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BEIJING – Google Inc.’s partial withdrawal from China brought condemnation and signs of pressure from the government Tuesday while leaving Chinese Web surfers to wonder whether the company’s new offshore search engine site would be blocked by censors.

Google’s decision to move most of its China-based search functions from the mainland to Hong Kong opened a new phase in a two-month-long fracas pitting the world’s most powerful Internet company against a government that tightly restricts the Web in the planet’s most populous market.

A few Chinese passers-by laid flowers or chocolates on the large metal “Google” sign outside the company’s office building in northern Beijing.

Inside, executives briefed nervous employees about what lines of the company’s business would continue. At least one client who stopped in and was anxious about his Google advertising account found staff members confused.

“Nobody in there could give me a clear answer,” said Pan Yun, manager of a Beijing real estate Web site. “I just want to know if our business can continue but they couldn’t give me an answer.”

Meanwhile, TOM Online, a provider of online and mobile services in China that is controlled by Hong Kong’s richest man, said it was dropping its affiliation with Google for fear of running afoul of mainland censorship rules. The company said it would stop using Google’s search services at the expiry of their current agreement, though did not provide a time frame.

The moves underscored the uncertainties Google faces after announcing Monday that its China search engine, google.cn, would automatically redirect queries to its service in China’s semiautonomous territory of Hong Kong, where Google is not legally required to censor searches.

While the search engine was the most politically charged part of its business, Google still plans to roll out mobile phones based on its Android platform with Chinese phone companies. It’s also keeping a research and sales division in China. Its map services and a free, advertiser-supported music portal still have their servers in the mainland, and its Gmail e-mail service remains available too.

“It’s a balancing act. They are trying to leave but not leave, stay but not stay,” said Duncan Clark, managing director of BDA China Ltd., a technology market research firm.

Many Chinese felt caught in the middle, admiring Google for taking a stand against censorship but wondering whether the government might further punish the company.

“I don’t know what the Chinese government will do to Google next,” said Zhou Shuguang, a well-known blogger who uses the online name “Zuola.” “But I welcome the move and support Google because an uncensored search engine is something that I need.”

Google first said it was considering a shutdown in January over cyberattacks and stringent censorship requirements. With the new Hong Kong-based search engine, users from China would hardly have unfettered access. Searches from China must pass through the Chinese government’s extensive Web filters — collectively known as the Great Firewall — which automatically weeds out anything considered pornographic or politically sensitive. The move, in effect, shifts the responsibility for censoring from Google to the communist government.

Beijing responded swiftly, testily declaring that Google violated commitments it made to abide by China’s censorship rules when it entered the China market in 2006.

“This is totally wrong. We’re uncompromisingly opposed to the politicization of commercial issues, and express our discontent and indignation to Google for its unreasonable accusations and conducts,” an official with the Internet bureau of the State Council Information Office, China’s Cabinet, was quoted as saying by the official Xinhua News Agency.

The withdrawal of its search engine makes Google the latest foreign Internet company to founder in a China market that is heavily regulated and prone to particular consumer tastes. Companies such as Yahoo, eBay and Microsoft’s MSN instant messaging service have never gained as much traction in the China market as their homegrown rivals. Google ran a distant No. 2 with 35 percent of the search market, compared with local rival Baidu Inc.’s 60 percent.

Google’s discord with the Chinese government added to souring ties between Washington and Beijing over Taiwan, Tibet and trade and others economic issues.

Playing down the friction with the Internet company and with Washington, Chinese Foreign Ministry spokesman Qin Gang said China had a right to filter content deemed harmful to society and national security and Google’s response should not harm wider relations with the United States.

“The Google incident is just an individual action taken by a business company, and I can’t see its impact on China-U.S. relations unless someone wants to politicize that,” Qin said at a routine media briefing.

Google’s strategy leaves the google.com.hk search engine vulnerable to a total blockade. Facebook, Twitter and YouTube, which is owned by Google, are completely shut out of the mainland. The Mountain View, California, company also could see its existing operations foiled by a government unhappy about being challenged by a marquee foreign investor.

Despite reports saying a move was imminent, Google’s decision caught many Chinese users by surprise. He Xinliang, an employee at an Internet security company in China’s western city of Xi’an, first realized something had changed when he clicked on google.cn but found himself on the Hong Kong site.

