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Clock may be ticking for Google to act on China

Two weeks after drawing a line in the sand, analysts hope Google follows through on threat

By Sharon Gaudin
January 28, 2010 04:28 PM ET

Computerworld - About two weeks after Google publicly squared off with the Chinese government, the world is still watching for the search company's next step.

Some industry watchers wonder how long Google can wait before some supporters of the initial move start to get frustrated with what they see as a lack of follow through on its threat.

Google announced on Jan. 12 that a major attack launched against its network from hackers inside China had forced it to consider abandoning its Chinese operations. The company also said that the attack, which was aimed at exposing the Gmail accounts of Chinese human rights activists, prompted it to reconsider its agreement with the Chinese government to censor search results of users in the country.

A week later Google CEO Eric Schmidt told analysts during the company's quarterly earnings call that he was holding out hope that it could continue doing business in China. He said on the call that the company was still censoring search results in China, but expects to stop soon.

Analysts surmise that Schmidt appears to be signaling its plan to stop censoring search results to Chinese officials, and that Google won't leave the country voluntarily -- China would have to kick it out.

"Publicly, China has been intransigent. Google drew some lines in the sand, and China has said that it will not bend," said Ezra Gottheil, an analyst with Technology Business Research. "So both parties have said publicly that they won't give in. We don't know what's happening behind closed doors, but my guess is there hasn't been much movement and there will not be for some time."

Google declined to comment on anything to do with its China strategy or whether any talks with the Chinese government are underway.

Dan Olds, an analyst with The Gabriel Consulting Group, suggested that negotiations are likely slow and contentious, based on some of the harsh statements coming from Chinese government officials.

"In light of China's continuing public defense of their censorship policies, I tend to think that any negotiating on China's side is simply them restating their refusal to budge," said Olds. "Google has put its stake in the ground on Web censorship. Are they going to follow through on it? That's the big question."

Olds said that Google is probably busy preparing to stop censoring results, figuring out how to best pull its operations out of China if necessary and on improving the company's security and intrusion detection systems.

"Google outlined its position in a very public and explicit way," said Olds. "At some point soon, people are going to start wondering if Google is going to back up its words with actions. If Google fails to follow through, it's going to look like they violated their principles for money. Their reputation will take a pretty big hit if that happens."



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