China Renews Google’s License

China Renews Google’s License
By DAVID BARBOZA
Copyright by Reuters
Published: July 9, 2010
http://www.nytimes.com/2010/07/10/technology/10google.html?hp


SHANGHAI — The Internet giant Google said Friday that the Beijing government had renewed its license to operate a Web site in mainland China, ending months of tension after the company stopped censoring search results here and pulled some operations out of the country.

Google made the announcement early Friday morning in California in a blog posting by its chief legal officer, David Drummond.

“We are very pleased that the government has renewed our I.C.P. license,” Mr. Drummond wrote referring to an Internet content provider license. “And we look forward to continuing to provide Web search and local products to our users in China.”

Google’s chief executive, Eric E. Schmidt, said Friday that the renewal “was the outcome we were hoping for.”

Mr. Schmidt, who told reporters on Thursday that the company expected to obtain the renewal, said that he did not know China’s decision would come so soon and was informed of the decision early Friday. He had expected the decision to come down within 24 to 48 hours.

“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.

If the license had not been renewed, Google would have effectively been forced to shut down its Web site, google.cn, in China. With the renewal, however, Google can continue offering limited services in China and direct users to the company’s uncensored Hong Kong-based Chinese language search engine, google.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.

The license renewal is a sign that Google, while uncomfortable with operating in China and censoring its search results on Beijing’s behalf, is determined to keep a foot in China, which now has more Internet users than the United States.

Google announced in January that it had suffered China-based cyber attacks on its databases and the e-mail accounts of some users. The company said it would also stop censoring search results, which it had agreed to do when it first began to operate in China several years ago. The Chinese government insists that its citizens’ access to the Internet be stripped of offensive and some politically sensitive material.

In March, Google closed its Internet search service in China and began directing users to the uncensored Hong Kong site.

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.

Just a few weeks ago, however, Google signaled a softer approach to Beijing by saying that it had stopped automatically sending users in mainland China to its Hong Kong site. The company said it had created a Web page that offered users in mainland China a choice, rather than automatically directing them to its Hong Kong site.

The move, though seemingly insignificant, seemed to comply better with Beijing’s strict regulations.

“This approach ensures we stay true to our commitment not to censor our results on google.cn and gives users access to all of our services from one page, Mr. Drummond wrote at the time.

Renewal is required annually for Google’s license, which officially expires in 2012.

“This is a reasonable move by the government,” Jake Li, an Internet analyst at Guotai Junan Securities in Shenzhen, told Bloomberg News. “Google has brought itself into compliance with regulations, so there’s no good reason to deny them the license.”

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 are those like 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 eBay have failed to gain significant traction here. And Facebook, Twitter and YouTube are blocked by the government.

Michael de la Merced contributed reporting from Sun Valley, Idaho.