeChat article published on September 4 that Google Cloud had confirmed its cooperation with the company to enter China. However, the company soon withdrew the announcement without reason.

According to the article, the two parties had secured the partnership already in August. Local business and finance media National Business Daily reached out to Capital Online and was informed that the content of the article was untrue (in Chinese). A spokesperson also told the reporter that the company is now investigating why the withdrawn article was published.

*Screenshot of Capital Online’s article on Google Cloud partnership. Image Credit: National Business Daily*

There is no confirmation on Google’s side either. A source close to Google that wished to stay anonymous told TechNode that Google Cloud and Capital Cloud do have a partnership but it involves license and cloud agency services abroad. The source agreed that the article contained false information.

Another source familiar with the matter said that Google Cloud does have an intention to enter the strictly monitored area, although there is no public information about any Chinese partners or unique localization plans.

This is not the first time Google’s cloud unit was rumored to enter China. On August 4, the unit was reportedly in talks with tech companies including Tencent and Inspur to expand regional business and acquire local political support. The Bloomberg report quoted an insider saying that Google Cloud began talks in early 2018 and narrowed the number of potential candidates to three firms in March. Aside from Tencent and Inspur, there is still one potential company whose name is unknown.

Interestingly, according to Capital Online’s official statement (in Chinese) and Chinese stock trading system’s record, the company announced to suspend all trading starting from December 20, 2017 and promised to resume trading no later than September 14, 2018. The company, also known as CDS Global Cloud, is listed in China’s over-the-counter system, the National Equities Exchange and Quotations (NEEQ).

The company declared that the decision was made due to certain corporate actions that need policy guidance, plan discussion, or uncertainty evaluation, or other events that would make the company feel necessary to suspend trading. However, even though Capital Online is apparently discussing some big plans internally, the date in 2017 doesn’t match the “early 2018” timeline given by the Bloomberg source. Since Capital Online is a listed company, any formal talks would have to be reported.

Though Google’s intention to return to China seems strong, there is still a long way to go. While Google Search will see extremely high barriers to re-enter China due to local rules, other tech services and infrastructure such as Google Cloud may find a path to the market relatively easier.

“Coming back to China wouldn’t be easy,” Lee Kaifu, former president of Google China and current CEO of Sinovation Ventures, said to Bloomberg during this morning’s TV show. The conversation did not mention the Google Cloud and Capital Online’s alleged deal but suggested American tech giants collaborating with local partners who “know how to succeed” in local markets would help “follow regulations more precisely” and win Mainland businesses.