The Importance of Information Channels for Cross-Border M&A: An Analysis of Google's Arrival and Departure in China

Abstract

In recent years, Chinese-listed companies have increasingly pursued mergers and acquisitions (M&A) both domestically and internationally, facing challenges typical of emerging economies such as market inefficiencies and information asymmetry. The lack of robust information channels for cross-border deals has led investors and bidding firms to rely heavily on diverse resources to bridge information gaps. The sudden entry or withdrawal of key information channels, particularly search engines, significantly impacts the information landscape. Prior to 2006, Baidu dominated the Chinese internet search market but had limited reach beyond China. Google's entry in 2006 disrupted this landscape, capturing over 40% of the market share by 2009 before abruptly exiting in 2010. The reliance on Google for international information made its departure particularly impactful. Analyzing Google's entrance and exit from mainland China in the context of M&A highlights the role of information asymmetry and institutional structures, especially pronounced in cross-border deals where Baidu's limitations compared to Google's international reach became apparent.

Keywords: M&A, Google, Information Channels