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    Google (GOOG) Bows to Pressure from Chinese Government

    Google Inc. (NASDAQ: GOOG) has decided to stop redirecting its Chinese users to the company’s Hong Kong site. The move comes as Google looks to renew its license in China.

    Earlier this year, Google started redirecting its Chinese users to the Hong Kong site after the Chinese government had asked it to censor its search results on Google objected to the censorship of content on its site and this led to a confrontation between Google and the Chinese authorities. Google was also upset about the fact that Gmail accounts of some of its Chinese users were hacked into by Chinese authorities. Following these controversies, Google came up with an innovative way to defy the Chinese authorities. It started redirecting its Chinese users to the Hong Kong site, where the censorship laws did not hold. Obviously this has not gone down well with the Chinese authorities.

    Now with its license up for renewal, Google realizes that it has to bow in front of the Chinese government or face exit from the country. And Google can ill afford that. China, with 400 million internet users, is a very big market for Google to exit. The company realizes this and has succumbed to the pressure.

    David Drummond, Google’s chief legal officer, in a blog post on Monday, wrote that the Chinese government will reject the company’s application for renewal of its Internet Content Provider license, due on Wednesday. This would effectively mean that the company will have to shut down its Web site completely in the country, wrote Drummond. He wrote that in light of this and in an effort to continue to serve its Chinese users, the company is proposing compromise under which it will stop redirecting users to the Hong Kong site automatically.

    The move was expected since Google cannot afford to shut its China operations. It will be interesting to see how the Chinese government will react to this now.

    Shares of Google are down 2.69% to $459.38 in today’s trading on volume of 1.13 million. The stock reached a low of $452.50 today. The Google stock has a 52-week range of $395.98-$629.51 and is currently trading below its 50-day and 200-day moving averages.

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