Yesterday Google dropped quite a bombshell when it announced that, because of a series of attacks on Google and other companies by hackers trying to get access to Chinese human rights activists GMail accounts, it would reconsider its “approach to China”:

These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

What?  Google may pull out of China?  Obviously this is such a big issue with so many levels of complexity that come in to play that it is difficult to even get a handle on what’s happening.  We’ve had some initial reactions to what Google’s position might be, however, which we’ll outline quickly here:

• Google is tired of fighting with China over censorship
• The hacking attacks threw a scare into them
• Google can’t grow or thrive in such market conditions
• Google.cn is not a big business, nor is China a big market for Google
• Google.com can still serve the China market, without the headaches

Can Google still run a successful search business in China using only Google.com and not Google.cn?  That remains a possibility, even if Google “pulls out” of China, and so the thoughts of them just giving up their market share in China may be premature.

As one tweet using the #googlecn hashtag said yesterday, “It’s not Google that’s withdrawing from China, it’s China that’s withdrawing from the world”.  The issues facing Google, while they are somewhat unique given Google’s rocky relationship with China, are not just two powerful entities bashing heads.  While Microsoft may be able to move into a space left by Google, and find it very tempting to do so, Microsoft and Bing are bound to face the same challenges faced by Google – a fierce resistance to opening up China to the connected world, and a “local first” mentality that is going to favor Baidu, the Chinese search company, no matter what happens.  Indeed, at least one search market analyst thinks most of the share potentially given up by Google would go to Baidu:

He added that much of this 30pc of the search market would most likely go to Chinese search engine Baidu, saying that this could “further cement its leadership position” with the remainder possibly not split equally among Bing and Yahoo users, thus further upsetting “the balance of power for one or the other, and means growing in the Chinese market is likely to make it very difficult for at least one of them”.

Still, Microsoft has an established presence in China, if not much search market share, is well versed in dealing with sometimes adversarial governments, and has stated a strong desire to grow its search business in China.   Getting Google out of the way, in a potentially lucrative market, might be quite helpful to Bing, but at the same time it may find that it’s China, and not Google, who is the fiercest competitor.