Money Matters, Simplified.
Google gets the license to stay in China
by Jamie Anderson - July 9, 2010 - comments
Google said Friday that its license to operate internet-search services in China was renewed by the country's authorities.
Google Inc. (GOOG) confirmed Friday that its Internet license had been renewed by the Chinese government.
"We are very pleased that the government has renewed our ICP (Internet content provider) license and we look forward to continuing to provide web search and local products to our users in China," confirmed Google's top lawyer, David Drummond.
No further details were divulged by the Mountain View, California-based company.
Long tussle ends
Google has had a history of run-ins with the Chinese government, more so in the last few years.
The penetration rate in China may be low but the country already has more internet users than in any other country.
Things had come to such a pass that in January this year Google announced that it might have to pull out of China. The company called the cyber laws in China a "sophisticated" cyber attack originating from the country.
Thereafter, to adhere to the stringent censorship laws Google began redirecting Chinese users to its unfiltered search site in Hong Kong.
This led to the speculation that China may not renew Google’s license to operate in the country.
Loss of market share
Call it change of tactics or a conciliatory move towards Beijing, Google announced last month that Chinese users would be sent to a "landing page" first instead of automatically sending them to the Hong Kong site.
The move makes a lot of business sense. The penetration rate in China may be low but the country already has more internet users than in any other country.
Thus for Google, exiting China or being asked to leave China would mean a loss of substantial market share.
As on date, Baidu has about 60 percent of the market share in China. Google with 30 percent share is a distant second.
"The government views the January announcement as a loss of face. But because Google has now made this move [not to automatically redirect users to Hong Kong], there is a chance they will most probably meet in the middle and Google will get the licence," Edward Yu of research firm Analysys International had said.
Chief Executive Officer Eric Schmidt was also optimistic. He said at a conference in Sun Valley, Idaho, "We now expect to get a renewal".
"Our operations in China are completely at the discretion of the Chinese government," added Schmidt.
Technically the license expires in 2012; however, as per the terms agreed with the Chinese government, it must be renewed annually. Without a license, Google would not have been able to use its mainland Chinese search address.