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Google's Chinese Partners Scramble To React To Defiance Of Censorship

By Aaron Back and Lorraine Luk Of DOW JONES NEWSWIRES BEIJING -(Dow Jones)- Google Inc.'s (GOOG) Chinese partners--from mobile carriers to Internet portals and smaller companies involved with specific Google services such as music downloads--are scrambling to come up with alternative ways to make sure their business and customers aren't impacted from the U.S. search giant's move to reroute its Chinese users to a search site in Hong Kong that it doesn't censor. Sina Corp. (SINA), one of China's top Internet portal operators which carries a Google search bar on its home page, is considering finding a new search partner, a company spokesman said Thursday. The spokesman however stressed that no final decision has been made. The comments came after Tianya, an Internet company that runs one of China's most popular online forums, said Wednesday it plans to discontinue its cooperation with Google on its online video business, and possibly other projects as well. Hong Kong-based media company Tom Group Ltd. (2383.HK) said earlier this week it removed Google's search service from its Web portal in order to stay in compliance with China's rules and regulations. Google spokeswoman Jessica Powell said Thursday the company will continue to provide censored search results to partners in cases where it has a contractual obligation to do so. However, she said Google will not renew those contracts so those obligations will be phased out over time. Powell declined to name specific parties to such contracts. Analysts said Sina could partner with Chinese search giant Baidu Inc. (BIDU) or it could opt to tie up with a foreign Google rival such as Microsoft Corp. (MSFT), which operates the Bing portal. Sina has its own internally developed search engine called iask, intended to be a question and answer site similar to ask.com in the U.S., but analysts said it is far behind other search engines in technical ability. Duncan Clark, chairman of technology research firm BDA China, said Sina will likely be keen to appease Beijing. "Sina has even self-censored news on the Google situation," he said. Google's relationship with China's two largest mobile phone carriers is also in question. Both China Mobile Ltd. (CHL) and China Unicom (Hong Kong) Ltd. (CHU) have aggressively rolled out smartphones based on Google's android operating system. But China Unicom said Wednesday that though it introduced an Android handset manufactured by Motorola Inc. (MOT) earlier this month, it decided not to pre-install Google's search function. China Unicom President Lu Yimin said: "We are open to cooperating with any handset makers and companies. But they must obey china's regulations." China Mobile, the world's largest mobile phone operator by subscribers, uses Google's Chinese site as the default search engine for its users. China Mobile Chairman Wang Jianzhou said last week that the company's cooperation with Google is not exclusive, and that the company is also working with Bing and other search engines. A company spokeswoman didn't immediately have any comment Thursday. "I won't be surprised to see China Mobile switching to other search engines as the spat between Google and the Chinese government is escalating," said Gartner analyst Sandy Shen. Such a move would hurt Google only slightly in the near term, she said, but would cost it huge growth potential in the massive Chinese mobile market. "For China Mobile, I don't see any impact as telecom operators can always look for a new search partner." Google's pioneering music service, which offers Chinese users free, advertising-supported music downloads, is currently still available and running on the google.cn domain name. That service is run in partnership with Top100.cn, a site owned by Chinese company Orca Digital Inc. Gary Chen, chief executive of Orca Digital, did not comment on what would happen if the music service was moved to the Hong Kong site, saying only: "Google music still exists, like before. Mainland users can use the music service exactly as before." Google's Powell said the company hasn't yet decided on the future of the music service, including if it will move it to the Hong Kong site. "We are currently evaluating that on a product by product basis," she said. -By Aaron Back and Lorraine Luk, Dow Jones Newswires; (8610) 8400-7701; aaron.back@dowjones.com

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