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China gives new licence to Google
Submitted by Khushi in Business, on the 11th of July, 2010 at 01:15:11am.
July 11, 2010 - 2:03PM
Google has been granted a licence to continue to operate its search business in China in a sign that the dispute over censorship in the Asian superpower has been resolved.
The internet giant - which in January warned it might pull out of China because of the country's censorship policies and allegations of cyber-hacking - has had its internet content provider licence renewed by Beijing.
The renewal comes just a week after Google stopped automatically redirecting users of its Chinese website to Hong Kong - users must now click on a separate tab to be redirected - in a move viewed by industry insiders as a necessary sop to the authorities.
It is seen as the latest thawing in the at-times frosty relationship between the US and China, and came just a day after the US Treasury chose not to label China a currency manipulator in spite of its continued pegging of the yuan to the dollar.
Shares in Google rose $7.44 - or 1.63 per cent - to $464 on the news, confirmed in a brief statement which said the company is looking forward "to continuing to provide web search and local products to our users in China". The licence has to be renewed annually, although technically runs through to 2012.
Although Google's existing Chinese operations make up a only small proportion of its annual US$24 billion revenues - analysts estimate it generates $300m-$600m a year from the country - it remains important as a source of future growth, given the country already has 384 million internet users, the most in any one nation.
"We think it's important to be in China," chief executive Eric Schmidt told CNBC. "We want to do it in a way that doesn't violate our fundamental principles."
Before the dispute, Google had a 30 per cent share of China's $1 billion internet search market, although main rival Baidu is thought to have taken share from the US company as a result of the dispute.
The first signs of the spat emerged in January, when Google announced it was no longer willing to censor searches in adherence with Chinese rules, and said it may pull out of the country.
Two months later, in a move which angered the Beijing authorities further, it began re-routing searches on Google.cn to Hong Kong. Eight days after that move, some of its services were partially blocked, although the reason was never determined.
The easing in relations came after the decision to stop the automatic re-route, and a fresh licence application made two weeks ago.
But analysts warn it might not necessarily be a smooth process for Google from now on. "China doesn't necessarily want Google to exit the country. China just wants to exert its control over Google," said Colin Gillis, director of research at BGC Financial, warning that this is unlikely to be the end of the company's problems.
Henry Blodget, the analyst-turned-blogger, said on his Business Insider website that Google "has come out on the losing end of this negotiation" as it has gone from the Chinese government censoring those pages it found objectionable to censoring all web pages.
Google has been granted a licence to continue to operate its search business in China in a sign that the dispute over censorship in the Asian superpower has been resolved.
The internet giant - which in January warned it might pull out of China because of the country's censorship policies and allegations of cyber-hacking - has had its internet content provider licence renewed by Beijing.
The renewal comes just a week after Google stopped automatically redirecting users of its Chinese website to Hong Kong - users must now click on a separate tab to be redirected - in a move viewed by industry insiders as a necessary sop to the authorities.
It is seen as the latest thawing in the at-times frosty relationship between the US and China, and came just a day after the US Treasury chose not to label China a currency manipulator in spite of its continued pegging of the yuan to the dollar.
Shares in Google rose $7.44 - or 1.63 per cent - to $464 on the news, confirmed in a brief statement which said the company is looking forward "to continuing to provide web search and local products to our users in China". The licence has to be renewed annually, although technically runs through to 2012.
Although Google's existing Chinese operations make up a only small proportion of its annual US$24 billion revenues - analysts estimate it generates $300m-$600m a year from the country - it remains important as a source of future growth, given the country already has 384 million internet users, the most in any one nation.
"We think it's important to be in China," chief executive Eric Schmidt told CNBC. "We want to do it in a way that doesn't violate our fundamental principles."
Before the dispute, Google had a 30 per cent share of China's $1 billion internet search market, although main rival Baidu is thought to have taken share from the US company as a result of the dispute.
The first signs of the spat emerged in January, when Google announced it was no longer willing to censor searches in adherence with Chinese rules, and said it may pull out of the country.
Two months later, in a move which angered the Beijing authorities further, it began re-routing searches on Google.cn to Hong Kong. Eight days after that move, some of its services were partially blocked, although the reason was never determined.
The easing in relations came after the decision to stop the automatic re-route, and a fresh licence application made two weeks ago.
But analysts warn it might not necessarily be a smooth process for Google from now on. "China doesn't necessarily want Google to exit the country. China just wants to exert its control over Google," said Colin Gillis, director of research at BGC Financial, warning that this is unlikely to be the end of the company's problems.
Henry Blodget, the analyst-turned-blogger, said on his Business Insider website that Google "has come out on the losing end of this negotiation" as it has gone from the Chinese government censoring those pages it found objectionable to censoring all web pages.
