Google says China has renewed its Web license

By Reuters
Posted July 9, 2010 at 5:49 a.m.

Google Inc. Chief Executive Eric Schmidt expressed confidence the company will secure a license to operate a website in China, confounding speculation Beijing may shut down its flagship site there.

Schmidt, addressing executives and financiers at an annual gathering of the industry’s movers and shakers in the Idaho mountain resort of Sun Valley, said he expected Beijing to renew its license to operate a website in the world’s largest Internet market, but offered no timeframe.

“We would expect we would get the necessary license,” Schmidt said. “We now expect to get a renewal.”

Google stunned markets and consumers in January when it warned it might quit the country, saying it would not provide the censored search results that China requires. In March, it began to redirect visitors on its local website to a site in Hong Kong that provided uncensored results.

China’s Ministry of Industry and Information Technology said on Wednesday that it was reviewing Google’s license renewal application but gave no deadline for completion.


Analysts and investors have discounted a severe curtailment of Google’s business in the world’s No.3 economy.

Its stock has slid more than 26 percent this year, hit partly by fears that its stance against censorship will incense a Chinese government intent on maintaining control over the flow of information within its borders.

By contrast, local search leader Baidu Inc has seen its stock soar about 75 percent since Google’s announcement on investor hopes for a big market share gain.

An outright license rejection — as expected by some analysts — could spell future trouble for Google’s non-search businesses in China, such as Android-based mobile phones, now carried by the nation’s largest telecoms carriers.

Google’s search business in China accounts for a tiny slice of the company’s $24 billion in annual revenue. Analyst estimates of Google’s annual revenue in China range from $300 million to $600 million, but long-term growth prospects are key.

Google now operates a landing page for its website and clicking anywhere on the page brings the user to the site. But if Beijing refuses to renew its license, the site would be effectively shut down.

Last week, Google said it would stop automatically rerouting users to its uncensored Hong Kong search site after Beijing indicated it would not renew Google’s Internet Content Provider license if it continued to do so.

Schmidt’s comments come halfway through what has been a tumultuous year for the company, as the world’s No.1 search leader deepened its rivalry with iPhone-maker Apple and social network Facebook.

Google is due to report its second-quarter financial results next week. Shares in the company ended Thursday up 1.4 percent at $456.56 and were little changed after-hours.

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