“I was more or less mentally prepared for this because it’s been a hot topic for a while, but I was still just a little surprised,” said He, who regularly uses Gmail, Google Docs and Google Calendar. “At least the page is still in simplified Chinese.”

The Hong Kong page offers search results in the simplified Chinese characters used in mainland China in addition to the traditional characters used in the self-governed territory.

Initial post-move plans were broken to some of Google’s 600 Chinese staff at a meeting held in the first-floor cafeteria of Google’s Beijing office, said company spokeswoman Jessica Powell.

“We haven’t worked out all the details so we can’t ever rule out letting people go, but we very much want to avoid that,” said Powell.

On taobao.com, a popular Chinese online retailer, one vendor already was selling a “GoogleBye” t-shirt for 38 yuan ($5.50). The words were tucked under an image of the Great Wall and above that in Chinese characters, it said “Long Live the People’s Republic of China.”

The State Council official said the government talked to Google twice to try to resolve the standoff and suggested that China’s laws requiring Web sites to censor themselves was nonnegotiable.

“We made patient and meticulous explanations on the questions Google raised … telling it we would still welcome its operation and development in China if it was willing to abide by Chinese laws, while it would be its own affair if it was determined to withdraw its service,” the official said.

Still, the decision is likely to further dismay many Internet-literate Chinese, who admired Google’s fight against censorship even though they don’t like to be reminded of the government’s heavy hand.

“I feel that people will greatly respect Google’s action,” said Beijing law professor and human rights lawyer Teng Biao. “China’s censorship of the Internet search engine results is a violation of the most basic of human rights. By doing this, Google will bring more global attention to China’s human rights situation.”

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SAN FRANCISCO – Google Inc. stopped censoring the Internet for China by shifting its search engine off the mainland Monday but said it will maintain other operations in the country. The maneuver attempts to balance Google’s disdain for China’s Internet rules with the company’s desire to profit from an explosively growing market.

Google’s decision comes after an impasse pitting the world’s most powerful Internet company against the government of the world’s most populous country. It’s still not clear if Google’s solution will resolve a standoff that began Jan. 12. That’s when Google said it would no longer adhere to China’s requirement that it omit some Internet results.

Visitors to Google’s old service for China, Google.cn, are now being redirected to the Chinese-language service based in Hong Kong, where Google does not censor the search results. The Hong Kong page heralded the shift Monday with this announcement: “Welcome to Google Search in China’s new home.” The site also began displaying search results in the simplified Chinese characters that are used in mainland China.

However, the results can’t all be accessed inside China, because government filters restrict the links that can be clicked by mainland audiences.

Google plans to retain its engineering and sales offices in China so it can keep a technological toehold in the country and continue to sell ads for the Chinese-language version of its search engine in the U.S. The company, based in Mountain View, also intends to keep its mapping and music services on Google.cn.

But the revolt against censorship threatens to crimp Google’s growth, particularly if China retaliates by making it more difficult for the company to do business in the country. The Chinese government could react by blocking access to Google’s services, much as it has completely shut off Facebook, Twitter and YouTube, which is owned by Google.

In remarks carried by Chinese state media, an unnamed official with the government’s State Council Information Office said Beijing is “uncompromisingly opposed” to Google’s move.

“This is totally wrong,” the official told the official Xinhua News Agency.

The tensions in China already have prompted Google to delay plans to sell some new wireless phones running on its mobile software in the country. A store offering mobile phone applications for the Android software system also remains on hold.

“Figuring out how to make good on our promise to stop censoring search on Google.cn has been hard,” David Drummond, Google’s top lawyer, wrote in a Monday blog posting. “We want as many people in the world as possible to have access to our services, including users in mainland China, yet the Chinese government has been crystal clear throughout our discussions that self-censorship is a nonnegotiable legal requirement.”

In a way, Monday’s change harks back to how Google operated in China before 2006. Back then Chinese users could search through Google sites such as Google.com, although filters inside China kept people there from clicking through to links generated by queries such as “Tiananmen Square massacre.”

