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China puts new limits on Google search results

Chinese access to Google’s search engine grew more restricted, with some sensitive searches blocked altogether, Tuesday as fallout from its decision to redirect mainland users to its uncensored Hong Kong website threatened to undermine the Internet giant’s ability to cling to its hard-won Chinese market share.

The move was already reverberating across the Pacific. Google said Tuesday that it would delay rolling out in China mobile applications that run on Android phones after its Chinese partners came under government pressure to pull out of deals with Google.

Chinese Internet and mobile-services provider Tom Online, run by one of Asia’s wealthiest businessmen, Li Ka-shing, also announced it would stop using Google’s search engine.

With the latest transpacific row, it was unclear whether the Hong Kong site would be blocked or whether Google would be allowed to continue its other operations and partnerships with Chinese companies such as state-owned telecommunications carrier China Mobile Ltd.

“The Chinese will look for ways to squeeze Google across the board,” said James Lewis, a technology expert with the Center for Strategic and International Studies, a think tank.

Google said Monday that it hoped to keep a sales team, research and development operations and a burgeoning stake in mobile phones in China. Analysts say the attempt at business as usual underscores how dearly the company still wants to succeed in the world’s largest Internet and cellphone market while taking a stand against government censorship.

It’s a tightrope act, with Google leaving the Chinese market without leaving China and complying with Chinese law while trying to undermine it, said Douglas Paal, vice president of the Carnegie Endowment for International Peace and a senior advisor on Asian affairs in the Reagan and George H.W. Bush administrations.

“Google wants to have its cake and eat it too,” said Duncan Clark, chairman of research firm BDA China Ltd.

So far, the dispute between the technology giant that wants to spread information and the government that wants to limit it is not spilling over into already strained diplomatic relations between China and the United States. The Obama administration’s subdued comments echoed the tone of the Chinese government.

National Security Council spokesman Mike Hammer said Google had informed the White House of its plans and expressed disappointment that Google and Beijing had been unable to reach a deal.

“The U.S.-China relationship is mature enough to sustain differences,” Hammer said.

But tensions have escalated in relations between Google and China, Benchmark Capital analyst Clayton Moran said.

“I am a little surprised that Google didn’t voluntarily shut down to have a more diplomatic exit. That in my mind might have helped them in their efforts to keep the other operations going. It appears to me that both sides are taking a pretty hard stance,” Moran said.

State Department spokesman P.J. Crowley said Tuesday that Beijing should consider the implications of one of the world’s most recognizable institutions deciding it’s too difficult to do business in China.

Google’s Hong Kong site features a simplified form of Chinese characters used in mainland China. It also has maintained products it had on its Chinese site, such as legal music downloads and partnerships with leading online forums.

Experts say Google’s Chinese website can earn a profit if it proves to advertisers that a migration to Hong Kong servers does not cost the company users.

The search engine also can count on Chinese advertisers who target Google.com. An estimated 40% of Google’s ad revenue in China is generated by the American site.

Hong Kong, a former British territory, belongs to China but has separate laws that allow Google to operate an uncensored search engine. Those accessing the site in China are subject to Web content filters, better known as the Great Firewall, that will block connections to sensitive sites.

Earlier Tuesday, searches for sensitive terms such as the banned spiritual group Falun Gong netted results that would have been blocked on Google’s old site. Though they couldn’t be opened, they provided a glimpse at what sort of uncensored material was available. By the evening, the same search immediately resulted in an error message, suggesting government censors had adapted to the change.

Google also hopes Android can reap benefits for the company in China’s rapidly expanding smart-phone market. The company was hoping to use the software to dominate mobile Internet searches and also sell a slew of cellphone applications, much like Apple Inc.'s iPhone.

“Android’s share is not significant now, but the opportunity is enormous in a country with over 800 million mobile subscribers,” said Kaiser Kuo, a Beijing-based technology expert.

Experts say a decision from the government will not come easily or swiftly.

When one ministry tried to install filtering software called Green Dam Youth Escort on all personal computers last year, the plan was ridiculed by Web-savvy Chinese who viewed the government as increasingly out of step with technology.

“The government got spooked by the reaction to Green Dam,” said Clark of BDA. “I think the debate is raging” about what to do with Google.

But lawmakers are also sensitive to an undercurrent of nationalism that has seeped into the controversy. Some see support for Google from Secretary of State Hillary Rodham Clinton as evidence that Washington is trying to undermine stability in China and weaken its international standing.

“China already has a bad image abroad,” said a law student who only wanted to give his first name, Tim. “This will add to it. I really like Google. I respect their decision, but I don’t understand it.”

Edward Yu, president of Analysys International, a Beijing-based technology research firm, said the status quo could exist indefinitely.

“The government will want to at least wait and see what the impact is and then come back to it,” Yu said.

At a regular Foreign Ministry briefing Tuesday, spokesman Qin Gang declined to say whether Google’s new approach was legal and whether the search engine would eventually be blocked in China.

“The Chinese government administers the Internet according to the law, and this is our unequivocal position,” Qin said.

If Google is in effect blocked, a slew of Internet companies will probably carve up the more than one-third market share the Mountain View, Calif., company commanded in China’s search-engine sector.

Goldman Sachs analyst James Mitchell estimated that industry leader Baidu Inc. could pick up 33% to 75% of Google.cn’s traffic and 50% of its revenue. But Baidu could face a challenge from Soso.com, a search engine operated by online gaming and social networking giant Tencent Holdings Ltd. More than two-thirds of China’s 400 million Internet users use Tencent’s instant-messaging service known as QQ.

Other rivals could include e-commerce sites Alibaba and Taobao and existing competitors Sohu, Yahoo Inc. and Microsoft Corp.'s Bing.

Yu said the search engines could use the current shock of Google’s departure to Hong Kong to snare advertisers.

Tang Jing, chief executive of Nanjing Iwin Internet Media Co., said the Google dispute had wreaked havoc on his business, which sells advertising space online. Customers who wanted ads on Google’s Chinese site have demanded refunds totaling $120,000. He said he was waiting for reimbursements from Google.

Tang said there was enough demand for other search engines for his agency to stay afloat. He hopes to soon have a clearer picture of whether he can rely on Google in the future.

“We have not given up on Google completely,” Tang said.

Also facing uncertainty are Google’s several hundred employees. Many appeared to have gathered for a company meeting at the search engine’s offices in Beijing on Tuesday morning.

Xiao Qiang, director of the Berkeley China Internet Project, said “this is the very beginning of an unfolding story” as the educated elite -- students, educators, scientists and technologists -- grapple with the loss of a search engine and its companion tools such as Google Docs and Gmail. He predicted a dramatic rise in the number of people who circumvent the Great Firewall to access the uncensored Internet.

jessica.guynn@latimes.com

david.pierson@latimes.com

Lily Kuo, Nicole Liu and Tommy Yang in The Times’ Beijing bureau contributed to this report.


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