Page last updated at 23:38 GMT, Wednesday, 13 January 2010

Google 'may pull out of China after Gmail cyber attack'

Peter Barron from Google: ''We should no longer agree to censor our results in China''

Internet giant Google has said it may end its operations in China following a "sophisticated and targeted" cyber attack originating from the country.

It did not accuse Beijing directly, but said it was no longer willing to censor its Chinese search engine -

This could result in closing the site, and its Chinese offices, Google said.

Chinese rival Baidu called the move "hypocritical" and financially driven. In US trade on Wednesday Baidu's shares were up 13%, and Google's down 0.57%.

Google said the e-mail accounts of Chinese human rights activists were the primary target of the attack, which occurred in December.

The search engine has now said it will hold talks with the government in the coming weeks to look at operating an unfiltered search engine within the law in the country, though no changes to filtering had yet been made.

Google launched in 2006, agreeing to some censorship of the search results, as required by the Chinese government.

It currently holds around a third of the Chinese search market, far behind Baidu with more than 60%.

Email targeted

In a blog post announcing its decision, Google's chief legal officer David Drummond said: "A primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists."

Some Google shareholders... will see this as a commercial example of cutting off your nose to spite your face
Robert Peston, BBC business editor

The company said its investigation into the attack found two accounts of its online mail service - Gmail - appeared to have been accessed.

However, the attack was limited to accessing account information such as the date the account was created and subject line, rather than e-mail content, it said.

It said it had also discovered that the accounts of dozens of US, China and Europe-based Gmail users, who are "advocates of human rights in China", appeared to have been "routinely accessed by third parties".

It said these accounts had not been accessed through any security breach at Google, but "most likely via phishing scams or malware placed on users' computers".

At least 20 other large companies from a wide range of businesses were similarly targeted, it added.

'Makes me sick'

In a blog, the chief architect of Baidu said Google's decision to quit was for financial reasons, rather than a human rights issue, as Google had failed to dominate the Chinese search market.

"What Google said makes me sick," he said. "If you are to quit for the sake of financial interest, then just say it."

Chris Hogg
Chris Hogg, BBC News, Shanghai

The Chinese authorities will be infuriated that Google has announced publicly it's considering whether to pull out of the country, before negotiations with officials get under way.

The assumption has always been that the China market is too big to walk away from.
Foreign firms accept the difficult commercial conditions, the tough competition, government interference or censorship because the prize is worth it.

Google's decision to concede to China's demands on censorship in 2006 led to accusations it had betrayed its company motto - "don't be evil" - but Google argued it would be more damaging for civil liberties if it pulled out of China entirely.

BBC technology correspondent Rory Cellan Jones said Google had also seen a significant amount of internal dissent over its decision to operate under censorship.

In 2008, it signed the Global Network Initiative agreement with rivals Microsoft and Yahoo, pledging better protection of online privacy and freedom of speech against government interference.

Those commitments, however, are weighed against the commercial opportunities that China provides as a fast growing market.

Nearly 340 million Chinese people now online, compared with 10 million only a decade ago.

Google's presence in China is financial rather than some other altruistic purpose
Clim, Hong Kong

Last year, the search engine market in China was worth an estimated $1bn and analysts previously expected Google to make about $600m from China in 2010.

But unlike most markets, Google comes second in search in China.

It has 31% of the market compared with about 60% controlled by market leader Baidu, which has a close relationship with the Chinese government. Yahoo has less than 10%.

Microsoft has a tiny share of the Chinese market with its new Bing search engine, but in December the technology giant said it was committed to China, calling it "the most important strategic market".

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