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Google’s reach in China is wide

Any pullout might hamper range of services

A gate crosses an entrance of the Lanxiang Vocational School in Jinan, China. Reports have tied the school to online attacks on Google e-mail accounts and on about 20 other firms. A gate crosses an entrance of the Lanxiang Vocational School in Jinan, China. Reports have tied the school to online attacks on Google e-mail accounts and on about 20 other firms. (Reuters)
By Joe McDonald
Associated Press / March 17, 2010

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BEIJING — China without Google — a prospect that looks increasingly likely — could mean no more maps on mobile phones. A free music service that has helped fight piracy might be in jeopardy. China’s fledgling Web outfits would face less pressure to improve, eroding their ability to one day compete abroad.

Chinese news reports say Google Inc. is on the verge of making good on a threat to shutter its China site, Google.cn, because Beijing forces the Internet giant to censor search results. The reports indicated that Google had already stopped censoring results, but searches yesterday for such sensitive topics as “Tiananmen massacre’’ appeared to still return only whitewashed results.

A Google spokesman, Scott Rubin, denied censorship had stopped and would not confirm whether Google.cn might close.

The extent of a possible pullout from China is unclear. Services that might be affected range from advertising support for Chinese companies to online entertainment to its immense search engine.

“If Google leaves, it’s a lose-lose scenario, instead of Google loses and others gain,’’ said Edward Yu, president of Analysys International, a Beijing research firm.

Google says it is in talks with Beijing following its Jan. 12 announcement that it no longer wants to comply with Beijing’s extensive Web controls. But China’s industry minister insisted Friday the company must obey Chinese law, which appears to leave few options other than closing Google.cn, which has about 35 percent of China’s search market.

Such a step could have repercussions for major Chinese companies as well as local Web surfers.

It would deliver a windfall to local rival Baidu Inc., China’s major search engine, with 60 percent of the market. But other companies rely on Google for search, maps, and other services.

China Mobile Ltd., the world’s biggest phone company by subscribers, with 527 million accounts, uses Google for mobile search and maps. Baidu offers mobile search, but China Mobile passed up a partnership with it earlier after they failed to agree on terms, according to industry analysts. Millions of mobile customers might lose access to Google’s Chinese-language map service.

A key issue is whether Beijing, angry and embarrassed by Google’s public defiance, would allow the company to continue running other operations, including advertising and a fledgling mobile phone businesses, in China if Google.cn closes.

China promotes Internet use for business and education but bars access to sites run by human rights and political activists and some news outlets. Officials, who defend China’s controls by pointing to countries that bar content such as child pornography, are stung that Google has drawn attention to how much more pervasive Chinese limits are.

Chinese Web surfers are blocked from seeing Facebook, YouTube, Twitter, and major blog-hosting services abroad, and a Google pullout would leave them increasingly isolated.

Google hopes to keep operating its Beijing research and development center, advertising sales offices, and mobile phone business, according to a person familiar with the company’s thinking. But the person said the company won’t do that if it believes its decision to stop censoring search results will jeopardize employees in China. Industry analysts estimate Google has a work force of 700 in China.

The government says Chinese mobile phone carriers will be allowed to use Google’s Android operating system but there has been no word on whether efforts to sell its own phones in China might be affected.

Uncertainty also surrounds Google’s China music portal, a free, advertising-supported service launched last year in partnership with four global music companies and 14 independent labels. Industry analysts say it has helped to undercut China’s rampant music piracy by offering an alternative to unlicensed copying.