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In an earlier post I discussed the situation with Google in China, after the decision on whether or not to renew the search giant's Chinese license was pushed back by authorities in China. This was the latest in a long-running dispute between China and Google, which has included the search engine refusing to filter Chinese results, moving out of the country and accusing them of sponsoring the Aurora attack earlier this year (which targeted the personal information of human rights activists using Gmail).
Finally, China has agreed to renew Google's operating license in the country, on the condition that they stop automatically re-routing Chinese searchers to the Hong Kong version of the site, which doesn't filter or censor its results.
As the above screenshot demostrates, users will still have the option to use the Hong Kong version of the site, but it now requires an extra click from the user. Results from the Google.cn will be filtered, but users will still have an option to view uncensored results by searching via the Hong Kong site. This compromise appears to be suitable for both parties, as it allows Google to keep the Chinese happy whilst still maintaining their anti-censorship stance.
Many people have suggested that Google wouldn't be too bothered about the Chinese market, but I would suggest that's far from the truth. Google are a business and with the Chinese online advertising market expected to grow to around $10-13billion annually, it's no wonder the company were keen to make a compromise with the Chinese government.
Google have already lost out on both financially and in terms of market share in China, despite their future in the country only being in doubt for around a month. Uncertainty amongst businesses and advertisers over the companies' future in China caused a considerable number to switch their paid advertising to Chinese search engine Baidu, based in Beijing.
Google have now dropped to a 30.9% market share in China (down from 35.6% three months ago), Baidu's share on the other hand has rocketed to 64%, up from 58.4%. Some analysts are now suggesting that Google will struggle to keep the level of market share they currently have and that Baidu will not only stay out in front, but their lead will continue to grow in China.
Even now that Google have renewed their license and are back in the Chinese market, it is unclear whether or not advertisers will feel comfortable advertising with Google anymore. If this feeling of uncertainty continues, Baidu is likely to see a lot more income from paid advertising as Chinese businesses feel more assured investing time and money in a search engine that will play ball with the governement.