“We can confirm that the government has renewed our [internet content provider] licence,” a Google spokesperson said. The announcement comes less than a week after a set of new regulations took effect which appeared to put the legal structure of many foreign and overseas-listed Chinese internet companies at risk.

The rules, spelling out how the Chinese government will review acquisitions of Chinese companies by foreign investors for national security implications, say that foreign investors will not be able to avoid a review through techniques such as contracts that give them control over a domestic company.

Lawyers have warned that this phrase targets so-called variable interest entities, structures used over the past decade to circumvent foreign ownership restrictions in the internet sector.

Typically the VIE owns the licence necessary for operating a business such as running an internet search engine or an e-commerce site in China. Instead of directly owning a majority stake in that company, which Beijing prohibits in internet content services, the foreign company secures control of that company through contracts.

Industry executives and legal experts say it remains unclear exactly how the new regulations will affect the industry, but warn that they give the government more discretionary power in a sector already seen to have significant regulatory risk.

Google’s China business is also organised under the VIE model, with a locally incorporated company as the technical owner of the ICP licence.

Lawyers said cases such as Google’s should not be affected by the new rules because its local partner company was set up for the sole purpose of holding the licence, and the relationship between the two should therefore be judged as a “greenfield investment”.

However, the case is significant because Google, having had a major falling-out with the Chinese authorities, is seen as particularly vulnerable to regulatory risk.

In January 2010, the company threatened a retreat from the Chinese market due to concerns over censorship and a hacking attack, and said it had decided to no longer censor Chinese search results. In March last year, it followed up by moving its mainland China web search services to its unfiltered Hong Kong site and redirecting Chinese users there.

The company’s share of web search revenues in China has since dropped from a high of 35 per cent to below 20 per cent, according to Analysys, a Beijing-based research company, with most of the difference being snapped up by Baidu, the Chinese market leader.

Beijing had extended Google’s ICP licence last summer for another year, but this year’s annual extension had been delayed since the end of June.

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The company posted a Thursday notice about the new barrier without any other details. A Google spokesman in the U.S. says he is still trying to gather information about the situation in China.

It’s the latest twist in a high-profile showdown over Internet censorship pitting Google against China’s communist government.

Google risked having its search engine cut off from the world’s most populous country because it was no longer willing to let China’s government control its search results. The two sides had appeared to reach a truce three weeks ago when China renewed Google’s Internet license there. — AP

WASHINGTON (AFP) – Microsoft on Tuesday denounced Yahoo! Japan’s Internet search alliance with Google, saying it would give Google near-total control over the third-largest market for search queries in the world.

“Google’s plan would cement its position as essentially the sole provider of search results in Japan for years to come,” Microsoft vice president and deputy general counsel Dave Heiner said in a blog post.

“The proposed deal will eliminate search competition in Japan — in paid advertising and natural search results,” Heiner said.

The agreement calls for Yahoo! Japan to switch to Google’s search engine this year from the Yahoo! Inc. technology currently used and deploy Google’s online advertising and distribution system.

Despite its namesake, the Japanese portal is 40 percent owned by telecoms operator Softbank, while Yahoo Inc. holds a 35 percent stake.

It is therefore not directly affected by the search partnership reached last year between Microsoft and Yahoo!, an alliance aimed at boosting competition with Google, which has two-thirds of the global market.

The independently-run Japanese company is not obliged to use Microsoft’s Bing search engine, which will power Yahoo! in the United States by the end of the year and other regions later.

Microsoft’s Heiner said Google currently accounts for about 51 percent of paid search advertising in Japan while Yahoo! Japan accounts for 47 percent.

“If Google is permitted to proceed with its plan, it would gain nearly complete control over search and search advertising in Japan through contract, not organic growth,” Heiner said.

“Google alone would decide what consumers in Japan will find, or not find, on the Web,” he said.

“In fact, the competitive effects of the plan may be felt globally because Japan is the third largest generator of search queries in the world (after the United States and China),” Heiner said.

He said rival search engines would be facing a major competitive disadvantage.

“That is because if Google gains control over the roughly half of Japanese search queries that it doesn?t already control, it will deprive competing search engines of the query scale that is essential if they are to improve their own search results in Japan,” Heiner said.

