On Monday, Google stopped censoring Google Search, Google News and Google Images on Google.cn, according to a blog post from Chief Legal Officer David Drummond.
“Users visiting Google.cn are now being redirected to Google.com.hk, where we are offering uncensored search in simplified Chinese, specifically designed for users in mainland China and delivered via our servers in Hong Kong,” he wrote.
As expected, the Chinese government didn’t entertain allowing Google to continue operating an uncensored Google.cn. The Hong Kong work-around is “entirely legal,” he said.
Background: The Google-China Challenge: How It Came to This
“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 has set up a Web page where people can monitor the status of its services in China.
It’s highly unlikely that the Chinese government will look the other way and allow access to Google.cn, said Joseph Fewsmith, a Boston University professor or international relations and political science.
“I’m surprised Google thought there was room to negotiate on that [censorship] point,” Fewsmith said.
Google continues research and development work in China and maintains a sales team in the country. “All these decisions have been driven and implemented by our executives in the United States, and that none of our employees in China can, or should, be held responsible for them,” Drummond wrote.
On January 12, Google shocked the world when it announced that it would stop censoring results in its China search engine, Google.cn, because the company had been the victim of hacking attacks originating in China.
Through the attacks, hackers stole Google intellectual property and broke into the Gmail accounts of China human rights activists, the company said. At the time, Google said it would seek talks with the Chinese government over ways it could operate Google.cn legally without censoring, although experts said the chances of that happening were at best slim.
If no middle ground was reached, Google said it would be willing to close Google.cn and shutter its offices and operations in China, a drastic move considering China is one of the biggest and fastest growing Internet and telecommunications markets in the world.
Google has declined repeated requests in recent weeks to discuss its China impasse and it is not clear how much present and future revenue the company would forego by exiting China’s search market. Analysys International expects China’s search market to reach 10 billion yuan (US$1.46 billion) this year.
The impact on Google would be larger if it also stops providing online services like Gmail and Picasa, which it monetizes via online advertising, and its Android mobile operating system, which it licenses to mobile carriers, handset makers and PC vendors.
Some Chinese Receptive
However, in five to 10 years and in later decades, Google’s decision may yield great benefits, because it has likely endeared the search company to many young Chinese Internet users, said Ben Sargent, an analyst with Common Sense Advisory, a market research company.
“Google will sit on the sidelines for a while, and meanwhile they’ve made a big impression on the young Chinese,” he said.
While the reasons behind Google’s decision are varied and complex, and include concerns about espionage, piracy, and cyberattacks, Google is stressing the free speech and social justice angle, which likely resonates with the young, who are more likely to be free thinkers and Internet-savvy than previous generations, he said.
“Google has never gotten the traction in China that it has in most of the other markets. It’s not the dominant player and doesn’t own the market in China,” Sargent said.
“So, in the long term, if it wants to change the penetration rate and become a dominant player in China, it needs to win the hearts and minds of the next generation,” he added.
By adopting a long-term strategy, Google is ironically acting similarly to the way the Chinese approach matters.
“As a culture, China is much more long-term thinking than most other cultures. No other government takes such long-term views as the Chinese government,” Sargent said. “So Google is trying to out-Chinese the Chinese in terms of making a really long-term play for young people’s hearts and minds in China.”
“This is one of the most interesting business cases that I can remember in the last 10 years,” he added.
All along, Chinese government officials have said Google must comply with local laws if it wants to continue doing business in the country. They have also said China’s government has never been involved in any cyberattacks against Google or anyone else.
After initial, combative announcement on Jan. 12, Google officials, particularly CEO Erich Schmidt, have sounded more conciliatory regarding the matter.
“We wish to remain in China. We like the Chinese people, we like our Chinese employees, we like the business opportunities there,” Schmidt said during the company’s earnings conference call on Jan. 21. “We’d like to do that on somewhat different terms than we have, but we remain quite committed to being there.”
He also seemed to ease up on Google’s original certainty that the hacking originated in China, describing the attacks as “probably emanating from China with the origin details unknown” and adding that the matter was “still under investigation.”
After Jan. 12 and until now, Google continued to censor Google.cn, blocking results about topics the Chinese government finds politically sensitive, like the 1989 Tiananmen Square pro-democracy protests and Tibet’s exiled spiritual leader the Dalai Lama.
During the impasse, Google’s other operations in China have been largely unaffected, such as its Android mobile business. Despite the row between Google and the government, the country’s IT Ministry said the Android operating system wouldn’t be affected if it conforms to Chinese regulations. A variety of Chinese carriers and hardware makers, including China Unicom and Lenovo, moved forward with plans to market Android-based phones and laptops.
Market Constraints
However, there has been uncertainty regarding Google mobile applications and services, including its search engine, in Android devices in China. Google postponed their availability after its January 12 announcement.
Google is a distant second in China’s search engine usage behind leader Baidu. Last year, Google fielded almost 19 percent of China residents’ queries to Baidu’s 76 percent, according to iResearch. Compared with 2008, Google’s share dropped 1.8 percentage points, while Baidu increased its share by 2.8 points.
Still, Google fared much better than Yahoo China, which is controlled by China’s Alibaba Group and had a 0.3 percent share, and Microsoft, whose Bing search engine had a 0.4 percent share of queries, according to iResearch.
Baidu finished 2009 with total revenue of 4.45 billion yuan and net income of almost 1.5 billion yuan, up about 40 percent in each case.
According to its government’s official figures, China had 384 million Internet users at the end of 2009, making it the country with the largest Internet population.
In addition to requiring censoring of search results, the Chinese government also blocks access to social media sites like Google’s YouTube, Facebook and Twitter, monitors individuals’ e-mail accounts and patrols Web sites for politically-sensitive or pornographic content. China makes no apology for the way it regulates Internet content and activities, saying its policies are geared towards preventing social ills, such as subversion and unrest.
(Owen Fletcher in Beijing contributed to this article. IDG, the parent company of IDG News Service, is an investor in Baidu.)