Google Inc. (GOOG) has announced that it will pull out of mainland China. They will circumvent the censorship of their content by moving their search engine operations to Hong Kong, where their content is already unfiltered. This decision is the result of the company’s constant issues with content censorship and compounded when they were the target of hackers from China’s universities.

Regardless of the 400 million and growing web surfers in China, they feel that this move is for the best. Moreover, China only makes up a small fraction of the company’s multibillion dollar revenue, so the financial impact will be minimal. Google said it will try to leave as much business in China as possible, following the removal of the search engine.

Google’s endeavor to move into China began in 2006, when two of the three top Google executives believed this was an untapped market. Unfortunately, the only opposition, founder Sergey Brin was right, and maybe the company should have just stayed out of the country. It’s competitor in China, Baidu.com, currently has the largest market share and is not letting Google move into their territory. Although Baidu is modeled after their company, Google was unable to take much market share away from the Baidu since they began offering their services in China.

While Hong Kong has been an entity of China since 1997 and they still run on separate economies, even having different currencies. The reason why things haven’t changed much in Hong Kong, is because China promised to preserve the city’s capitalist system and free press for another 50 years when the British turned it over. The question is whether or not China will block Google’s search engine off to the rest of the country and keep the company contained in Hong Kong.

Shares of Google Inc. closed at $557.50 a share, down only $2.50 for the day.

Search Tags: China, Google, Hong Kong

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