Microsoft recalled that a proposed Google-Yahoo! partnership was rejected by the US Justice Department as anti-competitive.

“Less than two years later Google has entered into a deal that would turn its only major competitor in Japan into a collaborator, rather than a competitor, across natural search results and advertising,” Heiner said.

Microsoft also raised questions about the legality of the agreement.

“Google reports that it already received approval from the Japanese Federal Trade Commission for the deal, even before it was announced and before the JFTC reached out to advertisers, publishers and competitors to learn about the likely competitive effects of the deal,” Heiner said.

“It will be interesting to see over the next few weeks if that is really accurate,” Heiner said. — AFP

The renewal had been in doubt due to the tense relations between Google and Chinese authorities over censorship of Google search results.

Google closed its China search engine in March but wants 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 that the move could mean losing its license.

Talking with reporters at the annual media conference in Sun Valley, Idaho, hosted by investment bank Allen & Co., Schmidt said, “We now expect a renewal.”

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 poses a balancing act for Google. The company wants to uphold the principle of free access to information. It also wants to keep a foothold in a market that has nearly 400 million Web users, the world’s biggest.

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 has about 60 percent of the market to Google’s 30 percent.

Schmidt did not say when he expects Beijing to give it the OK. Google’s license runs though 2012 but needs a renewal each year. And he stressed that Google’s operations in China are still at the mercy of the Chinese government.

“They have the absolute ability to stop our operations if they should choose to,” he said.

In fact, China has routinely blocked parts of Google’s service such as YouTube.

Google said last week that users in mainland China were unable to use the “suggest” feature of its search engine, which offers possible results as they start to type a query. — AP

(This version CORRECTS that Google wants to retain a website in China but has closed its China search engine)

WASHINGTON (AFP) – Google’s Web search engine in China was “partially blocked” on Wednesday, the deadline for the Chinese authorities to renew the Internet giant’s business license.

“It appears that search queries produced by Google Suggest are being blocked for mainland users in China,” a Google spokesman told AFP. “Normal searches that do not use query suggestions are unaffected.”

Google Suggest provides a user with suggested words as they type a query into the Google search box. Typing in the letters “ob,” for example, may prompt a suggestion for “Obama.”

A Web page maintained by Google on the accessibility to its services in mainland China, google.com/prc/report.html, listed its Web search service as “partially blocked” as of Wednesday.

The service had been listed as “fully or mostly accessible” for previous days this week. Other Google services such as Gmail, News and Images were “fully or mostly accessible” on Wednesday.

It was not immediately clear, however, whether the change in accessibility to Google’s Web search service in China was linked to its ongoing dispute with the Chinese authorities over censorship.

Google’s Web search engine in China has been “partially blocked” on three other days this month, most recently on June 17, June 18 and June 20.

Google said Tuesday it would stop automatically redirecting Chinese users to an unfiltered search site in Hong Kong, a process it began in March in response to state censorship and cyberattacks it claims came from China.

Google said all mainland users would now be directed to a new landing page on google.cn, which links to the uncensored Hong Kong site.

Google’s change in tack in the world’s biggest online market was aimed at addressing government complaints about the censorship issue and came just before its Internet Content Provider license was up for renewal Wednesday.

“It’s clear from conversations we have had with Chinese government officials that they find the redirect unacceptable — and that if we continue redirecting users, our Internet Content Provider license will not be renewed,” Google’s chief legal officer David Drummond said on the company’s official blog.

“Without an ICP license, we can’t operate a commercial website like google.cn — so Google would effectively go dark in China,” he said.

“Over the next few days we’ll end the redirect entirely, taking all our Chinese users to our new landing page,” he said.

Drummond said Google re-submitted its business license application based on what it called a “new approach.”

“This new approach is consistent with our commitment not to self-censor and, we believe, with local law,” Drummond said.

Marsha Wang, a Beijing-based spokeswoman for Google, said the company was still waiting for a response from the central government on the license issue.

“We will keep communicating with (the government) to see what information it will give us,” she told AFP.

China is the world’s biggest Internet market, with an online population of more than 400 million, according to official data.

