This doesn't mean that the world's leading online advertising company will be forgetting about the world's most populous nation entirely. It will still try to attract visitors from mainland China externally, despite the challenges of breaking through the great firewall of China.
Google is tired of whitewashing its results in China, and trying to provide balance from the outside is a noble pursuit. Attempting to counter internal propaganda is reminiscent of Radio Free Europe and -- more recently -- Radio Marti fueled by Cubans in exile.
The rub for Big G is that renegade broadcasters don't have profit as an incentive. Google is going to score some serious style points with human-rights activists worldwide, but it's not going to pad its pockets.
The Chinese government is already warning Google partners -- including SINA (Nasdaq: SINA ) that promotes Google.cn from its portal's landing page -- that they can no longer promote Google if it violates the country's laws. China-based advertisers will also be unlikely to strike sponsorship deals on external Google sites.
This doesn't mean that search dies in China if Google does close up shop internally. Baidu (Nasdaq: BIDU ) remains the market-share champion, and that thick slice will only get fatter. There will be opportunities for smaller engines such as Sohu.com's (Nasdaq: SOHU ) Sogou to matter more. This may also be a dinner bell for Microsoft (Nasdaq: MSFT ) and Yahoo! (Nasdaq: YHOO ) for search relevance in a fast-growing country that hasn't exactly panned out in the past.
Naturally we will have to wait and see if the unnamed sources that have reached out to this morning's Wall Street Journal -- and Financial Times over the weekend -- are right.
Since Google's actions in China have commanded global attention, expect the world's top search engine to make a splash on the way out -- if it does in fact leave.