Google - China -- Dig Two Graves

Google (Goog) may shut down it's China search engine according to the Financial Times of London. Informed rumor has it that talks are not going well. China publicly warned Google to follow the law on Friday. Google is used to re-inventing the world not following old laws that they did not believe in. Beijing is used to respect and authority. You respect they have the authority.

In the dig two graves scenario we have the two coffins. Google does not know how to deal with governments. Right know it's a mega cap bad boy. Remember Microsoft (MSFT) under the Clinton administration. Things can change and Microsoft has a more nuanced approach to government relations. Now.

Google does not get it.

In the second coffin we have Beijing throwing a reactionary hissy fit.They probably have a partial agenda of helping out Chinese search engines (What's that big one again? Baidu (BIDU) with the Yahoo YHOO) hook up?)

The problem with the Beijing coffin will be the fall out with other businesses.

How will other businesses looking to do business in China react?

If you just want to export something and it's "Wham bang thank you Madam" Who cares. If you are looking to operate in China then it could be a problem.It will become political and social, as westernized liberal thinking communities become suspicious and start retaliating. Even non liberal communities will start having doubts.

Remember the Rio Tinto executives are still unresolved.

The cyber attacks are still un-resolved. And we think the Chinese will do something about the Yuan when it's not in their best interests as Beijing sees them.

Buckle up Google.