Microsoft to maintain China operations, report says

Resolution of China-Google immaterial to its plans; won't comment on online censorship

Microsoft has no intention of ending its business in China no matter how Google Inc.'s battle with the Chinese government ends, an executive in the firm's Asian operation was reported to have said today.

"Regardless of whether or not Google stays [in China], we will aggressively promote our search and cloud computing," Zhang Yaqin, chairman of Microsoft's Asia-Pacific R&D Group, told Reuters earlier today.

Yaqin spoke the news agency during the opening of China's National People's Congress in Beijing.

To drive the point home, Yaqin told Reuters that Microsoft plans to spend some $500 million on research and development in China this year.

Industry analysts have been speculating about how Microsoft and Yahoo -- Google's biggest search rivals -- would react if the search giant pulls its business out of China.

Google announced in January that a major attack launched against its network from China had forced it to consider pulling its business from the country. After the attack, which was aimed at exposing the Gmail accounts of Chinese human rights activists, Google said it was reconsidering its willingness to censor search results of users in China as required by the government.

Google's stand against China largely is being met with support from industry watchers, who said the search giant has taken a major hit in good will in recent years by ceding to China's censorship demands.

If Google does take a stand against censorship and Microsoft continues to comply with China's demands, it's unclear how the industry would react.

"Microsoft committing to China so explicitly underscores the huge opportunity they have in Asia now that Google has taken at least a step backward," said Dan Olds, an analyst at Gabriel Consulting Group. "Microsoft faces the same problems as Google, like how do you deal with a government that controls your business and demands that you censor content. Microsoft has decided that the potential rewards outweigh the risks of being perceived as toadying to an authoritarian government."

In January, Microsoft CEO Steve Ballmer wrote in a blog post that engagement in China is very important to the company.

"We have done business in China for more than 20 years and we intend to stay engaged, which means our business must respect the laws of China," wrote Ballmer at the time. "That's true for every company doing business in countries around the world: We are all subject to local laws."

When asked today if Microsoft intends to continue censoring search results in China, a Microsoft spokesperson simply referred to Ballmer's blog post about continuing on in China.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, send e-mail to or subscribe to Sharon's RSS feed .

Copyright © 2010 IDG Communications, Inc.

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