Google tried to better reach Web users in China by setting up Google.cn, whose results would be tailored for them. That meant complying with rules requiring the omission of search results the government deemed subversive or pornographic. Google’s pages for China noted that some results had been excluded. But the complicity sparked criticism by Google supporters, including some of its own employees, who believed the company was violating its “Don’t Be Evil” motto.

On Jan. 12, the search company vowed to shake loose from government-imposed restraints on the Internet. It said it was no longer comfortable playing by the rules after it determined that Google and more than 20 other U.S. companies had been targeted in computer hacking attacks originating from China. The attackers also tried to pry into the e-mail of human rights activists, according to Google. That raised the specter that the Chinese government played a role in the espionage, although Google never made a direct accusation.

Even so, Google had hoped to persuade China to let it run a search engine that could deliver unrestricted results. Failing that, Google wanted to find enough common ground to maintain its research center and sales team in the country.

Drummond said Google might pull some of its sales force out of China if the government blocks access to the Hong Kong search engine entirely. About 700 of Google’s 20,000 employees are in China.

“We very much hope that the Chinese government respects our decision, though we are well aware that it could at any time block access to our services,” Drummond wrote. Google said he was unavailable to elaborate.

Although Hong Kong is part of China, the former British colony was granted a degree of autonomy when it returned to Chinese rule 13 years ago. Its legal and political freedoms were largely preserved. That has made Hong Kong an appealing home base for companies operating in mainland China, which has troubled Beijing, said Nicholas Bequelin, Human Rights Watch’s senior Asia researcher.

“China may also read this as a challenge to its sovereignty of Hong Kong,” Bequelin said. Google’s move “is probably going to put the heat on the Hong Kong authorities, (whose) leadership is hand-picked by Beijing.”

The friction with Google also could affect China’s relationship with the Obama administration, which has joined in the call against Internet censorship. China’s officials have responded indignantly, insisting all companies must obey the country’s laws and accused Google of coordinating its protest with the U.S. government.

A spokesman for the White House’s National Security Council, Mike Hammer, expressed disappointment that Google and China weren’t able to work out their differences.

“The U.S.-China relationship is mature enough to sustain differences and while we seek to expand cooperation on issues of mutual interest with China, we will candidly and frankly address areas of disagreement,” Hammer said.

Many analysts believed China didn’t want to lose Google completely, possibly because it might be interpreted as a setback in the government’s efforts to foster innovation. Some Web surfers in China also fretted about the possible loss of Google, even going so far as to place flowers outside the company’s offices.

For its part, Google wanted to stay in China so it could keep hiring computer programmers and peddling ads in the country. Google also believes its presence in China could lead to looser rules on censorship.

China accounted for a small fraction of Google’s $24 billion in annual revenue. Analysts estimate Google brought in $250 million to $600 million from China. It’s unclear how much of that amount flowed exclusively from Google.cn.

Investment analysts have been more worried about the long-term consequences of Google’s actions in China. Opportunities there figure to grow faster than in the U.S. or Europe. Even if Google remained a distant second in search behind the homegrown Baidu.com Inc. in China, Google could still prosper as more Internet ads are served up in the country.

Google shares have slipped 5 percent since its Jan. 12 warning about a possible shutdown in China. The technology-driven Nasdaq index has climbed about 5 percent during the same span. Google shares fell slightly after the announcement and closed Monday at $557.50, down $2.50 for the day. The decline continued Tuesday morning as the stock dropped $6.21, or 1.1 percent, to $551.29.

Baidu’s U.S. shares, which have soared about 50 percent since Google raised the possibility of leaving China, closed Monday at $579.72, up 1.8 percent. It continued to rise Tuesday morning, gaining $10.07, or 1.7 percent, to $589.79.

China’s financial promise is the main reason other technology companies, including Microsoft Corp., seem intent on staying there. If Google exited the country completely, Microsoft and other technology companies might have had an easier time recruiting China’s best engineers.

The director of the China Internet Project at the University of California, Berkeley, applauded Google for its stand but predicted China will look for ways to undercut the company.

“The Chinese government will respond in their typically heavy-handed way,” said Xiao Qiang, director of the project. “It’s inevitable.”

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CAIRO (AFP) – Egypt has banned international calls made through mobile Internet connections, one of Egypt’s top three mobile phone operators said on Tuesday, which would include internet Skype calls.

