What's the price of standing for a principle?

For Google (GOOG), it could be as much as half a billion dollars this year if the web giant closes its Chinese-language website, according to investment bank UBS. That outcome looked increasingly likely Monday evening after Chinese officials warned Google's partners and imposed a media blackout on news of the standoff, according to reports.

Google's exit from the Chinese search market will cost it $400 million to $500 million in 2010, "resulting in a potential impact to share price of $15-25," the bank's Internet analysts Brian J. Pitz and Brian P. Fitzgerald wrote in a note Monday. The analysts said they weren't changing their estimates for the company until there is "greater clarity" about what will happen to Google's other China operations, including its Android mobile phone system.

Google shares have been weighed down somewhat by uncertainty over the spat with China, but most analysts have thus far been fairly subdued about Google's possible exit.

It's Only $500 Million

After all, $500 million represents just over 2% of Google's annual revenue of $23 billion. Citibank analyst Mark Mahaney wasn't that stressed about Google's Chinese closure Monday. "It's a negative for Google, but there are just more offsetting positives," he told CNBC. Mahaney specifically referred to Tuesday's broadband announcement and mobile efforts as reasons to be bullish on the stock.

After Google announced in January it would no longer censor its Google.cn, the Chinese government's response has essentially been, "We'll miss you." Baidu.com -- the Google of China -- controls 60% of the market there and has close ties to the government. After U.S. Secretary of State Hillary Clinton got involved, using the Google case as a rallying cry for global Internet freedom, the Chinese have become more bellicose.

Last Friday, a senior Chinese official called Google "unfriendly and irresponsible" and reiterated the country's position: follow the law, or get out. The Chinese government has also warned Google's partners not to disobey censorship laws and to prepare for Google.cn's possible shut-down, The New York Times reported. Google is expected to "shut down the Chinese search engine and try to reach Chinese customers through its search engine based in the United States," the paper said.

Some people in China evade government censors and access Western websites using proxy networks and other tools.

Censoring News About the Censorship Spat

Meanwhile, in a somewhat vertigo-inducing move, the Chinese government is trying to censor news about its censorship dispute with Google.

"The Communist Party's Propaganda Department issued requests to media outlets on Friday to halt their coverage of the possible closure of Google's Chinese Web site," according to The Wall Street Journal's China Real Time Report, citing a Chinese journalist familiar with the situation.

"It's not uncommon for propaganda authorities in China to give orders dictating the nature of news coverage on sensitive issues where they fear dissent," Loretta Chao and Sue Feng report. "The fact that authorities have decided that Google's situation should get that treatment suggests they know that many Chinese Internet users, tens of millions of whom are Google users, don't see things the same way the government does."

At least some Chinese are obeying their government's orders.

"On Monday, coverage of Google in the Chinese media was scarce, apparently reflecting the government gag-order," Chao and Feng wrote.

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