Google faces pressure as China to decide on licence

Reuters | Wed Jun 30, 2010 | 3:52pm IST

Google Inc could face further pressure for its other products in China as Beijing is due to decide whether or not to renew a licence for the firm’s flagship search engine in the world’s largest Internet market. In an effort to keep its China licence, Google said on Wednesday it will stop automatically redirecting China users to its uncensored Hong Kong site within the next 48 hours. Beijing has been silent on whether a compromise system will be enough to allow Google to stay in the lucrative market — the worlds largest with nearly 400 million users, where local powerhouse Baidu Inc is the top dog. "If they lose this licence, the trend is moving in the wrong direction for Google, it seems likely they will have trouble with their other licences in China as well," said T.R. Harrington, chief executive of search consulting firm Darwin Marketing.

Google unexpectedly warned in January it might quit the country over censorship concerns and after suffering a hacker attack it said came from within China. Now, Google also faces the hurdle of needing to get a licence for its popular Google Maps product in China. China recently released new requirements for firms keen to provide online mapping services, and unveiled a preliminary list of companies allowed to get the license. Google, with its popular Google Maps product, was not on the list, although a source familiar with the situation said the handful of approved companies was not final. Google said it was examining the impact of the new regulations on its products. A total of 23 domestic firms, including Baidu Inc, were given preliminary approval to have online mapping services, according to a document posted on China’s State Bureau of Surveying and Mapping.

A senior government official said on Wednesday he did not know the specific details of Google’s new approach, but reiterated the government’s long-standing position that foreign companies operating in the country must respect local rules. "We’ve long said that to develop in China, you must abide by Chinese laws," Wang Chen, head 

of the Information Office of the State Council told reporters. "Our stance is very clear in those statements." Every China-based website needs an Internet Content Provider (ICP) licence from China’s Ministry of Industry and Information Technology, which must be renewed on a yearly basis. Google’s ICP licence ends in 2012 but comes up for renewal on Wednesday. Without the licence, Google would not be able to run a search website in China. Some users visiting now get a webpage with the Google logo and search box, but clicking anywhere on the page brings them to the Hong Kong search site. On Wednesday, France’s antitrust regulator accused Google of a "lack of transparency" over its keyword advertising service and ordered it to clarify conditions for the product within four months.


Analysts said the non-renewal of Google’s ICP licence would in China yank the company back to the years when Google had virtually no presence in the country. It would also make it tougher for Google to see its other business licences renewed. China’s search market was worth 7.15 billion yuan ($1.05 billion) in 2009, with search leader Baidu Inc dominating at around 60 percent while Google had 30 percent. Edward Yu, chief executive of technology research firm Analysis International, said Google China’s search traffic and revenue had stabilised in the second-quarter and advertisers were returning to the company. However, Yu said Google not getting its ICP licence would be disastrous for its search business in China. It is unclear how China will respond to Google’s landing page reminding users to click through to its unfiltered search site. It is possible China could block the URL of the landing site. "It’s the worst case scenario, if users can’t access and there is no reminder page for them to click through to Google Hong Kong, there will be an impact on traffic and in turn advertisers," Yu said.


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