Google in China: Redux

In mid-January Google Inc. (NASDAQ:GOOG) first revealed that it may shut down its Google.cn search engine due to censorship from the Chinese government. In March, Google settled on re-directing search requests to Google.hk, where the company no longer had to censor the results, but left that dirty chore to the government’s highly suspicious firewall.

China’s home-grown search leader, Baidu, Inc. (NASDAQ:BIDU), controls more than 60% of the search market in China, compared with about 30% for Google. That figure hasn’t changed much in the past two months since Google started re-directing traffic to Hong Kong.

The government’s response to Google’s ploy was subdued to the point of being invisible. Google’s servers in both China and Hong Kong were not shut down or interfered with in any way. But that may be about to change.

Google’s license to operate as an Internet Content Provider under Chinese law expires tomorrow. According to the company’s official blog, “it’s clear from conversations we have had with Chinese government officials that they find the redirect unacceptable—and that if we continue redirecting users our Internet Content Provider license will not be renewed (it’s up for renewal on June 30). Without an ICP license, we can’t operate a commercial website like Google.cn—so Google would effectively go dark in China.”

Google is trying to keep its license by stopping the automatic re-direction to the Hong Kong servers, instead displaying a link on the Google.cn landing page pointing to the Hong Kong servers. Somehow, it seems unlikely that the Chinese government is going to accept that one extra mouse-click meets the licensing requirements.

Google’s only leverage, it seems, is its commitment to keeping its R&D operations in China going. If the company’s license is denied, Google would very likely close its Chinese operations altogether. The government probably does not want to see that happen. Having a high-profile R&D site in China is a feather in the government’s cap and it might forgive a multitude of sins to keep that feather intact.

Still, none of this is new. The situation differs only slightly from January in that Google is still trying to stake out a position on the high moral ground. Even if Google’s license is renewed, and the company doesn’t censor results, the government still does with Google’s full knowledge. Sure Google’s hands are cleaner, but there’s still dirt under its fingernails.

Paul Ausick