China Renews Google's License despite Friction

Google on Friday said Beijing has renewed the license it needs to continue operating a website in China, securing the search giant's foothold in the world's biggest Internet market despite tensions over censorship.

The renewal of the license to provide Internet content was in doubt due to the rocky relations between Google and Chinese authorities over hacking of Gmail accounts and censorship of Google search results. Google last week stopped automatically redirecting users in China to its uncensored Hong Kong site after Beijing threatened to withdraw its license.

"We are very pleased that the government has renewed our ... license and we look forward to continuing to provide web search and local products to our users in China," said an e-mailed statement by Google's top lawyer, David Drummond.

The statement, which gave no other details, also was posted on Google's blog. There was no immediate statement posted on the website of China's ministry of industry and information technology.

Losing the Chinese license would have been a significant setback for Google, even though China will only account for a fraction of the company's projected $28 billion in revenue this year. China already has nearly 400 million Web surfers, making it the world's biggest Internet market, and usage is expected to rise for years to come. For Beijing, the renewal partly defuses a high-profile dispute that has added to the perception of China as becoming less welcoming to foreign businesses.

Google CEO Eric Schmidt said Thursday he expected Beijing to renew the license.

A company spokeswoman Courtney Hohne said on Friday she could give no further details.

"In the coming days, we will clarify what products we'll offer locally through google.cn," she said, referring to company's Chinese site.

Google closed its China search engine in March but has wanted to keep a website that offers music and other services. Users had been automatically redirected to Google's uncensored Hong Kong site, but the company stopped that last week after Chinese officials warned the move could mean losing its license.

Google's relations with Beijing have been rocky since the U.S. search giant said it no longer wanted to cooperate with government Internet censorship. The announcement was prompted by cyber attacks the company traced to China.

The conflict has posed a balancing act for Google. The company wants to uphold the principle of free access to information while also keeping a foothold in the Chinese market.

Google, based in Mountain View, Calif., does not hold the kind of dominant position in the Chinese search market that it does in the U.S. The search engine operated by Chinese competitor Baidu Inc. has about 60 percent of the market to Google's 30 percent.

The license renewal means that Google will have a chance at expanding other lines of existing business in China: advertising, mapping and the Android operating system for mobiles.

Although Google's China license runs until 2012, it must be renewed annually. The company applied for renewal before the June 30 filing deadline.

In a letter requesting Google's license renewal, the company's local partner, Guxiang Information Technology Co. Ltd., pledged to "abide by the Chinese law" and "provide no lawbreaking contents," the state-run Xinhua News Agency reported.

Xinhua had reported Google was "very late" in submitting the application.

Phone calls to the regulator, the Ministry of Industry and Information Technology, before Friday's news were not answered.

For China, the renewal takes the heat out of a high profile dispute at a time when American and European businesses are changing their once bullish attitudes about the China market and complaining about unfair regulations and other obstacles.

"Basically, this was a smart move on the part of the Chinese government to kind of defuse the situation so that the Google search engine will still be available in China," said Paul Denlinger, an Internet consultant for startups. He said that the friction between Google and China won't disappear but will temporarily dissipate.

Among the things to look out for in coming months is whether Google services will continue to be featured on new mobile phones in China, Denlinger said. Motorola had in recent months been replacing Google functions with those of its Chinese rival Baidu, he said.

"It will be interesting to see if Google can stop the slow bleeding," Denlinger said.

Google opened its China site in 2006 to attract more Chinese users after the government filters slowed their access to its main U.S. site, Google.com.

China has routinely blocked parts of Google's service such as YouTube.

Even without the license renewal, Web surfers could still reach Google's Chinese-language Hong Kong site by typing in its ".hk" address directly. Industry analysts, though, believed many people would have defected to Chinese competitors such as Baidu.