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Market Entry Strategies Case Studies » Google's Orkut in Brazil: What's So Social About It?
Social network advertising is forecasted to reach $3.6 billion by 2011. There are a number of companies cashing in on this trend. Google, the biggest search engine company, launched its social networking site Orkut in 2004. The site was not successful in the US. However, became immensely popular in Latin America, particularly Brazil, where almost 70% of Internet users were Orkut users. Soon, Google was plagued by allegations that Orkut communities of neo-Nazis, anti-socials and racists were being formed. It was being used to spread child pornography, paedophilia and for Internet trafficking. Google was asked to hand over user data to Brazilian authorities for identifying the perpetrators. Google refused to do so. As a result, criminal charges were filed against Google's head of Brazilian operations and a fine was levied on Google for each day of non-compliance. Google eventually cooperated with the authorities. Its woes however did not end here. When Google introduced advertising on Orkut, there were reports that ads were appearing alongside illegal content. With no way to monetise Orkut and the never-ending controversies, will Google be tempted to cut its losses and shut down Orkut in Brazil? This case study talks about the growth of social networking sites, particularly on Orkut's operations in Brazil. The issue of whether user information should be shared with the legal authorities forms the core of the discussion. Should Internet companies hand over user data when demanded? Does their compliance mean breach of user trust? If they refuse, termination of services is likely, then how do companies achieve the goal of wealth maximisation? How can Internet companies best combine the interests of their users, advertisers and authorities, while ensuring that revenues keep flowing in?

Pedagogical Objectives

The case is structured to let the students analyse and understand:

  • The characteristics of social networking sites and the reasons behind their popularity
  • Importance of scrutinising a country before offering a product there
  • Social networking sites' dilemma - whether to share user information with the legal authorities or refuse and risk getting shut down?
 
AUTHOR(S) Shanul, Muthu Kumar
INDUSTRY Internet Search & Navigation Services
AVAILABLE AT www.ibscdc.org www.ecch.com
REFERENCE NO. MES0090
YEAR OF PUBLICATION 2008
TEACHING NOTE Available
STRUCTURED ASSIGNMENT Available
KEYWORDS
Google; Baidu.com; China's Search Engine Market; Business Model; Globalisation and Localisation; CAGE Frame Work; Alliance Strategies; Acquisitions and Partnerships; Chinese Google; Government Business Environment; Internet Censorship; Online Advertising; Market Entry Strategies Case Study; International Business; Legal Environment and Regulations
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