China Renews Google’s License
By DAVID BARBOZA and MIGUEL HELFT
Published: July 9, 2010
SHANGHAI — The tense standoff that began in January withGoogle’s unprecedented rebuke of China’s Internet censorship rules appeared to ease on Friday with a compromise that might allow both sides to claim a partial victory.
Google ended its standoff with the Chinese government by giving a link to uncensored search results rather than automatically redirecting users.
Bobby Yip/Reuters
Two office workers outside of Google’s head office in Beijing on Friday.
Google said that Beijing agreed to renew the company’s license to operate a Web site in mainland China, months after Google said it would stop censoring search results in China. Google’s challenge of Beijing’s authority, which followed a series of sophisticated online attacks which Google said originated in China, put into question Google’s ability to do any business in the world’s largest Internet market.
Google’s chief executive, Eric E. Schmidt, said Friday that the renewal “was the outcome we were hoping for.”
“We’ll keep doing what we’re doing, and they’ll keep doing what they’re doing,” he said Friday at the Allen & Company media conference in Sun Valley, Idaho.
The license, which China could revoke at any time, allows Google to keep its Web site, Google.cn, in China and continue operating some Internet services there. It also allows Google to continue referring users in China to its uncensored Hong Kong-based Chinese language search engine, atgoogle.com.hk.
Hong Kong, a former British colony that is now a special administrative region of China, is governed separately from the mainland. Under the current setup in mainland China, users can conduct a Google search and see the results, but often they cannot open the links because they are blocked by the Chinese government.
“This was an issue made to order for compromise,” said J. Stapleton Roy, director of the Kissinger Institute on China and the United States at the Woodrow Wilson International Center for Scholars. “It is good for China to have Google involved there, and it is good for Google to keep its footprint in China.”
The renewal of Google’s license came two weeks after the company was forced to change its approach of automatically sending Chinese search users to its Hong Kong-based site. Under threat from Beijing that its license would be denied, Google instead began displaying on Google.cn a link to the Hong Kong site that users could click to conduct searches.
Forcing users to take that extra step could cost Google market share in China, where it trails behind Baidu, the local search engine. But China experts said that the approach represents a pragmatic balancing of interests that lets both sides get some of what they want.
Xiao Qiang, director of the China Internet Project at the University of California, Berkeley, said that Google won because “they get their operating license. Chinese Internet users win because they can continue to access some Google services.”
But Mr. Xiao said the Chinese government also would win, because while it forced Google to move its search service out of China and barred it from automatically redirecting users to its uncensored Hong Kong-based search engine, it also got to show its own people and the outside world that it was willing to balance economic issues and censorship.
“It is unprecedented for a private company to challenge Chinese Internet censorship,” Mr. Xiao said. “In the past, there would have been no doubt that the Chinese government would have punished Google.” For the government, finding a way to keep Google in the country “is a very calculated position that is good for China’s long-term development and openness,” Mr. Xiao said.
While Google’s stand against Chinese government censorship earned Google the good will of free speech and human rights advocates, it also came at a cost.
The compromise will allow Google to keep some of its business in China, but its position there may be weakened. In addition to potentially losing search traffic, Google could be hurting its ambition to expand into China’s booming mobile phone business. Some phone makers and network operators are introducing phones powered by Google’s Android software in China, but they have stripped out Google’s mobile search service from the devices and replaced it with rivals like Baidu. Google, which makes its money placing ads linked to search results, could face a limited audience for mobile advertising.
Google said in January that it was not willing to continue cooperating with Chinese censors after the hacking attempts on its databases and the e-mail accounts of some users. The company said at the time that it might have to shut down its search engine in China if the government insisted that the company continue to strip material that officials consider offensive or politically volatile.
Many analysts were stunned by the moves and questioned whether Google was acting prudently in risking its spot in the world’s largest Internet market.
When the government insisted that Google continue to censor search results, the company tried to simply redirect users to the Hong Kong site. The change had little impact on Chinese users, who could still not access sites that the Chinese government censored. But it shifted the onus of censoring results from Google to China’s filtering system, known as the Great Firewall of China.
But Google’s approach failed to appease Beijing, and Google was forced to modify it again late last month, by offering users a link on Google.cn rather than the automatic referral to the Hong Kong site. The move, though seemingly insignificant, apparently satisfied China.
Renewal is required annually for Google’s license, which officially expires in 2012.
Even before the censorship issue came to the fore, Google was struggling in China to attain the same market dominance it has achieved in many other countries.
The hottest Internet companies in China include Baidu, Tencent and Alibaba — fast-growing local companies that are making huge profits.
Google is not the only American giant that has had trouble in China. Yahoo and eBayhave failed to gain significant traction here. And Facebook, Twitter and YouTube are blocked by the government.
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