Google’s li­cense re­newed in China

U.S. search gi­ant’s con­ces­sion on web­site redi­rec­tion enough to keep com­pany in busi­ness

Austin American-Statesman - - BUSINESS - By Joe McDon­ald

BEI­JING — China re­newed Google Inc.’s li­cense to op­er­ate a web­site, pre­serv­ing the search gi­ant’s toe­hold in the world’s most pop­u­lous coun­try af­ter the com­pany gave up an at­tempt to cir­cum­vent Bei­jing’s cen­sor­ship prac­tices.

Google said Fri­day that Chi­nese of­fi­cials had ap­proved its In­ter­net con­tent provider, or ICP, li­cense but gave no de­tails of what ser­vices it would of­fer.

Re­newal had been in ques­tion af­ter Google be­gan au­to­mat­i­cally redi­rect­ing users in China to an un­cen­sored Hong Kong search site. But the com­pany dis­man­tled the vir­tual bridge to Hong Kong last week af­ter reg­u­la­tors ob­jected to the sleight of hand and threat­ened to re­voke its In­ter­net li­cense.

Users are still only a sin­gle step away from the Hong Kong ser­vice. They can click any­where on the page to go to Hong Kong, a sub­tle change that could still be enough to per­suade main­land Chi­nese to use a com­pet­ing search site in­stead.

And though main­land users can get un­cen­sored Google re­sults from Hong Kong for even con­tro­ver­sial topics, users will not al­ways be able to click through the links be­cause of govern­ment fil­ters.

“We are very pleased that the govern­ment has re­newed our ICP li­cense, and we look for­ward to con­tin­u­ing to pro­vide Web search and lo­cal prod­ucts to our users in China,” Google’s top lawyer, David Drum­mond, said in a state­ment.

The com­pany’s one-sen­tence state­ment pro­vided no ad­di­tional in­for­ma­tion. Google spokes­woman Court­ney Hohne said de­tails on what ser­vices Google will of­fer in China will be re­leased in com­ing weeks.

There was no im­me­di­ate state­ment on the web­site of China’s In­ter­net reg­u­la­tor, the Min­istry of In­dus­try and In­for­ma­tion Technology.

In Jan­uary, af­ter Google had traced hack-

ing attacks to China, the com­pany said it no longer wanted to com­ply with that coun­try’s rules re­quir­ing it to cen­sor search re­sults. The an­nounce­ment em­bar­rassed Chi­nese lead­ers, prompt­ing ques­tions about whether they might pun­ish the com­pany by shut­ting it out of China, where Google has a lu­cra­tive ad­ver­tis­ing busi­ness and a fledg­ling mo­bile phone op­er­a­tion.

In March, Google shut down its main­land China-based site, which had ex­cluded from its re­sults sites that could not be reached from China. It redi­rected users to the un­cen­sored Hong Kong site in­stead. To keep its li­cense, Google stopped the au­to­matic redi­rec­tion.

Google opted not to leave China com­pletely so it could pur­sue its com­mer­cial am­bi­tions: a mu­sic ser­vice; its mo­bile phone busi­ness, in­clud­ing its An­droid op­er­at­ing soft­ware; a Bei­jing devel­op­ment cen­ter; and a di­vi­sion to sell ads for the Chi­nese-lan­guage ver­sion of its U.S. search en­gine.

Los­ing the China li­cense would have been a sig­nif­i­cant set­back for Google, even though China will only ac­count for an es­ti­mated $250 mil­lion to $600 mil­lion of the com­pany’s pro­jected $28 bil­lion in rev­enue this year. China al­ready has nearly 400 mil­lion Web users, a fig­ure that is ex­pected to rise for years to come.

For Bei­jing, the re­newal qui­ets a high­pro­file dis­pute at a time when Amer­i­can and Euro­pean busi­nesses are com­plain­ing about un­fair treat­ment by China’s govern­ment.

“Ba­si­cally, this was a smart move on the part of the Chi­nese govern­ment to kind of defuse the sit­u­a­tion,” said Paul Den­linger, an In­ter­net con­sul­tant for startup com­pa­nies, adding that the fric­tion be­tween Google and China will wane tem­po­rar­ily but not dis­ap­pear.

Bei­jing en­cour­ages In­ter­net use for busi­ness and ed­u­ca­tional pur­poses but tries to block ma­te­rial deemed sub­ver­sive or porno­graphic. Govern­ment task forces monitor for­eign web­sites and use a sys­tem that routes traf­fic through a hand­ful of state-con­trolled gate­ways to shut off ac­cess to those run by dis­si­dents or hu­man rights and Ti­bet ac­tivists. China has rou­tinely blocked parts of Google’s ser­vice such as YouTube.

The li­cense re­newal leaves Google in China but with its com­mer­cial fu­ture un­clear. In­dus­try an­a­lysts say that with­out a China-based search func­tion, users will de­fect to lo­cal ri­val Baidu Inc., and ad­ver­tis­ers try­ing to reach a main­land

‘They were play­ing a game of chicken, It seemed like Google was try­ing to get pushed out rather than leave on their own.’

T.R. HaRRingTon Chief ex­ec­u­tive of Dar­win Mar­ket­ing

in Shang­hai

au­di­ence won’t use the Hong Kong site. Un­like in the United States, Google is not the dom­i­nant player in China, with some 30 per­cent of the search mar­ket to Baidu’s 60 per­cent.

Moun­tain View, Calif.-based Google opened its China site in 2006 to at­tract more Chi­nese users af­ter govern­ment fil­ters slowed their ac­cess to its main U.S. site,

Google’s ef­forts to win re­newal ap­peared to be late and not very en­er­getic, said T.R. Harrington, chief ex­ec­u­tive of Shang­hai-based Dar­win Mar­ket­ing. He said the new home page put up late last month ap­peared very rough com­pared with other Google sites.

“They were play­ing a game of chicken,” Harrington said. “It seemed like Google was try­ing to get pushed out rather than leave on their own.”

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