Google May Soon Quit China Over Cyber Attack, Censoring

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Google may finally be ready to call it quits in China following a protracted war of words with the nation's government over censorship and cybersecurity.

The Bloomberg news service, citing a report by Shanghai-based China Business News, said Google "may announce" an April 10 pullout as soon as next week on March 22. That's in keeping with recent comments by Eric Schmidt, Google's CEO, who in recent weeks has said several times that Google (NASDAQ: GOOG) expects to announce a decision "soon" on its China operations.

The issue exploded in January when Google's head legal counsel, David Drummond, wrote in a blog post that the company planned to stop abiding by the Chinese government's censorship restrictions on search results for its Google.cn search engine site. At the same time, Google also said it, and dozens of other U.S. corporations had been subject to various unauthorized attempts to hack its network and some of its users' accounts.

Google also said its investigation indicated the attacks, which have become known as "Operation Aurora," originated in China, possibly with the complicity of the government there, a charge Chinese officials hotly denied.

McAfee Labs later said it identified a zero-day vulnerability in Microsoft Internet Explorer that had been used as an entry point for the attack on Google and at least 30 other companies.

Intel (NASDAQ: INTC) confirmed in its annual filing to the Securities and Exchange Commission that a recent and "sophisticated [cyber attack] incident occurred in January 2010 around the same time as the recently publicized security incident reported by Google." But Intel also said the attack didn't result in any loss of intellectual property or damage to its network.

Google claimed the attack, which included attempts to hack the Gmail accounts of human rights advocates in China, was unsuccessful.

Security, censorship policy in focus

The stakes are high for Google because a decision to leave China would mean leaving behind a country with over a billion people and rapidly growing Internet adoption.

Google said it had no comment on the China Business News report.

Earlier reports indicate part of Google's negotiating stance with the government is to see what it can salvage in the country if it decides to shut down Google.cn. For example, Google and its partners are ramping up mobile services and devices based on the company's Android software and may want to negotiate assurance the government will let those efforts continue even if Google.cn closes.

David Needle is the West Coast bureau chief at InternetNews.com, the news service of Internet.com, the network for technology professionals.