Google conscience hits Chinese communism

Google-style capitalism with a conscience is butting heads with China's brand of communism.

Google has vowed to stop bowing to Chinese online censorship that came as a legal condition when the California technology firm tailored a search engine for that country in 2006.

The impetus for the stand was China-spawned cyber espionage that recently targeted Google and other firms.

Filtered results were being delivered Wednesday at google.cn as Google awaited an audience with Chinese officials to discuss how, if at all, the search engine could operate uncensored.

"The question is if google.cn shuts down, what that means," Broadpoint AmTech analyst Ben Schachter told AFP.

"I don't think we've seen anything this out in the open before. How it plays out remains to be seen."

Google has trodden carefully, partly for the sakes of workers in China, since it made public on January 12 a wave of "sophisticated" cyberattacks that originated in that country.

Its stance has been scrutinized to the extent of fueling speculation that it is simply justifying exiting a China market where it has failed to shine.

China search engine Baidu reigned supreme in that country in November with about 62 percent of the market while Google had 14.1 percent, according to industry tracker comScore.

Analysts suspect that Google's decision runs deeper than current market share given the value of having a stake in China's booming market.

"If you are going to be a worldwide technology provider, you can't cut off the largest single population," said Silicon Valley analyst Rob Enderle of Enderle Group.

Stockholders who turn to Google for answers should peruse an "Owners Manual" letter that founders Sergey Brin and Larry Page published online when the company went public in 2004.

"Google is not a conventional company," Brin and Page said. "We do not intend to become one."

The founders promised that they would stick to the values Google developed as a private firm they started in a Stanford University dormitory.

"Don't be evil," Brin and Page wrote, echoing the company's unofficial motto.

"We believe strongly that in the long term, we will be better served - as shareholders and in all other ways - by a company that does good things for the world even if we forgo some short term gains."

Google battled the US Department of Justice in federal court in 2006 to prevent unbridled access to search results being sought to help revive a Child Online Protection Act deemed unconstitutional.

The decision to filter China search results in order to do business there reportedly caused much consternation at Google.

Google executives reasoned at the time that Internet freedom would eventually blossom in China.

"China is a huge market but it is a market that comes with strings," said Interpret analyst Michael Gartenberg.

"What is unclear about the stated departure is, are the rules not working for Google or is the market not panning out the way they've expected?"

Internet rights activists praise Google's decision, suggesting scrutiny shift to firms staying silent about cyberattacks.

Security experts place the number of targets at more than 30, and so far only Google and Adobe have revealed they were attacked.

Cyber spies that struck at Google were after source code and email accounts of human rights activists, according to the Internet firm.

Google is considering shutting down the China search engine but could maintain research and sales facilities in that country.

Analysts will be watching a Google earnings report on Thursday for indications of plans in China.

Most of the "hundreds of millions" of dollars Google makes annually in China might go unaffected by a pullout since it comes from online advertising posted outside that country.

The main cost to Google from a China exit is expected to be in future opportunities. Google on Wednesday delayed the China release of two mobile telephones based on its Android software.

Companies launching devices or services in China might shun working with Google to avoid problems with the government.

Chinese officials have showed no sign of yielding and maintain that companies doing business in that country must follow local law.

"At the end of the day Google may not lose that much in China because it may turn out there wasn't much in China for them to begin with," said Gartenberg.

"Pulling out lets them take the high ground and evoke the 'Don't be evil' mantra."