Google shifts search service based in mainland China to Hong Kong

SAN FRANCISCO — Just over two months after threatening to leave China because of censorship and intrusions from hackers, Google on Monday closed its Internet search service there and began directing users in that country to its uncensored search engine in Hong Kong.

While the decision to route Chinese users to Hong Kong is an attempt by Google to skirt censorship requirements without running afoul of Chinese laws, it appears to have angered officials in China, setting the stage for a possible escalation of the conflict, which may include blocking the Hong Kong search service in mainland China.

The state-controlled Xinhua news agency quoted an unnamed official with the State Council Information Office describing Google's move as "totally wrong."

"Google has violated its written promise it made when entering the Chinese market by stopping filtering its searching service and blaming China in insinuation for alleged hacker attacks," the official said.

Google declined to comment on its talks with Chinese authorities but said that it was under the impression that its move would be seen as a viable compromise.

"We got reasonable indications that this was OK," Sergey Brin, a Google co-founder and its president of technology, said. "We can't be completely confident."

Google's retreat from China, for now, is only partial. In a blog post, Google said it would retain much of its existing operations in China, including its research and development team and its local sales force. While the China search engine, google.cn, has stopped working, Google will continue to operate online maps and music services in China.

Google's move represents a powerful rejection of Beijing's censorship but also a risky ploy in which Google, a global technology powerhouse, will essentially turn its back on the world's largest Internet market, with nearly 400 million Web users.

"Figuring out how to make good on our promise to stop censoring search on google.cn has been hard," David Drummond, Google's chief legal officer, wrote in the blog post. "The Chinese government has been crystal clear throughout our discussions that self-censorship is a nonnegotiable legal requirement."

Drummond said that Google's search engine based in Hong Kong would provide mainland users results in the simplified Chinese characters used on the mainland and that he believed it was "entirely legal."

"We very much hope that the Chinese government respects our decision," Drummond said, "though we are well aware that it could at any time block access to our services."

Some Western analysts say Chinese regulators could retaliate against Google by blocking its Hong Kong or American search engines entirely, just as it blocks YouTube, Facebook and Twitter.

Google's decision to scale back operations in China ends a nearly four-year bet that Google's search engine in China, even if censored, would help bring more information to Chinese citizens and loosen the government's controls on the Web.

Instead, specialists say, Chinese authorities have tightened their grip on the Internet in recent years. In January, Google said it would no longer cooperate with government censors after hackers based in China had stolen some of the company's source code and even broken into the Gmail accounts of Chinese human-rights advocates.

While other multinational companies are not expected to follow suit, some Western executives say Google's decision is a symbol of a worsening business climate in China for foreign corporations and perhaps an indication that the Chinese government is favoring homegrown companies.

Despite its size and reputation for innovation, Google trails its main Chinese rival, Baidu.com, which was modeled on Google, with 33 percent market share to Baidu's 63 percent.

The decision to close google.cn will have a limited financial impact on Google, which is based in Mountain View, Calif. China accounted for a small fraction of Google's $23.6 billion in global revenues last year.

Google's departure could present an opportunity for Baidu, whose stock has soared since the confrontation between Google and China began.

It could also give a chance to Redmond-based Microsoft, a perennial underdog in Internet search, to make inroads in the Chinese market. Microsoft's search engine, Bing, has a small share of the market.