Google is likely to close its Chinese search engine as talks with the Chinese authorities over Internet censorship reach an impasse. The Financial Times reports that Google is 99.9% certain to close its search operations in China. And although it wants to find ways to keep its other operations in China going, a backlash from the Chinese authorities would make it almost impossible to keep a presence in the world's biggest Internet market.
The Financial Times reports that the Chinese government has thrown down the gauntlet. Li Yizhong, minister for industry and information technology, said: "If [Google] takes steps that violate Chinese laws, that would be unfriendly, that would be irresponsible, and they would have to bear the consequences."
If Google does shut those operations, it will be a high strategic set back for the company. As I noted here in my blog entry this week, China has 384 million users and it's growing with more taking to the Net through hand held devices.
Adding to Google's problems is the news that Motorola has snubbed Google, announcing that it will not use Google on its Google Android phones and instead use Microsoft's Binge search service.
This is a fascinating story because of the way it plays into geo-politics now heating up. Reuters reports that China has accused Washington of hypocrisy for its criticism of Beijing's restrictions on the Internet and dissent, blaming the United States for the financial crisis and saying the human rights record in the US is terrible.
In his blog, Benjamin Daniels says Google's decision tells us that corporations will start exerting more power on the global political stage. Daniels writes: "This is not 'business as usual'. This is a radical new definition of the reach of a corporation into the world of politics and diplomacy, and an acceptance by major governments that geopolitics an appropriate sphere for corporations. Businesses are increasingly able to operate outside national jurisdictions and on immense scales; the largest exceed the GDP of most nations, maintain independent security forces larger than government armies, and control sums of money that can break sovereign currencies. It would not surprise me at all if corporations became international actors on the scale of governments, conflicts, diplomacy, and all. The real question is how governments and the international institutions that they utilize are going to deal with such a development."
And what does all this mean for Google? ZDNet's Tom Foremski says the champagne corks at Microsoft's Redmond office would be popping. He says it's a huge blow to Google's future strategy and predicts a falling out between Google CEO Eric Schmidt and the company's founders.
That's a big call. Still, watch this space.
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