Economy
Google hits exit key
By Wang Xing and Zhang Haizhou in Beijing, and Guo Jiaxue in Hong Kong (China Daily)
Updated: 2010-03-24 07:37
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Search engine's departure from the Chinese mainland opens door to rivals. Wang Xing and Zhang Haizhou in Beijing, and Guo Jiaxue in Hong Kong report.
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 Passengers ride in a double-decker bus painted with a Google advertisement in Beijing on Tuesday.[REUTERS / CHRISTINA HU] |
Google Inc took a major step in its row with the Chinese government on Tuesday by redirecting traffic from its Beijing-based search engine to its service in Hong Kong.
The move effectively means the company no longer needs to filter its search results, as required by Chinese law.
Although Google's exit is good news for its rivals, chiefly Baidu, Sogou and up-and-comer Tencent, many experts said it is a "lose-lose situation" for both China and the US-based company.
The initial reaction from the authorities came via an unnamed State Council information official who told Xinhua News Agency that Google had "violated its written promise it made when entering the Chinese market (in 2006) by stopping filtering its search service and blaming China, in insinuation, for alleged hacker attacks".
"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," the official said.
However, just hours later, Foreign Ministry spokesman Qin Gang told a regular press briefing that the government would handle the case "according to law", and that the move was an isolated act by a commercial company and should not affect China-US ties "unless politicized".
Philip Crowley, a US State Department spokesman, said on Monday it was "a decision for Google to make".
It is unclear whether the move will go on to impact bilateral ties, while uncertainty also remains on whether Google's revenue, and that of its Chinese partners, will be affected.
"TOM reiterated that as a Chinese company, we adhere to rules and regulations in China where we operate our businesses," said a statement by its parent company, Hong Kong-based TOM Group, which is controlled by Hong Kong tycoon Li Ka-shing. The company declined to say when it stopped using Google services or to provide any details
of its agreement with Google. Many of Google's other Chinese partners, such as free music service Orca Digital, insisted the redirecting of Google.cn and Google.com traffic to its Hong Kong website will have little impact on their partnerships.
"Google.cn is only one gateway so it doesn't have a significantly impact to us," said Orca chief executive, Gary Chen, whose firm has received investment from Chinese basketball star Yao Ming. He said his company may keep its partnership with Google through its global website and believes the Chinese government would not oppose that. "I believe they can still find a solution," he said.
Orca generated 5 million yuan ($730,000) in the fourth quarter of 2009 - most of which came through Google's advertising platform - and Chen said he expects that figure to double this year despite Google's closure of its China-based operations.
About 40 percent of Google China's revenue is generated through its global advertising network, which would not be impacted by the shutdown of Google.cn, according to Edward Yu, president of China-based market research firm Analysys International.
