Google exiting mainland China
Search giant attempts compromise in censorship battleSAN FRANCISCO -- Google stopped censoring the Internet for China by shifting its search engine off the mainland Monday but said it will maintain other operations in the country. The maneuver attempts to balance Google's disdain for China's Internet rules with the company's desire to profit from an explosively growing market.
Google's decision comes after an impasse pitting the world's most powerful Internet company against the government of the world's most populous country. But it's not clear Google has resolved the standoff that began Jan. 12. That's when Google said it would no longer adhere to China's requirement that it keep some Internet results out of its citizens' view.
Visitors to Google's old service for China, Google.cn, are now being redirected to the Chinese-language service based in Hong Kong, where Google does not censor the search results. The Hong Kong page heralded the shift Monday with this announcement: "Welcome to Google Search in China's new home." The site also began displaying search results in the simplified Chinese characters that are used in mainland China.
However, the results can't all be accessed inside China, because government filters restrict the links that can be clicked by mainland audiences.
Google plans to keep its engineering and sales offices in China so it can keep a technological toehold in the country and continue to sell ads for the Chinese-language version of its search engine in the U.S. The company, based in Mountain View, Calif., also intends to keep its mapping and music services on Google.cn.
But the revolt against censorship threatens to crimp Google's growth, particularly if China retaliates by making it more difficult for the company to do business in the country. The Chinese government could react by blocking access to Google's services, much as it has completely shut off Facebook, Twitter and YouTube, which is owned by Google.
In a way, Monday's change harks back to how Google operated in China before 2006. Back then Chinese users could search through Google sites such as Google.com, although filters inside China kept people there from clicking through to links generated by queries such as "Tiananmen Square massacre."
Google tried to better reach Web users in China by setting up Google.cn, whose results would be tailored for them. That meant complying with rules requiring the omission of search results the government deemed subversive or pornographic. Google's pages for China noted that some results had been excluded. But the complicity sparked criticism by Google supporters, including some of its own employees, who believed the company was violating its "Don't Be Evil" motto.
On Jan. 12, the search company vowed to shake loose from government-imposed restraints on the Internet. It said it was no longer comfortable playing by the rules after it determined that Google and more than 20 other U.S. companies had been targeted in computer hacking attacks originating from China. The attackers also tried to pry into the e-mail of human rights activists, according to Google. That raised the specter that the Chinese government played a role in the espionage, although Google never made a direct accusation.
Even so, Google had hoped to persuade China to let it run a search engine that could deliver unrestricted results. Failing that, Google wanted to find enough common ground to maintain its research center and sales team in the country.
It's unclear whether Google's attempt to skirt China's censorship rules by using Hong Kong as a back door will provoke more acrimony. China's Ministry of Industry and Information Technology did not issue an immediate comment early Tuesday in Beijing.
"Figuring out how to make good on our promise to stop censoring search on Google.cn has been hard," David Drummond, Google's top lawyer, wrote in a Monday blog posting. "We want as many people in the world as possible to have access to our services, including users in mainland China, yet the Chinese government has been crystal clear throughout our discussions that self-censorship is a non-negotiable legal requirement."
Drummond said Google might pull some of its sales force out of China if the government blocks access to the Hong Kong search engine entirely. About 700 of Google's 20,000 employees are in China.
"We very much hope that the Chinese government respects our decision, though we are well aware that it could at any time block access to our services," Drummond wrote. Google said he was unavailable to elaborate.
Although Hong Kong is part of China, the former British colony was granted a degree of autonomy when it returned to Chinese rule 13 years ago. Its legal and political freedoms were largely preserved. That has made Hong Kong an appealing home base for companies operating in mainland China, which has troubled Beijing, said Nicholas Bequelin, Human Rights Watch's senior Asia researcher.
"China may also read this as a challenge to its sovereignty of Hong Kong," Bequelin said. Google's move "is probably going to put the heat on the Hong Kong authorities, (whose) leadership is handpicked by Beijing."
The prospects for a truce have seemed remote at times because China's communist leaders did little to conceal their indignation at Google's defiance. Officials have said all companies must obey Chinese laws and accused Google of working with the U.S. government to undermine China.
A spokesman for the White House's National Security Council, Mike Hammer, expressed disappointment that Google and China weren't able to work out their differences.
"The U.S.-China relationship is mature enough to sustain differences and while we seek to expand cooperation on issues of mutual interest with China, we will candidly and frankly address areas of disagreement," Hammer said.
But many analysts believed China didn't want to lose Google completely, possibly because it might be interpreted as a setback in the government's efforts to foster innovation. Some Web surfers in China also fretted about the possible loss of Google, even going so far as to place flowers outside the company's offices.
For its part, Google wanted to stay in China so it could keep hiring computer programmers and peddling ads in the country. Google also believes its presence in China could lead to looser rules on censorship.
China accounted for a small fraction of Google's $24 billion in annual revenue. Analysts estimate Google brought in $250 million to $600 million from China. It's unclear how much of that amount flowed exclusively from Google.cn.
But investment analysts have worried about the long-term consequences of Google's actions in China. Opportunities there figure to grow faster than in the U.S. or Europe. Even if Google remained a distant second in search behind the homegrown Baidu.com Inc. in China, Google could still prosper as more Internet ads are served up in the country.
Google shares have slipped 5% since its Jan. 12 warning about a possible shutdown in China. The technology-driven Nasdaq index has climbed about 5% during the same span. Google shares fell slightly after the announcement and closed Monday at $557.50, down $2.50 for the day. Baidu's U.S. shares, which have soared about 50% since Google raised the possibility of leaving China, closed Monday at $579.72, up 1.8%.
China's financial promise is the main reason other technology companies, including Microsoft Corp., seem intent on staying there. If Google exited the country completely, Microsoft and other technology companies might have had an easier time recruiting China's best engineers.
The director of the China Internet Project at the University of California, Berkeley, applauded Google for its stand but predicted China will make it difficult for the company to continue doing business in China.
"The Chinese government will respond in their typically heavy-handed way," said Xiao Qiang, director of the project. "It's inevitable."