Google totally wrong: Chinese govt

16:45, March 24, 2010      

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The Chinese government Tuesday criticized Google for being "totally wrong" by stopping censoring its Chinese-language search results, while reaffirming that the foreign investment environment will not be affected in China, a readymade reaction after two months of tension sparked by the search engine's pullout threat.

Surveys showed that the majority of China's Web users is not much affected by Google's decision to reroute searches to its Hong Kong-based site.

Analysts said Google's withdrawal shows that the Chinese government has successfully defended itseflf in an ideological battle, adding that the company's business is sure to suffer a blow.

Google's chief legal officer, David Drummond, made an announcement in a blog post at about 3 am Tuesday (Beijing time), saying that the company had stopped censoring its search services – Google Search, Google News and Google Images – on, and the company was redirecting Chinese mainland users to its uncensored site in Hong Kong.

The announcement came two months after Google's revelation of coordinated cyberattacks on the Gmail accounts of Chinese dissidents. The company said the attacks originated in China, without giving specific evidence.

Speculation of its threatened pullout lasted the past two months, with information ping-ponging back and forth.

Beijing reacted two hours after Google moved to cease censoring search results, accusing it of violating a written promise it made when it opened its Chinese search engine in 2006.

"This is totally wrong. We're uncompromisingly opposed to the politicization of commercial issues, and express our discontent and indignation to Google for its unreasonable accusations and conduct," an official in charge of the Internet Bureau of the State Council Information Office (SCIO) said in a statement carried by the official Xinhua News Agency.

The White House, which had backed Google in its dispute, expressed "disappointment" Tuesday that an American company felt compelled to take this step, noting that the White House was informed of it before the company made its announcement to the public.

Chinese foreign ministry spokesman Qin Gang said at a regular press conference Tuesday that the Google case would not affect China-US relations "unless someone politicizes the issue."

Jin Canrong, vice director of the School of International Studies at Renmin University of China, said the withdrawal was a profit-driven show, in which Google went after bigger business profits by closing its services on the Chinese mainland, which was not profitable, in exchange for boosting its reputation.

While Google is the world's top search engine, it held only an estimated 36 percent share of China's search market in 2009, compared with home-grown rival Baidu's 60 percent.

"The spat was also a display of an ideological clash between China and the West. China would not allow complete Internet openness, which is in line with the country's national policy. Google has little knowledge of and respect for China on that," Jin said.

Losers and winners

An online poll on showed that 74 percent of nearly 19,000 Web users believed Google's exit from the mainland search market will have no effect on their use of the Internet, 14 percent felt they would be partly affected, and 12 percent conceded they will be much affected.

CNN reported Tuesday that academics, researchers and business people, however, are more concerned because local Chinese search engines are less successful at international searches in English.

Lü Benfu, an expert on the Internet economy and deputy director of the Management Institute at the Chinese Academy of Social Sciences, said that, considering the interests of those users, Google's exit means a loss for all sides.

An opinion piece in PC World magazine said Tuesday that Google's decision ignored conventional wisdom, which holds that no company can afford to ignore, let alone walk away from, China, a market with more than 1 billion people.

In fact, Google stopped short of pulling out of China altogether, saying that it intended to continue research and development work in China and maintain a sales presence there. The company has 700 software engineers and sales staff at three locations in China.

The company hopes that many of its Web services can survive, including mobile phone and browser businesses. It also has a popular music search business and a version of Google Answers.

Wang Jinhong, a Google spokeswoman, told the Global Times that operations at the Beijing headquarters had been "normal" and the company had "no plans to shift its staff to Hong Kong at this stage."

Shen Dingli, director of the Center for American Studies at Fudan University, said Google's decision is only a stall tactic.

"The company might believe the ideological issue remains negotiable," Shen said. "That's why it doesn't completely pull out for now."

The Times said Tuesday that the compromise reflects the importance to the company of retaining a presence in the world's largest market of nearly 400 million Web users.

Analysts and investors, however, are not optimistic about Google's future performance in China, which represents an important growth opportunity for the company, while its growth slows in mature markets such as the US and Western Europe, and even though China generates only a small portion of Google's nearly $24 billion annual revenue.

"You sort of make China look like the bad guy and you think you're going to be selling Google phones? Good luck, we'll see how that goes," Colin Gillis, an analyst at BGC Financial, told Reuters.

Shares of Google, which have fallen more than 6 percent since it announced plans to stop censoring searches in China in January, closed Monday down $2.50 at $557.60. Shares of Baidu, which have soared more than 40 percent during the same timeframe, finished up $10.07 at $579.72.

Google's departure could "also give a chance to Microsoft, a perennial underdog in Internet search, to make inroads in the Chinese market. Microsoft's search engine, Bing, has a very small share of the market," The New York Times reported.

China will unwaveringly adhere to the opening-up principle and welcomes foreign companies' participation in the development of the Internet in the country, the SCIO official said, noting that foreign companies must abide by Chinese laws and regulations when they operate in China.

Source: Global Times
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