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Google partners in China issue plea to Web giant
Published on: 2010-03-17
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BEIJING—A group of Goolge Inc.'s partners in China have sent an impassioned plea to the Internet giant, saying their businesses are at risk if Google closes its Chinese search engine and demanding to know how they will be compensated.

The letter, viewed by The Wall Street Journal, states Google hasn't given its advertising resellers in China guidance since its announcement in January that it may pull out of China. The letter says the companies have watched their business decline and worry they face bankruptcy if Google withdraws.

The letter, which listed 27 Google advertising resellers in China, was sent Monday by email to John Liu, who leads Google's sales team and oversees the company's business operations in greater China, according to one of the resellers on the list, who spoke on the condition of anonymity.

The letter demands an explanation of how the resellers will be treated if Google has to leave China or shut down Google.cn.

A Google spokeswoman said the company had received the letter and was reviewing it. The letter was also posted on the Web site of China's state-run broadcaster.

The Google reseller said the companies are "facing operating pressure" due to the uncertainty of Google's status in China, but not all of the resellers had a part in drawing up the letter.

"Anyway, we really hope Google would face up to the problems and try to find ways to solve them," the reseller said, adding that a response hadn't been received as of Tuesday night.

Google, which has yet to follow through on an announcement in January to stop filtering search results on Google.cn, has been in negotiations with Chinese authorities over the extent to which it can continue operating, though it originally said the discussions would take place over a "few weeks."

The saga is being closely watched by Google users in China, which has the most Internet users of any nation and would be dominated almost entirely by easily controlled Chinese companies if Google exits the market. Analysts estimate the company has tens of millions of users here.

Convinced the company would take action on Monday, hundreds of Google users stayed awake the entire night to monitor search results on the Web site for any indication that filters had been lifted.

Users swapped analyses of results for keyword queries like "1989 student protest," a reference to the Tiananmen Square crackdown, because such content is considered politically sensitive in China and is often filtered.

Some users published screenshots of Google results that seemed to be uncensored, but it wasn't possible to determine what the causes of those inconsistencies were. As of Tuesday, Google's results were still censored in China.

"Many users are wondering why Google is so indecisive and some of them have lost their patience," said Issac Mao, an independent Chinese-Internet researcher and blogger.

Google's standoff with the Chinese government has highlighted the sometimes perilous regulatory web that entangles foreign companies in the country.

China operates a licensing system, policed by regulators, that requires all foreign investors to seek approval to conduct business activities within a defined scope. Companies that breach the terms of their license risk being closed down, which is the position in which Google now finds itself having declared it is no longer prepared to censor its search results.

No area of business in China is more politically sensitive than the Internet, or more heavily regulated. China bars foreign companies from owning an "Internet content provider" license to provide services in the country. For that, Google needed to partner with a Chinese company, which holds the ICP license from the Ministry of Industry and Information Technology.

A Google spokeswoman declined to comment on the status of Google's ICP license, but said licenses are "generally" due to be renewed this month. Still, it is unclear to what extent the license renewal is influencing Google's decision making, if at all, according to a person familiar with Google's China plans.

Google's commercial operations also have to be registered with the Ministry of Commerce. On Tuesday, Ministry of Commerce spokesman Yao Jian said Google has two companies registered, but so far the ministry hasn't received any reports regarding an exit of either company.

"If the two companies want to exit from China they will have to go through a procedure including reporting to the commerce ministry," Mr. Yao said, citing China's foreign investment law. He didn't elaborate.

Google grapples with a slew of agencies that have a say over the Internet. These include the Ministry of Public Security, which deals with criminal activities on the Web, including political dissent; the State Administration of Radio, Film and Television, responsible for broadcasting; and the Publicity Department of the Chinese Communist Party, which ensures that the media adheres to political orthodoxy.

For "anything that has to do with the Internet, you could be facing as many as a half dozen ministries," said David Wolf, chief executive of Wolf Group Asia, a Beijing-based marketing strategy firm.

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