Google to go dark in China, Baidu rejoices

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By Balachander Suriyanarayanan and Besta Sh | June 29, 2010 11:08 PM EST

Google Inc. has announced a "new approach" in China after the government said the company could no longer automatically redirect users to the unfiltered Hong Kong site.

“Ever since we launched Google.cn, our search engine for mainland Chinese users, we have done our best to increase access to information while abiding by Chinese law. This has not always been an easy balance to strike, especially since our January announcement that we were no longer willing to censor results on Google.cn,” said Google's chief legal officer David Drummond in a blog posting on Monday.

Prior to the announcement, the search engine had been redirecting the search inquiries to its unfiltered site in Hong Kong to avoid the censorship issues in China.

But now, the company has to stop redirecting as the Chinese government officials found it unacceptable and warned of losing license to operate in the country, if continued. Due date for the renewal of license is June 30, 2010.

"It’s clear from conversations we have had with Chinese government officials that they find the redirect unacceptable... Without an ICP license, we can’t operate a commercial website like Google.cn--so Google would effectively go dark in China," Drummond said.

To overcome the issue, Google has created a new "landing page" at Google.cn "where users can conduct web search or continue to use Google.cn services like music and text translate" locally without filtering.

"This approach ensures we stay true to our commitment not to censor our results on Google.cn and gives users access to all of our services from one page," Google said. The change in approach for internet users in China would enable the company to continue operations in China and it was hopeful of getting its license, due for renewal on Wednesday.

In March, Google pulled out of mainland of China showing dissent over the censorship in China. Google occupies the second position in search engine market in China, next to Baidu.

According to the Chinese government’s white paper on internet policy, 28.9 percent of the total population had access to internet by the end of 2009, above the world average. The country targets to increase access by 45 percent of the population in the next five years.

Taking the account the size and growth of internet users in China, any lost opportunity in the country is expected to hamper the growth prospects of Google. Online advertising in China registered a turnover of 20 billion yuan ($2.94 billion) in 2009.

Baidu plans to hire US talent

Move over Google, it's Baidu Inc, with over 60 percent of share in internet search in China, to grab the chance and expand. It has announced new plans to hire U.S engineers to enhance its technical skills and propel its growth globally.

"Baidu believes that talent is the key to our success as a company, and we go where ever the best talent can be found, whether here in China or in Silicon Valley," Zheng Bin, Baidu's human resources director told Reuters.

Analysts see a 50 percent increase in annual revenues for Baidu, grabbing nearly $330 million from Google’s revenues. In 2009, Baidu posted 4.45 billion yuan ($654.8 million) in revenues.

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