Google may quit China after accounts hacked

Google is considering shutting its Chinese website and offices after discovering a "highly sophisticated" attack last month aimed at gaining access to email accounts of human rights activists.

Google, owner of the world's most popular search engine, said it discovered that at least 20 other big companies had also been targeted. The company also said it planned to stop censoring results on its Google.cn site and hold talks with Chinese authorities.

"We recognise that this may well mean having to shut down Google.cn and potentially our offices in China," Google said.

It is notifying other targeted firms and working with United States authorities.

Google has clashed with the Chinese Government since it started a censored version of its site four years ago in the country, which leads the world in internet use. Any plan by Google to leave China would benefit Baidu, the leader in the market, said Erwin Sanft, an analyst at BNP Paribas in Hong Kong.

"There's no other competitor, so if Google pulls out, Baidu is left by itself," Sanft said. "If they pull out of China, it's hard to get back in the market and have a similar presence."

The move signalled Google was keeping closer to its "Don't be evil" motto, said Heath Terry, an analyst at FBR Capital Markets in New York.

Still, Google was a "long way away from getting out of China", Terry said. The company could threaten to leave the country because China accounted for such a small piece of Google's sales, he said.

"This is their way of opening up this important conversation. This is their way of starting to move the conversation forward."

China has more internet users than the total population of the US, according to the China internet Network Information Centre.

Google said the attack, in the middle of December, originated in China and was "highly sophisticated". It said the incident resulted in intellectual property being stolen from Google.

Google said two Gmail accounts appeared to have been accessed as part of the attack. The information gathered was limited to account information, such as the date it was created, as well as the subject lines of emails. The contents of emails were not exposed.

In addition, dozens of accounts of Gmail users, who are advocates of human rights in the US, China and Europe, were accessed, most likely through phishing scams or malware on the users' computers, Google said.

It said the decision to review its business in China was driven by US executives, without the involvement of staff in China.

"The decision to review our business operations in China has been incredibly hard, and we know that it will have potentially far-reaching consequences."

- BLOOMBERG