GOOG  Jan 12 2010, 05:20 PM EST
590.48Change% Change
-10.63-1.77%
BIDU  Jan 12 2010, 05:20 PM EST
386.49Change% Change
-14.08-3.51%
Google just made a big threat to the Chinese government over free speech and censorship.

 

The U.S. search giant says it will "review the feasibility of our business operations" in the country, following attacks on Google's infrastructure and continued restriction of free speech.

Google says it may shut down its Chinese search engine -- and potentially close its offices in China -- if the Chinese government does not allow it to run an uncensored search engine within the law.

Google chief legal officer David Drummond made the announcement in a blog post this evening.

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.

The decision to review our business operations in China has been incredibly hard, and we know that it will have potentially far-reaching consequences. We want to make clear that this move was driven by our executives in the United States, without the knowledge or involvement of our employees in China who have worked incredibly hard to make Google.cn the success it is today.

The announcement follows cyber attacks on Google servers (and other companies') designed to access Gmail and Google accounts used by Chinese human rights activists.

Google's business in China is not huge, but it could drive future growth, especially if Google were to gain more traction in the country. For context, Google's search share in China is around 15%-20%, much lower than leader Baidu, which is around 75%-80%.

Baidu shares are up 2.33% after hours to $395.50, while Google shares are down 1.6% to $581.01.

So will Google be the one that finally gets the Chinese government to relax its policies? Will Google pull out of China under protest? Or will the two settle on a middle ground?