Google's Compromise With China Gains License Renewal

The speedy renewal gives Google the green light to keep offering its search services in mainland China through 2012, enabling it to continue to target the country's 1.5 billion citizens and a bite out of competitor Baidu.com, which is the country's number one search engine. “We look forward to continuing to provide Web search and local products to our users in China,” Google said in a blog post Friday.

However, the renewal comes with the provision that Google's contract would be revisited annually and could be yanked if Chinese officials deem that the company is out of line with its conditions.

While the renewed license appears to be good news for Google, experts say that Chinese authorities still retained the right to renegotiate or terminate the contract for any reason.

Google's Internet contract was in danger of being eliminated entirely when the company redirected the bulk of its search services from largely censored mainland China's .cn domain to an unfiltered satellite domain hosted in Hong Kong. The redirect to Hong Kong domain .hk was ostensibly in reaction to censorship rules that required the search giant to filter Web content at the behest of the Chinese government.

As a compromise that attempted to both assuage Chinese consternation regarding the redirect while satisfying anti-censorship advocates, Google brought a small percentage of users to a landing page on Google.cn that linked to Google.com.hk as opposed to automatically redirecting all Google users to back to google.cn. Executives said that the redirect was temporary, but enabled the company to have confidently resubmitted its ICP license renewal application.

Google CEO Eric Schmidt told BusinessWeek that the company was surprised at how quickly China processed and renewed its Internet-service license.

“This is the outcome we were hoping for, we just didn’t expect a decision this soon,” Schmidt said. “I didn’t know until this morning. Literally the good news came overnight.”

Experts say that retaining Google's search service could demonstrate to the world that the country is becoming more open to outside competition, and may also constitute a nod to the Chinese people who voiced support for the company, BusinessWeek reports.

Google's shares rose $10.93, or 2.4 percent, to $467.49 on the Nasdaq Stock Market Friday after experiencing a 25 percent decline over this year.

The renewed Internet license, which Google submitted last week, might serve to help restore strained relations between the search giant and the world's most populous country. Earlier this year, the Google redirect to Hong Kong prompted threats by Chinese officials not to renew its contract.

Meanwhile, the redirect followed not long after Google suffered a massive cyber attack in January in which hackers originating from China took aim at the company's networks to target intellectual property and other assets.