Instant View: Google may pull out of China over censorship

SAN FRANCISCO (Reuters) - Google Inc said it is no longer willing to continue censoring Internet search results in China, and that it may have to shut down the google.cn website and its offices in the country.

Google said on Tuesday that it had detected "highly sophisticated" cyber-attacks in mid-December on the Gmail accounts of Chinese human rights activists, and that at least 20 other large companies from a wide range of businesses have also been similarly targeted.

U.S. Secretary of State Hilary Clinton will announce a technology policy next week to help citizens in other countries gain access to an uncensored Internet, Clinton's senior advisor for innovation Alec Ross told Reuters separately.

Shares of Google fell 1.9 percent to $579.50 in after-hours trading. Shares of Chinese Internet search company Baidu Inc, Google's main competitor in China, rose 5 percent to $406.00.

COMMENTARY

SANDEEP AGGARWAL, ANALYST, COLLINS STEWART

"Google has billions of records of people doing search and email, and in fact stores that information for longer duration than other companies."

"China is in our view one of the most attractive consumer Internet markets. We think it is generating $200 million in annual revenue from China. But this kind of attack they (Google) cannot afford to have as a global player. That's why I think they're evaluating whether they should basically withdraw from the country."

"What makes Google the largest search engine and one of the leading Internet companies is that they care about users' privacy and if that privacy comes under challenge it may impact their global business."

"They obviously did not appreciate the attack...we should not take the Google threat lightly."

STEPHEN JU, ANALYST, RBC CAPITAL MARKETS

"At first flush it feels like more of a positive for Baidu than a negative for Google. On a financial basis, probably doesn't effect Google very much, it's not going to be a very big needle mover for them."

"This is a complete 180 turnaround (for Google).

"Just about every earnings call recently has been that they are focused on the long-term growth opportunities for China and that they are committed."

"The underlying implication is I guess some sort of government authorities trying to conduct attacks on Google itself in order to gain this information."

"I guess the underhanded implication here is that the government is somehow responsible for conducting this cyber-attack and I guess they feel they cannot operate in that kind of an environment."

"There's only one eventuality here. If they (Google) want to allow unfiltered search results, they're going to get banned."

"I'm sure there's going to be skeptics out there who really question whether this is moral high ground driven. They were a minority player in China. So they might have felt that the government was taking steps to corral their share."

TIM GHRISKEY, CHIEF INVESTMENT OFFICER, SOLARIS ASSET MANAGEMENT, WHICH MANAGES ABOUT $2 BILLION

"Clearly not good news for Google and clearly not good news for consumers. You've got to think that eventually Google figures out a way to deal with this. If they do have to shut down their Chinese operations, that they would be able to reinstate them. Hopefully soon. I can't imagine that this would be permanent."

"China is a great growth engine for every business. It is a great opportunity for Google as well. You've got to think that there is some way the industry can figure out how to deal with hackers. This has been a problem on and off for lots of other companies. and a major frustration for users."

TRIP CHOWDHRY, ANALYST, GLOBAL EQUITIES RESEARCH

"It will hurt their profits. They get 8 to 10 percent of their revenues from China."

"If they walk, they will eventually be invited back into China, because the Chinese people will request that. Openness always wins, but it will take some time."

SHARON HOM, EXECUTIVE DIRECTOR, HUMAN RIGHTS IN CHINA, A NON-PROFIT ADVOCACY GROUP BASED IN NEW YORK

"It's a wakeup call for the international community about the risks of doing business in China. The tendency has been for companies to keep their eye just on the benefits of doing business. But the risks are real -- The risks are to our intellectual property. The risks are to our values."

REP. ANNA ESHOO, A CALIFORNIA DEMOCRAT, SERVES ON HOUSE ENERGY AND COMMERCE COMMITTEE AND ITS SUBCOMMITTEE ON

COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

"I'm deeply disturbed that yet another wave of attacks is coming from China. This raises serious national security concerns. I commend Google for coming forward with information about this attack and for cooperating with law enforcement officials to investigate the origin and nature it. It is important that companies continue to be transparent and open about cyber threats."

"For far too long, cyber attackers have hidden in the shadows. These kind of attacks are unacceptable and undermine confidence in the global economy. I urge other companies possessing such information to come forward to help the government identify the source of these attacks, so that the criminals can be held accountable for their actions."

(Reporting by Jim Finkle, Gabriel Madway and Alexei Oreskovic, compiled by Tiffany Wu)