Google Inc. Makes First China Investment Since 2010 Pullout

20 Oct 2015 | Author: | No comments yet »

Google Makes First China Investment Since 2010 Pullout.

Google Inc. is making its first direct investment in a Chinese startup, an artificial-intelligence developer, since mostly quitting the country in 2010 over censorship concerns. Google has reportedly taken a minority stake in Mobvoi, a Beijing startup that develops Chinese-language speech recognition technology for mobile devices. The investment, first reported by the Financial Times, shows ongoing interest by Google GOOG -2.87% in artificial intelligence technologies, particularly speech recognition, natural language processing, and of course, search. Mobvoi works on artificial intelligence (AI) voice-controlled software, like that used in Google’s Android products for mobile search, and also develops hardware like smart watches. Mobvoi, which jointly announced the investment today (Oct. 20) with Google, is a Beijing-based startup founded by former Google employees Zhifei Li and Mike Lei.

The Google-led Series C fundraising values Mobvoi at US$300mil (RM1.28bil), with the startup maintaining a controlling stake, said co-founder Li Yuanyuan in a telephone interview. In 2014, a growth equity arm of the corporation called Google Capital invested in InnoLight Technology Corp., a Suzhou-based company that makes high-speed data transmission hardware. “Mobvoi is very excited to welcome Google as an investor as both companies share a long-term view on technologies,” Li Zhifei, a company co-founder and former Google employee, said in a statement without specifying the amount that the Mountain View, California-based company is investing. In 2010, Google said it wouldn’t self-censor content for Chinese services, and then shut its local search page and directed users to its Hong Kong website.

The deal, not Google’s first in China but one of few, comes as the company seeks to re-establish itself in the world’s largest Internet market by population of users. The startup struck a partnership with Google earlier this year to provide search and speech recognition for Android Wear, the Google operating system for wearable devices. Because services like its search, e-mail and mapping are blocked in China, the US firm is trying to cement partnerships with domestic providers like Mobvoi, which offers technology similar to Apple Inc’s Siri and Google’s own version. While China’s government now blocks Google’s Gmail, search services and YouTube, the company’s Android software runs most of the country’s biggest-selling smartphones. Mobvoi, founded by two ex-Google employees who worked in translation and voice search at the California campus, will use the money to strengthen its artificial intelligence development, explore smart car technologies and hire more people.

Although Google has maintained an engineering and sales presence in China, it largely withdrew its services out of China five years ago after refusing to continue self-censoring search results. The investment in Mobvoi indicates that it might also try to reach Chinese consumers with AI and voice search—which would pit it directly against Baidu, the dominant search engine in China.

CEO Sundar Pichai has made no secret that he wants to get back into China, with his bet riding on Google Play, the app store for its Android mobile operating system, despite it currently being borderline inaccessible in China. Meanwhile, Baidu, Alibaba, and Tencent—China’s trifecta for internet business in search, e-commerce, and social, respectively—have each been funneling money into foreign startups over the past two years.

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