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China confirms that Google is good to go

China confirmed Sunday it had renewed Google's license to operate after a months-long standoff over Internet censorship, saying the company had pledged it wouldn't provide "lawbreaking content."
Two office workers walk out of Google's head office in Beijing
Two office workers walk out of Google's head office in Beijing on Friday.Bobby Yip / Reuters
/ Source: msnbc.com news services

China confirmed Sunday that it has renewed Google's license to operate after a months-long standoff over Internet censorship, saying the company had pledged it wouldn't provide "lawbreaking content."

The California-based search giant said Friday it had received approval to operate in the world's most populous country, after it agreed to stop automatically rerouting users of Google.cn to its site in Hong Kong, which is not subject to China's online censorship.

The company began the rerouting earlier this year when it decided to stop censoring its search results on the mainland site. The Chinese government operates the world's most extensive system of Web monitoring and filtering, blocking pornographic sites as well as those seen as subversive to Communist rule.

Search requests at Google.cn from within mainland China now require an extra click that then takes the user to the Hong Kong site. That small concession was enough to persuade China's regulators to renew the license, the company said.

An official with Ministry of Industry and Information Technology confirmed the license was renewed for another year for Beijing Guxiang Information Technology Co. Ltd., the operator of Google's China website, the official Xinhua News Agency said Sunday.

Dispute resolved ... for now
China's decision to allow Google to continue operations resolved a months-long dispute that had threatened the company's future in the country.

Xinhua said that Guxiang had agreed to "abide by Chinese law" and "ensure the company provides no lawbreaking content" in its renewal application letter.

"After our assessment, we decided that Guxiang had basically met the requirements," the ministry official, who was not identified, was quoted as saying.

The website of the ministry, which regulates the Internet in China, listed Guxiang on Sunday among about 200 companies whose licenses had been renewed until 2012.

Guxiang also agreed that all content it provides is subject to the supervision of government regulators, the official said.

The conflict arose in January when Google decided to end its four-year practice of omitting search results that the Chinese government considers subversive or pornographic. Google made the decision after blaming Chinese computer hackers for an attack it said was aimed at stealing the company's technology and e-mail information from human rights activists.

Big stakes ahead
China is not yet a big moneymaker for Google, accounting for an estimated $250 million to $600 million of the company's projected $28 billion in revenue this year. But the number of Internet users in China is estimated at 384 million, more than the nearly 200 million in the United States.

Google's biggest competitor in China is the homegrown Baidu search engine, which has a 60 percent share of the country's search market, according to the research firm Analysys International. Google's share is currently at around 30 percent, down from roughly 35 percent at the end of last year.

Susquehanna Financial Group analyst Marianne Wolk believes Google could be pulling in $5 billion to $6 billion annually from China's online advertising market just four years from now if it can manage to keep its market share in the 30 percent range.

The makeover of Google.cn could hurt the company, because it requires Chinese users to make an extra click to get search results, but "it's a sacrifice well worth making if it means they can stay in China," Kessler said.

Paul Denlinger, an Internet consultant for startups, said the Chinese government made a smart move to "defuse the situation so that the Google search engine will still be available in China."  He said that the friction between Google and China won't disappear but will temporarily dissipate.

Among the things to look out for in coming months, Denlinger says, is whether Google services will continue to be featured on new mobile phones. He noted that Motorola has been replacing Google's functions with Baidu's in recent months.

This report includes information from The Associated Press and Reuters.