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Google may leave China soon

By Aaron Smith and David Goldman, CNNMoney.com staff writers

NEW YORK (CNNMoney.com) -- Google appears to be getting closer to shutting down its strictly monitored search engine in China, according to news reports.

The reports, which cited people close to the situation, indicate that Google advertisers in China are being advised to switch over to rival Baidu Inc., out of fears that Google could abandon the country.

Following a targeted cyber attack on Gmail accounts emanating from China in December, Google announced on Jan. 12 that it intended to give all of its users open access to the Internet.

Google has since been negotiating with the Chinese government, as such a move would clash with China's censorship laws. Those laws forbid access to Internet sites that criticize the government, display pornography or promote certain religious material.

A spokeswoman for Google declined to comment specifically on the negotiations, but reiterated the company's intentions to remain an open-access site and said Google will soon make an announcement on the outcome of its dealings with China.

"We have always said we intend to stop censoring, and we will be making changes soon," said Jill Hazelbaker, spokeswoman for Google. "We are not detailing our plans at the moment. We will have an announcement soon, as in weeks not months."

Shares of Google (GOOG, Fortune 500) fell 3% in morning trading, as shares of rival Baidu (BIDU) soared 7%. China is one of the few countries in which Google does not dominate the search market: Google controls only about one-third of the Internet search market in China, where Baidu controls 64%, according to data from Analysys International.

When Google began its operation in China in 2006, it aimed to strike a balance between its stated goal of making the world's information widely available and the requirement that all Internet companies doing business in China adhere to government regulations regarding censorship.

China is home to one of the fastest-growing Internet-using populations, and many American Internet companies have agreed to the government's censorship laws in order to take advantage of the Chinese market's enormous growth potential.

But the December attacks changed Google's stance about operating in the country.

Google is often the subject of cyber attacks, but an investigation of the December attacks exposed evidence that showed the attackers' primary goal was to access Gmail accounts of Chinese human rights activists. While two accounts were hacked, the accessed information was limited to the date the account was created and subject lines, not the content of any emails. To top of page

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