Google and China had been embroiled in a high-profile spat over the hacking of gmail accounts and the censorship of searches, so Google decided to automatically redirect China's mainland users to its Hong Kong page, leading many to expect Beijing would not renew the company's license at the end of June.
But that turned out to not be the case, apparently due to the simple decision by Google to offer mainland users the option to go to the Hong Kong site, rather than automatic redirection. "I'm surprised that such a simple gesture like that would work, but I think deep down the Chinese government would hate to see Google leave completely," Munarriz says.
Though Baidu ( BIDU - news - people ) is easily the dominant player in the Chinese market, Munarriz postulates that the government is interested in having the competition. "Without it there's no need for a sense of dramatic innovation, no one pushing you to keep margins down," Munarriz says. "And I don't think China wants to seem like its pushing out foreign investors."
Google, for its part, can also see that it may have gone too far, Munarriz says. (See "Boy, Did Google Blow It In China.") "This is a gray area, and I think Google realized it went as far as they could go."
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