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In a move that has been telegraphed since last week, Google (Nasdaq: GOOG ) shut down the Google.cn domain in China yesterday. Visitors to the site are now being redirected to the company's Hong Kong hub at Google.com.hk, where the company is dishing out uncensored results in simplified Chinese.
In other words, it's daring China to block access to its servers in Hong Kong. In a clever move toward transparency, it even set up a new status page to update the world on which parts of its Hong Kong engine are being blocked by China. As of last night, Big G's search engine, image search, and Gmail were the only three completely available services in China. YouTube and Blogger are among the sites that are not available, while Picasa, Groups, and Docs are being partially blocked.
Google's timing couldn't be better. China is already receiving critical looks for how its controversial case against four Rio Tinto (NYSE: RTP ) employees plays out. Blocking access to all of Google's Hong Kong site would back its restrictive policies into a corner.
However, it's not as if China can just let the open markets decide. If consumers choose to check out unfiltered results for the Tiananmen Square massacre through an overseas site, it places homegrown sites such as Baidu (Nasdaq: BIDU ) and Sohu.com's (Nasdaq: SOHU ) Sogou at a disadvantage.
It has to do something. Even if China wields its power to restrict Chinese companies from advertising on the Hong Kong site, Google can afford to keep the engine running in exchange for karma points.
China has to come up with a solution that will favor the companies that play by its rules, or it won't be long before Microsoft's (Nasdaq: MSFT ) Bing follows suit instead of trying to step up as Google's replacement in China.
Google's move yesterday was a bold one, but this chess game is far from over.
How will the battle between Google and China end? Share your theory in the comments box below.