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Google taking it easier with China

Rob Schmitz Jun 29, 2010


Kai Ryssdal: It was big news a couple of months ago when Google got a little testy with the Chinese. The search company was annoyed about some fairly sophisticated hacks on its database that it said came from China. So it started automatically re-directing its Chinese users to its less restricted, that is, less censored site in Hong Kong. Today, just a day before Google’s license to do business on the mainland was set to expire, the company backed down a bit. It’ll offer those Chinese users a link to the Hong Kong site instead.

Marketplace’s Rob Schmitz has more.

Rob Schmitz: It’s a lesson that’s as old as doing business in China, how to save face.

Adam Segal: You don’t really gain very much by publicly airing your dirty laundry with the Chinese government.

And now it’s Google’s turn to learn that lesson. Adam Segal is a fellow at the Council on Foreign Relations, who’s an expert on China’s Internet policies. He says Google’s last-minute very public offer to China, after months of an equally public squabble with the government, suggests the company has been trying to bargain with the Chinese behind closed doors, but has now run out of options.

Segal: I suspect that we’re going to have some final resolution from the Chinese government, and then Google’s going to have to decide how it manages its other businesses in China.

In other words, without a website in mainland China, can Google expect to profit from China’s lucrative mobile phone market? That’s what Google’s shareholders may be wondering.

Tech industry analyst Laura Didio says the threat of losing China probably won’t have an impact on the company’s stock price or dividends, because Google is so strong in other global markets.

Didio: You’re going to have a lot of shareholders, particularly here in North America and Western Europe who might actually cheer Google on if they decide to stick to and hold fast to their principles.

But what’s more important for Google? Ensuring a free flow of information, or reaching as many people as possible? Google claims it “organizes the world’s information.” It may organize it, but 20 percent of the world’s population may soon stop using Google to consume it.

I’m Rob Schmitz, for Marketplace.

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