Because the Chinese market is extremely large. Cutting them of will hurt them in the short term, yes, but it will also force the development and popularization of local alternatives, which will hurt Google very much in the long term - see their recent examples with CPU development and Huawei's own Playstore.
This is not aimed personally at you; i've always had a problem understanding why big companies need to dominate all the market? If i have a successful local business, it's not hurting me that others do as well. I don't need to expand all over the globe to be successful. What's wrong with google not operating in china? Why can't google flourish as it is without dominating the market? I think you get my point here so i won't give more examples. I never did understand why people and organizations want to accumulate extreme amounts of power and wealth either. Like the bad guys in many movies. Of course that would defeat the purpose of the movie, but i often found myself thinking that if they spent half of that energy to the betterment of them selves (and others), it would probably be a pretty sweet life.
> i've always had a problem understanding why big companies need to dominate all the market? If i have a successful local business, it's not hurting me that others do as well.
Well, in this case, Google would leave billions of dollars in revenue and hundreds of millions of users on the table. Not only would it hurt their bottomline, it would also hurt their products as they train on user data, which has quite strong network effects.
This is really a different scale than a local business. If you have that with a single owner, she/he might be content with what she has and choose not to expand further. Google, on the other hand, has multiple of layers of management which need to report to thousands of owners, quite a few of which expect constant growth. This is really not one person who can be content with the size; it's multiple people who get their salaries based on growth and report to thousands of investors, which, for the most part, care about increasing their shares value. Leaving so much money on the table just for the sake of it is a hard sell in this structure.
Stock prices are tied to valuation which is based on expectations of growth. If you lower you growth goals and therefore projections, then the valuation tanks and the stockholders value drops. Management and employees are motivated by equity in companies like Google and therefore rely heavily on growth potential.
