Twists and turns in Google's China saga

BEIJING, CHINA: Two months after Google Inc threatened to pull out of China on hacking and censorship concerns, signs are mounting that Google is preparing an exit from the world's largest Internet market by users.

The following is a look at Google's involvement and operations in China.

* Google launched its Chinese-language website, Google.cn, in 2006 agreeing to comply with local laws requiring censorship of certain items including pornography and "vulgar comment".

* Its flagship English-language site, Google.com, is not required to submit to similar censorship, but the government filters content through its own Internet firewall.

* The company employs several hundred salespeople and engineers in three offices located in Beijing, Shanghai and Guangzhou. Domestic search rival Baidu, in contrast, employs about 4,000 sales and customer service personnel alone.

* At the end of 2009, Google had about 30 percent of the Chinese Web search market by revenue, compared to more than 60 percent for Baidu, according to Analysys International.

* By web traffic, Baidu led with more than 70 percent.

* Google does not break out Chinese revenue figures, but Collins Stewart analyst Sandeep Aggarwal estimates Google generates about $200 million in annual sales from China. JP Morgan has estimated Google would generate about $600 million in revenue from China in 2010.

* After announcing it may leave China, Google, which developed a mobile operating system called Android, postponed the launch of two mobile phones in China that used the platform -- an indication that the uncertainty surrounding Google's web operations has affected its other divisions.

* Google operates two research and development centres in China -- in Beijing and Shanghai -- with several hundred people, a Google spokesperson said. The research centres are the least likely to be affected by a Google pull out, a source said.

* Although Google has remained mum on the progress of talks, the firm's chief executive said recently that an outcome is expected "soon". The Financial Times reported that there is a 99.9 percent chance that Google will withdraw from China, citing a person familiar with the company's thinking.

* The Google situation has spread beyond censorship and hacking and has become a diplomatic knot in Sino-U.S. relations. The United States is studying whether it can legally challenge Chinese Internet restrictions, a top U.S. trade official said recently.