If Google (NSDQ: GOOG) follows through on its threat of pulling out of China, the company would be sacrificing significant long-term growth in the world’s biggest internet market. In the short term, however, the decision won’t have much impact on the company’s revenue. During an interview on CNBC, Chief Legal Officer David Drummond said Google’s revenues in China are “truly immaterial” — and even says, unbelievably, that his company’s entry into China “was never really a financial move for us.”
The term “material” is notoriously difficult to define. However, JP Morgan estimates that Google was set to make $600 million in revenue in China this year. That number seems excessive, considering that Baidu (NSDQ: BIDU) — which dominates the Chinese search market — is expected to bring in only $900 million in revenue. But even if JP Morgan’s estimate is correct, it only represents just over two percent of the $26 billion in revenue that most analysts expect Google to post this year.