Google Relocates China Operations

(Caixin Online) Internet giant Google announced on early March 23 that it had stopped censoring its Web search and news services in China, and redirected its site Google.cn. to Hong Kong, escalating its two month dispute with the Chinese government over the operation in the country.

But Google said it would continue to host its maps and music search service on the mainland and intends to keep its sales and research operations there. Since midnight on March 22, users who visit Google.cn have found they are redirected to an uncensored Chinese-language version of Google.com.hk.

"We believe this new approach of providing uncensored search in simplified Chinese from Google.com.hk is a sensible solution to the challenges we've faced — it's entirely legal and will meaningfully increase access to information for people in China," Google's Chief Legal Officer David Drummond wrote in an official blog.

China's official Xinhua News Agency on March 23 quoted an official from the Internet Bureau of the State Council Information Office, as saying that Google had "violated its written promise which it made when it entered the Chinese market." The official criticized Google's decision to stop the Chinese government's censorship of the internet and said that suggestions that the Chinese government had any relationship to the hackings are "totally wrong."

The incident unfolded in mid-January when Drummond wrote a blog entry that the company was considering a pullout of China due to cyber attacks and challenges from government censorship. He said that Google had detected major cyber attacks originating from China which targeted Google and at least twenty other large foreign companies in a wide range of businesses. Google said it would talk with Chinese government about its operation in the country. The statement set off a roiling debate amongst market watchers and the Chinese public, as well as concerns in political level.

After Google's latest announcement, the U.S. government said it was "disappointed" that Google and China failed to reach a compromise. The official from the State Council Information Office told Xinhua, "We're uncompromisingly opposed to the politicization of commercial issues, and express our discontent and indignation to Google for its unreasonable accusations and conduct."

In terms of Google's current 600-person workforce in China, the company said their future will depend on how things play out. Bloomberg cited company spokeswoman Jessica Powell as saying that Google "can't rule out the possibility of lay-offs."

Google launched the simplified Chinese portal Google.cn under the supervision of the Chinese government in January 2006, however, Google's operation in China has since been frustrating. Tensions between the company and the Chinese government escalated last year when authorities accused Google of linking sites to pornography and as a result, started blocking Google China search results.

Google also struggled to gain search-market share with domestic rival Baidu Inc. According to market research company iResearch, in 2009, Baidu topped the market share at 63 percent, while Google ranked second at 33 percent. Deutsch Bank analyst said earlier that the Chinese operation only contribute about 1 percent in Google's global revenue.