Google's Chinese Standoff Continues: So Why Not Just Leave?

In the latest move in Google’s (s goog) ongoing dance with Chinese authorities, the company says its search services have been partially blocked, as it waits for a decision on whether its licence to operate in China will be renewed or not (the deadline for renewal, which Google and other Internet service providers must do annually, was Wednesday). The search giant has now tried several times to find a way of remaining in China while still refusing to filter its search results as the Chinese government demands. All of which raises an obvious question: Why doesn’t Google just close up shop and leave China altogether?

To recap, Google started the current fight with the Chinese government in January, when it announced that it would no longer filter its search results in that country, in part because of a hacking attempt that Google suggested was related to government attempts to track and monitor dissidents in China. In March, the company started redirecting searches from its Chinese website automatically to the Hong Kong version of its site, which isn’t subject to government filtering restrictions. Earlier this week, however, Google said the Chinese government complained about this practice, and threatened to withhold its licence to operate in China.

Google was criticized by some when it chose to defy Chinese government demands and stop filtering its results — skeptics argued that the company’s search market share was so low in China anyway (it has an estimated 30 percent of the market, compared with local provider Baidu’s (s bidu) 65 percent or more) that it was using this ethical stance as a cover for its withdrawal from the Chinese market. But others applauded Google for taking a principled stand against the government’s repressive tactics. So if the company was actually acting on principles rather than out of expediency, as co-founder Sergey Brin has described, then why not take that stance to its logical conclusion and simply exit the country?

Even if Google were to shut down its Chinese site and services, most Chinese users would still be able to use the standard .com version of the company’s site, although those results would in most cases be filtered and the government could block access to the site altogether if it wanted to. Chinese users could also go to the Hong Kong version of the site directly, or the Taiwan version, although the Chinese government could also take action to block those too if it wished. But fundamentally not much would change from a search perspective, especially since Google seems to be hamstrung in China currently anyway.

What Google would lose, however, is a brand presence within China, and the ability to market both search and other services and features to Chinese residents who aren’t already users of the site. Obviously, losing access to a nation with more than a billion citizens, many of whom are becoming more affluent and looking to do more online — particularly in the mobile space — would be a severe blow. And it’s clear from the machinations it has been going through that Google would rather cling to the Chinese market by its fingernails than give up access altogether.

But at least if it left China, the company would be able to say that it stood firm in the face of demands from a totalitarian regime, and that has got to be worth something. Whether it is worth the loss of a potential billion-plus customers is something only Google can decide.

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Post and thumbnail photos courtesy of Flickr user Steve Webel