It’s hard to see exit from the Chinese market as maximizing Google’s profits. China is, after all, very large (though Chinese growth in searching is slow).
It may be that Google is being, at least in part, high-minded. After all, it’s motto is “Don’t be evil” & it is reported that Sergey Brin’s aversion to totalitarian states played a role here. Yet, it is not Google’s fiduciary duty to be high-minded: rather the organization must act in its shareholder’s interests.
But there are two points to be made in favour of Google’s China stance:
First, Google was getting clobbered in the Chinese market & so perhaps it is giving up less than one might think, & China wasn’t a significant part of its business anyway.
Second, Google makes its money by figuring out exactly what we’re interested in and then selling the ability to target ads aimed at us. For that to work well requires us to provide Google with a great deal of personal information, and we are all the more likely to do that if we trust Google.
Google, then, may have decided that fighting to protect our privacy, and to be seen to be doing so, might have immediate negative consequences for its bottom line, but might pay off in the long run. This seems to be born out by the latest detective work Google has undertaken to protect those who protest a Chinese mine in Vietnam.
Perhaps then, and only perhaps, a case can be made that Google’s China confrontation will bring sufficiently material long-term benefits to justify any short term costs.