In January, Google threatened to completely shut down its operations in mainland China over what it said were China-based cyberattacks, and said it was no longer willing to abide by the so-called “Great Firewall of China”.

Two months later, it started re-routing Google.cn users to its unfiltered Hong Kong site.

Beijing reacted furiously, denying any role in the cyberattacks which Google said had targeted the Gmail accounts of Chinese dissidents and saying it was “totally wrong” to stop filtering its Chinese-language search engine. — AFP

Google shut down its China-based search engine March 22 to avoid cooperating with the communist government’s Internet censorship and has rerouted users to its unfiltered site in Hong Kong. But Google said regulators told the company its Internet license, which expires Wednesday, would not be renewed if that continues.

“They made it clear to us that they did not think the redirect was acceptable,” said a Google spokeswoman, Jessica Powell. She declined to say what reasons the government gave for its objections.

Google still operates a music download service and several other features on Google.cn that are not affected by filtering regulations and Powell said it wants those services to continue.

Instead of automatically being switched to Hong Kong, visitors to Google.cn now see a tab that says in Chinese “We have moved to google.com.hk.” Users can click on that tab to move to the Chinese-language site in Hong Kong, which is a Chinese territory but has Western-style civil liberties with no Internet filtering.

There was no immediate word from Beijing about whether the measure was sufficient for Google to keep its Chinese Internet license.

“This new approach is consistent with our commitment not to self-censor and, we believe, with local law,” said Google’s chief legal officer, David Drummond, on a company blog.

“We are therefore hopeful that our license will be renewed on this basis so we can continue to offer our Chinese users services via Google.cn.”

Beijing encourages Internet use for business and education but operates an extensive monitoring system and tries to block access to pornography or subversive material. China has the largest population of Web users, with 384 million people online at the end of 2009, according to the government.

Google announced in January that it no longer wished to comply with Chinese Internet filtering and said hackers working from China tried to steal its code and break into e-mail accounts of human rights activists.

The statement was an embarrassment for China’s leaders, who want foreign companies to help develop its technology industries. People in the industry are watching to see whether Beijing allows Google to continue operating other businesses.

A foreign ministry spokesman, Qin Gang, said he had not seen Google’s announcement and could not comment on it. However, he added, “I would like to stress that the Chinese government encourages foreign enterprises to operate in China according to law.”

Google, based in Mountain View, California, hopes to keep a research center in China, an advertising sales team that generates most of its revenue in the country and a fledgling mobile phone business.

In a statement June 8, the government said the Internet played an “irreplaceable role in accelerating the development of the national economy.” But it vowed to keep a tight grip on online content and to block subversive material.

Regulators block websites such as Facebook, YouTube and Twitter to prevent dissidents and human rights or Tibet activists from using them to spread criticism of Beijing. — AP

The US-based firm last week said infected machines had been used both to spy on their owners as well as to attack blogs containing messages of political dissent.

“These are groundless opinions,” Nguyen Phuong Nga, spokeswoman for the Ministry of Foreign Affairs, told AFP.

Vietnam has “specific regulations against computer viruses, harmful software and for ensuring information security and secrecy,” she said in comments received over the weekend.

Google said the malicious software infected computers of users who downloaded Vietnamese language software, and possibly other legitimate software, that was altered to infect the machines.

Leading Internet security firm McAfee said perpetrators of the Vietnamese attacks “may have political motivations and may have some allegiance to the government of the Socialist Republic of Vietnam”.

Google announced last month it was redirecting mainland Chinese users to an uncensored site in Hong Kong, making good on an earlier pledge not to go along with the Communist Party government’s censorship rules.

Its decision to defy Beijing was based on what it called concerns over censorship and cyberattacks it said originated from China.

Analysts, rights groups and diplomats say the human rights situation in Vietnam has been worsening.

The country’s restrictions on news media and Internet sites such as Facebook threatened Vietnam’s rapid economic progress, Western donors said in December. — AFP

The US Internet giant had initially thought that recent changes to its search software had misled China censors into thinking queries were for Radio Free Asia.

Google backed off that conclusion after it realized that it had upgraded its search parameters about a week before results stopped showing up for many queries at its Chinese-language engine.

