Google Inc., the global Internet search engine giant, might have some trouble on its hands because it reportedly doesn't have the necessary license to operate in China.
According to a Beijing News report yesterday, Google's China website (Google.cn) didn't have the requisite ICP (Internet Content Provider) license when it launched its Chinese-language platform in late January.
Wang Lijian, spokesperson for the Ministry of Information Industry (MII), told Xinhua News Agency today that they have investigated the matter and the results of their investigations will be announced soon.
Under pressure to get a piece of the China market pie, Google launched its Chinese-language after months of testing, going head to head with domestic Internet heavyweights like Baidu.com.
Google has denied the allegations. "Google has a partnership with Ganji.com through which Google has the required license to operate Google.cn," Google spokesperson Debbie Frost said in a written statement.
Google added that they aren't the first foreign Internet company to ride on the license of a Chinese partner. "For instance, Yahoo is using the same ICP license as 3721.com and Amazon is sharing their ICP license with joyo.com."
Dr. Kai-Fu Lee, president of Google.cn, convened an urgent telephone meeting with media members yesterday afternoon, to emphasize that the practice is well within the law.
Under China's Internet administration rules, foreign web companies applying for an ICP license must withdraw all foreign investment in or hand over its service operations including assets, staff, domain name, trademark and clients to a Chinese partner, and set up another company that is totally controlled by the Chinese partner.
Foreign parent companies can only receive payment for technical support or through service cooperation agreements.
If a joint venture wants to obtain an ICP license, the foreign-owned shares in that JV must be kept below 50 percent.
Beijing News alleged that this wasn't the case with Google.cn. Ganji.com was not even mentioned in its financial reports. Sources with the MII were quoted as saying that the Google situation is quite different from the Yahoo or Amazon situation because "3721.com is an asset Yahoo has bought and joyo.com was purchased by Amazon," but Ganji.com is in "no way a subsidiary company of Google in China, and the so-called cooperation between the two is very vague."
Quoting a source close to Google.cn, Beijing News said that the matter has been reported to Google's US headquarters and there has been talk of either a big investment or a buy-out. Although Ganji.com is not in the Internet search business, it's their license that Google's after.
Google declined to comment on the speculation.
(China.org.cn by Zhang Rui, February 22, 2006)