“The National Telecom Regulatory Authority issued a decision to stop VoIP (Voice over Internet Protocol) and we stopped it on Saturday,” Vodafone Egypt’s external affairs director Khaled Hegazy told AFP.

The ban applies to Egypt’s three mobile operators, Vodafone, Mobinil and Etisalat.

Egyptian law states that all international calls must pass through state-owned Egypt Telecom, which recorded lower than expected earnings in 2009.

The ban has not been extended to international voice calls made over fixed-line Internet, such as through DSL.

Skype and other providers offering VoIP services bypass standard telephone networks by channeling voice and video calls over the Internet, allowing users to make calls free of charge.

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Microsoft’s data center of the future will be more like a trailer park.

Only the concrete pad will need to be built on-site, with everything else shipped in as a pre-manufactured unit. That’s a step beyond the current approach, used in places like the company’s massive new Chicago data center, where Microsoft has the servers shipped in a container but still requires a traditional building to provide water and cooling.

A proof-of-concept version of the prefab units that will make up Microsoft’s data center of the future.

Data centers are key to the economics of Microsoft’s future–everything from Bing to the cloud-based Windows Azure to the Microsoft-hosted versions of today’s software like Exchange and SharePoint

“Our plan for the future is to have essentially everything but the concrete pad pre-manufactured and then assembled on site: the IT, mechanical and electrical components are all part of pre-assembled components that we call an ‘ITPAC,’” general manager Kevin Timmons said in a blog posting on Tuesday.

Timmons said that the units will be made from standard recyclable parts such as steel and aluminum and will be able to be cooled with as little as a single water hose using residential levels of water pressure.

The units could house anywhere from 400 to 2,500 servers and draw between 200 kilowatts and 600 kilowatts. With automation, Timmons said that a single person could build a unit in just four days. The units could either be placed in a large building, or even placed outside as long as they had protective panels attached.

“We believe that by utilizing this new approach, Microsoft can reduce the time it takes to ramp up new cloud computing capacity in half the time as traditional data center infrastructures, as well as significantly reduce the cost of the building,” Timmons said. “This gives us the flexibility to grow without having to commit to a large upfront investment for a data center and hope that demand shows up later.”

The units also have significant environmental benefits over prior data center designs, using far less water–as little as 1 percent of traditional data centers–and using ambient air as opposed to requiring expensive chillers to cool the servers.

On the down side, Timmons isn’t expecting to win any beauty prizes for the new-look data centers.

“These facilities will not be pretty and might actually resemble the barns I spent so much time around during my childhood in rural Illinois,” he said.

Microsoft had said as early as 2008 that it planned to head in this direction. It showed off an early version of the self-contained unit at last year’s Professional Developers Conference.

Here’s a video (Silverlight required) that Microsoft posted to its Web site, showing its data center plan:

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As PC makers flood the market with new laptops based on the Intel Core i processors, anticipation of a refresh of the MacBook Pro and MacBook Air builds every week. Here’s a short MacBook wish list that may serve as a temporary salve to soothe the anxious Apple crowd.

The truism nothing succeeds like success applies in spades to the MacBook Pro and MacBook Air lineups. Apple has redefined laptop computing and spawned me-too designs from just about every major laptop manufacturer. And it’s easy to see why: Apple pioneered the sleek but sturdy all-aluminum laptop equipped with stunning LED displays and powerful standard graphics silicon.

So, how can Apple top this? Here’s five ways.

Five ways to best a brilliant design:

• Powerful processors: no surprise here, but this after all is what everyone is waiting for. The Intel Core i7 and Core i5 processors provide plenty of power while their 32-nanometer technology goes easy on power consumption.
• Greater graphics: this is a another no-brainer. Either ATI or Nvidia will do. Intel is offering better integrated graphics, but let’s presume that Apple will continue to shun Intel integrated graphics in favor of standalone, or “discrete,” graphics from ATI and Nvidia. The key: adequate pixel-pushing power but not so much that it melts the aluminum.
• Cooler Connections: USB 3.0 would be nice since it’s backward compatible and a lot faster than 2.0. Then there’s the razor’s edge of cutting-edge technologies called Light Peak. Intel and Apple have both been working on this. Light Peak can carry data at 10 gigabits per second in both directions simultaneously and Intel expects it will reach 100 gigabits per second in the next decade.
• Wider wireless: 3G/4G built in. This is a longstanding item on the MacBook wish-list. Alas, Apple appears determined not to include 3G as an internal option. Maybe Apple is waiting for 4G or maybe Steve Jobs thinks Apple laptops are not suited to the 3G world of the iPhone and iPad.
• Slicker storage: Hybrid drives are already standard fare on gaming machines, why not laptops? Put the operating system and apps on a relatively small (and inexpensive) solid-state drive and the rest on a larger hard disk drive. Also: an option for 1 terabyte of storage would be nice.