“So whatever happened today to block Google.com.hk must have been as a result of a change in the great firewall,” a Google spokesman said in an email response to an AFP inquiry.

“However, interestingly our search traffic in China is now back to normal — even though we have not made any changes at our end.”

China’s notoriously sophisticated Internet censorship is referred to as “The Great Firewall.”

Google said it will continue to monitor what is going on, but for the time being “this issue seems to be resolved.”

Google upgraded search code parameters worldwide to include a “gs_rfai” string of characters as part of a modification intended to improve query results, according to the company.

Engineers at the firm initially suspected problems with China search results were caused by censorship software in that country mistaking the “rfa” characters as referring to Radio Free Asia, the US-funded broadcaster transmitted across Asia that is routinely jammed by Chinese authorities.

RFA President Libby Liu said in response to their unintended association with the Google dispute that the development was “a stark reminder to the world of China’s repressive control of the Internet and free speech for its citizens.”

“It’s time for China to stop exerting draconian control of its cyberspace, and allow accurate and objective information to flow freely within its society,” Liu said in a statement released out of Washington.

Google also said it has yet to pinpoint the cause for its mobile Internet service being partially blocked in China.

The US Internet giant reported on Monday that its mobile Internet service in China was partially blocked, but it was unknown whether the trouble was related to its stand-off with Beijing over censorship.

Google mobile includes search, map, news and other services for smartphones and other Internet-enabled handsets.

Sensitivity to problems with Google offerings in China heightened since the company last week said it would no longer bow to government censors in Beijing by filtering its search results and effectively shut down its Chinese search engine, re-routing mainland users to its uncensored site in Hong Kong. — AFP

It has already been shunned by at least one of those partner firms and was attacked by a state newspaper after pulling the plug on its mainland Chinese language portal Google.cn. It now reroutes searches to an unfiltered Hong Kong site.

The Google dispute, which involves cyber attacks as well as Internet censorship, is one of many thorny trade, financial, political and security issues that are roiling U.S.-China ties this year.

On Wednesday, Google’s search services remained erratic across Beijing, frustrating users unsure about the future of its other services — from maps to music — over two months after its bombshell announcement it may quit China.

While Google is the world’s top search engine, it held only an estimated 30 percent share of China’s search market in 2009, compared with home-grown rival Baidu Inc’s 60 percent.

Activists who gathered at Google’s Beijing headquarters to show support appeared to be Google’s only vocal allies in China.

Google said it is not providing direct access to censored searches, but will fulfil existing contracts with other firms.

“We have over a dozen syndication deals with partners in China. We obviously have contractual obligations to them, which we want to honor,” a Singapore-based Google spokeswoman said.

“Over time, we will not be syndicating censored search to partners in China. But we will of course fulfil our existing contractual obligations,” she added.

Google has already been taken off the popular tom.com portal, owned by Li Ka-shing, a Hong Kong billionaire who is one of the richest men in the world and has good ties to Beijing, according to Bloomberg.

Many of Google’s often well-educated, professional fan-base in China, who use the company’s software for both work and play, said they were already suffering some fallout on Wednesday with erratic service.

Several of Google’s international search sites were failing to open, and when they could be accessed some users found that all searches, including for non-sensitive terms like “hello,” were returning blank pages or error messages.

Businesses, university students and people in private homes reported intermittent problems on the main Google.com site, the Google.co.uk site and Google.ca.

“Google.com.hk is not currently being blocked, although it seems that some sensitive terms are. However, if you search for a sensitive term and trigger a government blockage, that may affect subsequent searches … for a short period,” Google said.

ACTIVISTS SUPPORT

Around 100 people, including human rights lawyers and other activists, gathered at Google’s Beijing base late on Tuesday — the day when news of the pullout reached China — to pay tribute.

After arguments with police, they approached the company’s door to leave messages including “Google forever” and “Long live freedom!,” said Teng Biao, a prominent activist who visited the building after a rights meeting.

“It will bring some inconvenience, but we really support this move by Google. They put freedom of expression ahead of business, and we hope that it will encourage more people to pay attention to human rights situation in China,” Teng told Reuters by phone.

