Google compromise pays off with renewal of license in China

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By Keith B. Richburg
Washington Post Foreign Service
Saturday, July 10, 2010

SHANGHAI -- Google said Friday that its license to operate in China had been renewed, a surprise announcement that ended weeks of speculation over whether the Internet giant would be forced to abandon the world's single largest market of online users.

The renewal had been in doubt in recent days, as the existing license expired and Google, in what was considered a last-minute effort at compromise, decided to stop automatically redirecting Chinese users to its sister site in Hong Kong.

"We are very pleased that the government has renewed our ICP license, and we look forward to continuing to provide Web search and local products to our users in China," Google's chief legal officer, David Drummond, wrote on the company's blog.

There was no confirmation of the renewal Friday night from China's Ministry of Industry and Information Technology, which was handling the matter. There was also no mention of the renewal by any of the Chinese state-owned news sites that normally run breaking stories.

On Thursday, Google chief executive Eric Schmidt hinted that a renewal was coming, telling an annual high-tech gathering in Sun Valley, Idaho, "We now expect to get a renewal," according to news wires.

The standoff between Google and China -- which came to be framed as an issue of free speech online vs. the Beijing government's insistence on strict censorship and control -- began in January, when Google said its server had been hacked and some e-mail addresses compromised.

At the time, Google said it would no longer self-censor its local Chinese search site, The standoff became an additional irritant in the often-tense relationship between Washington and Beijing.

In March, Google began automatically redirecting its Chinese users to its companion site in Hong Kong, the former British colony that operates under a system of limited autonomy and does not practice censorship.

But last week, with its license to operate in China set to expire, Google announced that it was no longer automatically sending its Chinese users to the Hong Kong site. In what was seen by industry experts as a compromise to appease China, users going to instead received a page that allowed them to go to the Hong Kong site by clicking on a link if they wished.

Google actually draws only about a third or less of the Internet search engine traffic in China, and its Chinese search business accounts for just a small slice of the company's overall revenue. Far more Chinese users use the local site Baidu.

But loss of its license to operate an Internet site would have potentially locked Google out of the Chinese market for its other services -- particularly the far more important mobile phone business.

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