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First, Facebook dethroned Google as the most trafficked web site in the United States, and now the social networking community has proven to have an extremely loyal following among news readers, potentially threatening the dominant position held by Google News. So says a recent Hitwise survey.

“A few weeks ago when I posted my blog entry about Facebook being the largest news reader, I received a few comments and emails noting that visitors aren’t as valuable if they don’t come back,” said Heather Hopkins, a senior online market analyst for Hitwise. “Advertisers and retailers need some assurance that visitors will return again and again.”

Loyal Facebook Users

Well, Hitwise data might provide that assurance. Hopkins’ latest revelation shows that visitors from Facebook.com are more loyal to news and media web sites than visitors from Google News.

Hopkins points to a specific example she discovered based on Hitwise data: Among the top five print media web sites for the week ending March 6, 2010, 78 percent of Facebook users returned to that site to consume more news, versus only 67 percent of Google News users making return visits.

How does that compare to broadcast media? The numbers are fairly similar. Hitwise shows that 77 percent Facebook users return to broadcast news sites compared to a 64 percent repeat-visitor rate for Google News users.

Getting more granular, Hitwise data show 81 percent of visits to CNN.com in the week of March 6, 2010 were returning visitors. While 84 percent of visitors to CNN.com that came from Facebook.com were returning visitors, only 72 percent from Google News were returning.

“I’ve been encouraged by some readers to include Google.com in this series. In most cases, Google.com is the number one source of traffic to these sites. Interestingly, visitors from Google are less likely to be returning visitors than average for either Google News or Facebook,” Hopkins said. “This reinforces the long term value to News and Media organizations of working with the likes of Google News and Facebook.”

Media Focus on Facebook

With recent Pew Research showing that newspapers have seen ad revenue fall 26 percent during the year and 43 percent over the past three years, Hopkins said, understanding where to find loyal readers is becoming increasingly important. What does this mean for the media? Given this information and the Hitwise data about Facebook’s traffic dominance, perhaps a greater focus on Facebook.

For the first time, U.S. visits to Facebook exceeded those to the former top site, Google earlier this month. While the difference was relatively small for the week ending March 13 — 7.07 percent of all visits for Facebook, compared to 7.03 percent for Google — the trend could point to the growing strength of the social Internet.

One social platform Hopkins didn’t mention is Twitter. Twitter has been making its push onto the broader web and announced its @anywhere service last week. The service gives sites like Amazon.com, AdAge, Bing, Citysearch, eBay, The Huffington Post, Meebo, MSNBC, The New York Times, Yahoo and YouTube the ability to stream the millions of daily tweets Twitter users send every day.

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Earlier this week we cited a Mozilla wiki as saying that the next round of Firefox updates would happen March 20 (today). Currently that wiki says March 30.

The wiki entries for Firefox 3.6.2, 3.5.9 and 3.0.19 all say “Final release: March 30″. SeaMonkey 2.0.4 and Thunderbird 3.0.4 are also scheduled for release that day.

Looking ahead, the platform wiki says that the schedules for the next versions (3.5.10 and 3.6.3) will be posted next week. They will contain “…lots of small regression and security fixes” and “hopefully out of process plugins for 3.6.3 too!” Version 3.0.19 is the end of the line for that generation.

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  SAN FRANCISCO/LONDON, March 18 (Reuters) – Google Inc could win a widely expected victory next week in Europe’s top court and still face many more battles over keyword advertising, the backbone of its Internet business model.

The European Court of Justice in Luxembourg will rule on Tuesday whether or not Google infringes the trademark rights of such companies as Louis Vuitton through its Adwords service, in which advertisers pay to use keywords that are the companies’ proprietary brand names.