But Google’s move has angered the government, and on Wednesday an official Communist Party newspaper accused it of colluding with U.S. spies, in China’s latest blast at the company.

“Google is not a virgin when it comes to values. Its cooperation and collusion with the U.S. intelligence and security agencies is well-known,” a front page commentary in the overseas edition of the People’s Daily said.

“All this makes one wonder. Thinking about the United States’ big efforts in recent years to engage in Internet war, perhaps this could be an exploratory pre-dawn battle,” the paper said. — Reuters

HONG KONG (AFP) – The Internet company owned by Hong Kong’s richest man, Li Ka-shing, severed ties with Google’s search services Wednesday, sparking concerns that other companies may also pull away from the Web giant.

Stressing its adherence to China’s laws, Hong Kong-listed TOM Group issued a statement on behalf of subsidiary TOM Online following Google’s decision to stop censoring its Chinese search engine on Monday.

TOM, which runs online and mobile Internet services in mainland China, said it had stopped users from visiting its website through Google’s search engine service.

“TOM reiterates that as a Chinese company, we adhere to rules and regulations in China where we operate our businesses,” it said.

TOM Group is one of the key elements of the business empire of property tycoon Li, 81, who has strong ties with the Chinese government.

Li was ranked as the 14th wealthiest person in the world by Forbes magazine in March, when his net worth was 21 billion dollars.

Google co-founder Sergey Brin urged the US administration meanwhile to make the censorship row between China and his California-based company a “high priority.”

“Human rights issues deserve equal time to the trade issues that are high priority now — I hope this gets taken seriously,” Brin told the British newspaper The Guardian.

“Since services and information are our most successful exports, if regulations in China effectively prevent us from being competitive, then they are a trade barrier,” Brin said.

China has attacked Google for stopping censorship of its Chinese-language search engine but said there should be no broader fall-out in Sino-US ties provided the issue is not politicised in the United States.

China’s state media slammed Google again on Wednesday, saying the Internet titan was “not god” and accusing it of working with US intelligence.

“For Chinese people, Google is not god, and even if it puts on a show of politics and values, it is still not god,” said the overseas edition of the People’s Daily.

“Google is not chaste when it comes to values. Its cooperation and collusion with the US intelligence and security agencies is well-known,” the ruling Communist Party’s official mouthpiece said.

Chronology: Google’s operations in China

The English-language Global Times, a subsidiary of the People’s Daily, also hit out at Google, saying it had made a “huge strategic misstep in the promising Chinese market.”

China Daily relished the “moment of peace” created by Google’s decision, which came two months after it first said it had been the victim of cyberattacks originating in China and was no longer willing to bow to censors.

“Google’s efforts to make this issue into a political spat have naturally met with strong opposition and criticism from the Chinese government and society,” the newspaper said.

The paper slammed Google for offering China’s 384 million web users access to “pornography and subversive content,” saying the Chinese Web would “continue to grow in a cleaner and more peaceful environment” without google.cn.

A Google spokeswoman in Singapore declined to discuss TOM’s decision, but said the search giant planned to continue serving mainland Chinese users by re-routing its service through Hong Kong, a semi-autonomous Chinese territory.

“We made this decision as a matter of principle, but we understand this is a complicated process with ramifications on the technology side and the business said,” she said.

Elinor Leung, head of Asia Internet and telecommunications research with brokerage CLSA, said it was likely other Google partners, including phone giant China Mobile and Internet portal operator Sina, would follow TOM’s lead.

“They want to play it safe,” the Hong Kong-based analyst said. “China Mobile would likely terminate their mobile phone search. I think that would be the biggest loss.”

Although Google’s mainland Chinese sales are relatively small, China Mobile pulling away would be a big blow for the US company and present a major opportunity to China-based rivals, Leung said.

“The obvious one would be Baidu,” she added, in reference to the Chinese search engine.

China Mobile did not immediately respond to requests for comment.

Despite Google’s promise of uncensored results, searches on the mainland of politically sensitive keywords continue to generate the browser message “cannot display the webpage” — suggesting China’s “Great Firewall” of Internet control remained intact. — AFP