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Why Xiaomi Worries Google

Of all the Android smartphone manufacturers with global ambitions, Xiaomi stands out from the pack. Xiaomi’s founders say they run an “Internet company” that just happens to produce solid hardware at low prices.

Thus the company is a new kind of potential rival to Google. Over the years, the search and mobile giant has been “frenemies” with many phone manufacturers that use Google’s Android software to power their devices, chief among them Samsung Electronics. The South Korean hardware maker propelled Android while also challenging Google by trying to push users to its own revenue-generating services. That proved to be difficult for Samsung. Now, Xiaomi, which employs a growing number of former Googlers, is better positioned to challenge Google as it sells more phones outside of China, in untapped markets like India.

Several people at Google’s Android unit have told colleagues and outsiders that over time, Xiaomi is expected to present challenges by pushing phone customers to Xiaomi’s own Web services in ways that compete with Google’s apps. Such services could be app and game stores or enable people to search for and order goods and services from retailers. Xiaomi already offers such services within China, where Google mobile apps aren’t widely available or blocked outright, though Xiaomi’s non-hardware revenue is trivial for now. It aspires to offer such services globally.

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