Google Stops Censoring Google.cn - Analyst Blog

In an official blog posted Monday, Google Inc (GOOG) SVP (Corporate Development) and Chief Legal Officer, David Drummond announced that the company would stop censoring search results for the Google Search, Google News and Google Images services on its Chinese website, Google.cn.

Google has been in negotiations with Chinese officials, since it discovered willful attempts to hack its corporate infrastructure in China that also indicated abetment by the Chinese government. The interference by the Chinese government was with the intention of preventing human rights activists from carrying out private communications through their gmail accounts.

Google’s stand on free communication has had its name muddied by the state-controlled Chinese media, while the company’s decision to stick with its policies has earned it some good words from U.S. officials and agencies. But the bottom line is the company will no longer be able to provide the above-mentioned services in China.

Accordingly, users in China going to Google.cn will be redirected to Google.com.hk, which is a Chinese language site providing uncensored results through servers operated in Hong Kong. Due to the relative autonomy of Hong Kong, the city is exonerated from abiding by the strict policies of the Chinese government.

Of course, the freedom enjoyed by Hong Kong makes it a preferred destination for foreign investment and this is already a source of displeasure for the Chinese government. It is hard to say whether new policies will change the situation.

Even if they do not, the Chinese government still has the power to block Google.com.hk, something they could easily do, given the fact that they have already blocked Facebook, Twitter, YouTube, Google Docs and Blogger, which are owned by Google. Google’s other operations in China could also suffer, something the company is trying to avoid.

We believe this does not necessarily open the door to rivals, such as Microsoft (MSFT), but is good news for homegrown Baidu.com (BIDU). Google shares dropped 0.44% to close at $557.50 yesterday, while Baidu’s shares jumped 1.77% to close at $579.72.