Google gets Chinese approval

China gave Google Inc approval to keep operating its Chinese search page, resolving a months long censorship dispute.


Reuters July 10, 2010

SHANGHAI: China on Saturday gave Google Inc approval to keep operating its Chinese search page, resolving a months long censorship dispute that had threatened its future in the world's top Internet market.

The move, announced by Google on Friday, potentially removes another thorn in warming US China ties and reflects Beijing's desire to be seen as friendly to major foreign companies in spite of ideological differences, analysts say.

Shares of Google rose by 2.4 per cent as the news erased some concerns that China would eject the company for taking a hard line against Web censorship. But analysts said that Google's position in China remains fragile and that the country likely will account for a fraction of Google's revenue for some time.

"It's good for Google that they still have some presence. But they're clearly in a more compromised competitive position," said Ryan Jacob of the Jacob Internet fund, which holds Google shares. "Google is going to have a very difficult time gaining share, and will probably lose share over time."

Google had embarrassed China in January by drawing global attention to Beijing's Web censorship practices, a function of the government's belief that keeping a tight grip on information helps it maintain control. The Internet company also accused Chinese hackers of orchestrating a sophisticated cyber attack on Google and other major U.S. companies.

Google had declared it was no longer willing to offer censored search results, triggering a row that exacerbated tensions between Washington and Beijing, which also sparred over China's currency, US arms sales to Taiwan, and Tibet.

But tensions have subsided in past months, and the Google deal could further help China's ties with Washington, which has forcefully argued against Internet censorship and demanded that Beijing investigate and explain the alleged cyber attacks. Analysts, however, said that while the United States would likely welcome the Google agreement, the deeper divisions over Internet policy and hacking would likely continue to simmer.

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