In Google’s Adwords service, advertisers pay a fee so that “sponsored links” to their own websites pop up beside a user’s keyword search results.

“This case has the potential to shape global standards for the legitimacy of keyword advertising,” said Eric Goldman, an associate professor of law at Santa Clara University School of Law, who called that a “multibillion-dollar question.”

“We’re going to get new and highly influential legal guidance on the legitimacy of that practice,” he said. “That has the potential to move billions of dollars in our industry.”

Brand owners will closely examine next week’s judgment on three cases, one of which was brought by Louis Vuitton, as they try to protect their trademarks against a practice they say undermines their cachet.

Buying a sponsored link on a keyword such as “Nike” can be useful for retailers who stock goods of that brand—yet the retailers do not pay Nike (NKE.N) for using the brand name. More controversially, Nike’s rivals might buy it as a keyword, hoping to divert trade and traffic to themselves.

At the extreme, brands like Louis Vuitton and others fear that a loss of control of their brands to less-than-desirable outfits—such as counterfeiters—would damage painstakingly managed reputations or confuse and drive away consumers.

NO CLEAN WIN

The case is the first at such a high level to test Google’s liability, rather than that of the advertisers buying keywords.

Google used to block advertisers from buying others’ brand names as keywords, but in 2004 it changed its policy in North America and four years later extended that to Britain and Ireland. Google says it will honor valid complaints from brand owners and prevent their rivals from using a trademarked keyword in their ad text, but some trademark holders say they should not be sold in the first place.

The stakes are high in this murky area of law because paid ads are a mainstay of Google’s business and a foundation of commerce in the digital age. Courts in various member states within the European Union have issued disparate rulings, and U.S. decisions are similarly inconsistent.

Although Google does not break out revenue from its paid ads, it derives 97 percent of its annual revenue of nearly $24 billion from advertising.

Cases from five European nations brought by brand owners against advertisers are also pending in the European Court of Justice. The first of those will also be decided next week.

In one of those cases, international flower delivery group Interflora Inc and its UK unit are suing British retailer Marks & Spencer (MKS.L) for using the keyword “Interflora” and variants to trigger ads for itself, in the hope of luring flower buyers to its own service.

Interflora says its bidding costs for its own name as a keyword leapt as much as 14-fold when Google changed its policy in Britain in 2008, increasing its costs by a total of $750,000 in the first year after the change.

In the Google case, experts believe the court will rule at least partly in the Web giant’s favor, based on the September nonbinding opinion of the court’s Advocate General that Google did not infringe brand owners’ rights by allowing advertisers to buy keywords corresponding to trademarks.

But the case, which originated in the French courts, is unlikely to completely absolve Google of future responsibility, with further litigation in European countries guaranteed.

“It’s my feeling Google is going to win, but it’s not going to be an ultimate victory for Google,” said Alex Montagu, a New York-based attorney who specializes in intellectual property and international commerce transactions.

Though the hot-button issue of counterfeiting was not in front of the court, brand owners could still find Google liable in their host countries for “secondary infringement” by selling keywords to those who then infringe the trademark, such as counterfeiters.

“Where Google is not out of the woods is if Louis Vuitton can demonstrate that those sponsored links are being sold to people not authorized to use those trademarks, such as counterfeiters or the grey goods market,” said Montagu.

He argues for an international convention to deal with the liability of Internet service providers, saying trademark law has not kept pace with the digital age.

EBay Inc , which buys keywords from Google and also operates its own internal search, has similarly been sued by brand owners, including Louis Vuitton, in Europe and the United States over its use of keywords.

A favorable ruling for Google in Europe’s top court could allow eBay to reargue cases it has lost in countries such as France considered sympathetic to the claims of brand owners.

Google currently faces eight cases alone in the United States over the sale of trademarked keywords, said Goldman.

A “nice, clean” ruling from the European Court of Justice could potentially influence U.S. law, said Goldman, who added: “It’s very possible we’ll get a very muddy, murky ruling.”

“We take it for granted that Google can do whatever it’s doing and that’s not a question that anyone here (in the U.S.) has ever answered definitively.” (Additional reporting by Foo Yun Chee in Brussels; Editing by Gary Hill)

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