The company’s strategy is to gather enough intellectual property around LTE in one pool that device makers can go to to license technology for their products.

However, many big names — and important LTE patent holders — still aren’t on the list. Some key holders, folks such as Ericsson and Qualcomm, are unlikely to join, since licensing is an integral part of their business.

But Via hopes to get enough of the rest of the big patent holders to make its pool attractive to device makers.

Via won’t say if any companies have actually yet licensed the patents.

Although China Mobile and Deutsche Telekom aren’t seen as among the top holders of LTE-related patents, Via hopes they could inspire others to sign up.

Via Licensing CEO Roger Ross said that he is hopeful that companies such as Huawei, LG or Apple might decide to join the patent-licensing pool.

“I don’t want to be overly optimistic,” he said, but added, “I think we are going to get some of those very large patent holders.”

Why? Because iPhone sell-through growth in the international market appears to be slowing. As Raymond James analyst Tavis McCourt points out, international sell-through growth for the device fell to about 35 percent in the fourth quarter of 2012 from 40 percent in the third (McCourt estimates iPhone sales outside the U.S. were 29.2 million for the period). Now, 35 percent growth is still impressive. Thing is, it was more easily achieved, thanks to some shifts in the iPhone launch cycle.

“This would be a strong result, except for the fact that the comp was easy internationally for Apple, as the iPhone 5 launches occurred far earlier this year in most countries than last year’s 4S launch,” McCourt explains. “March will be a tougher comp internationally.”

How tough? McCourt expects international sell-through growth to slip to 15 percent year over year. That’s a hell of a decline. But Apple’s latest guidance does lend it some credence — or, rather, it doesn’t provide a good reason to dismiss it out of hand.

There are a few wild cards that could easily temper it, though. A new iPhone launched earlier in the year would certainly spike sell-through, as would the addition of a big, new iPhone carrier abroad. The first, at this point, seems a long shot. The second, however, is a definite possibility. Apple CEO Tim Cook was in China a few weeks ago, chatting with executives at China Mobile, the biggest wireless carrier in the world, with some 707 million subscribers.

But amid that parade of, ahem, letdowns that savaged more than 10 percent from Apple’s share price in after-hours trading Wednesday, was some good news about the company’s performance in Greater China, a region that is becoming increasingly important to the company’s growth — a region so important that Apple has made it a new operating segment.

Apple’s sales in Greater China for the quarter rose to $6.83 billion from $4.08 billion a year earlier. And that’s with the new iPads shipping late in the quarter. Meanwhile, iPhone sales in the region more than doubled. And that’s without China Mobile, the country’s biggest mobile operator, which doesn’t yet sell the iPhone.

“If you look at Greater China … our revenues were $7.3 billion in the quarter,” Apple CEO Tim Cook said during the company’s earnings call. “That’s incredibly high. It’s up over 60 percent, year on year. And that’s comparing a quarter with 13 weeks to one with 14 weeks. So the underlying growth is higher than that. We saw exceptional growth in iPhones into the triple digits. … [And we] saw very nice growth with iPad.”

So Apple is still on a tear in China. And, according to Cook, it’s only just getting started. Over the past year, it has increased the number of its China retail stores to 11 from six, it has doubled the number of premium resellers to more than 400, and it’s selling the iPhone at 17,000 outlets, up from 7,000 a year earlier.

“This isn’t nearly what we need, and it’s not the final by any means,” Cook said. “We’re not even close to that. But I feel that we’re making great progress, and I am very happy with how things are going.”

And, as I said earlier, Apple is still in the early stages with China. It hasn’t yet inked an iPhone distribution deal with China Mobile, though it may do so soon. And when it does add the device to China Mobile’s portfolio, it gains access to an additional 707 million subscribers. That’s a massive addressable market, and one certain to fuel the company’s continued growth in China.

China Mobile said the meeting took place at the company’s Beijing headquarters, during Mr. Cook’s second trip to the country in less than year. But the company declined to disclose details of the discussions, citing a confidentiality agreement. Apple’s Beijing spokeswoman couldn’t be reached for comment.

Read the rest of this post on the original site »

China's Ministry of Industry and Information Technology

The purpose of Cook’s trip wasn’t immediately clear, and Apple offered no explanation for it. What is known is that he met with Miao Wei, head of China’s Ministry of Industry and Information Technology, to chat broadly about China’s IT industry, global mobile communications and innovation. Beyond that, Cook’s agenda is a mystery. But China is an enormously important market for Apple. The company has nearly doubled the number of retail stores there since Cook’s last visit in March. Its manufacturing partner, Foxconn, is also based in China, and Cook has visited its factories on previous trips. Perhaps something like that is on the agenda this time, as well.

The most interesting question, however, is whether Cook will call on China Mobile. Apple still hasn’t inked an iPhone distribution deal with the company, mainland China’s largest mobile phone carrier. And it’s clearly in Apple’s best interests to do so. If, at long last, Apple was able to add the device to China Mobile’s portfolio, it would gain access to an additional 707 million subscribers — a massive addressable market, and one that Apple can’t afford to ignore much longer.

Update: Sources in position to know tell AllThingsD that Cook is joined on this trip by Phil Schiller, Apple’s senior vice president of Worldwide Marketing. They also say that a China Mobile meeting is on the agenda.

Negotiations between the two companies proceeded slowly, hamstrung by disagreements over subsidies and China Mobile’s demands for a cut of App Store app sales made over its network. To date, both Apple and China Mobile have held significant bargaining power in discussions — the former thanks to the the wildly popular iPhone itself, the latter thanks to a massive subscriber base befitting the world’s largest wireless carrier. And this may have contributed to the stalemate that appears to have stalled any progress on a deal.

But that may soon change, thanks to a tipping of the balance in Apple’s favor. According to Evercore Partners analyst Rob Cihra, China Mobile’s traction in the 3G market is slipping, and that may well be due to the fact that it still doesn’t offer the iPhone.

“We think China Mobile could be starting to ‘need’ the iPhone more, since it has seen its 3G market share erode by -7 percent to 37 percent since 2011 vs. China Telecom+Unicom having gained +7 percent to 63 percent,” Cihra said. “China Unicom alone has added nearly 2 million more 3G subs than China Mobile year-to-date despite being almost 1/3 the size, and overall share losses look to correlate with introduction of the iPhone in Mainland China.”

Given that, Cihra figures that Apple likely holds more bargaining power than it did a few years ago, and feels that the company will probably squeeze a satisfactory deal out of China Mobile in the second half of this year. And if it does manage to do that, the payoff could be huge. With just 20 percent penetration of the carrier’s 3G/4G subscribers, China Mobile could provide Apple with a 16 million iPhone opportunity in its first full year.

The entry-level Windows Phone 8 handset offers a 3.8-inch, 800 by 480 touchscreen, a five-megapixel camera on back and a front-facing VGA camera. It has eight gigabytes of internal memory, along with a microSD expansion slot.

But the feature that Nokia is really touting is the colorful design. The Lumia 620 comes in various base colors that can be snazzed up with seven different exchangeable shells. The covers are translucent, so when attached they create a dual-color effect with the phone’s base hue. Colors include lime green, orange, magenta, yellow, cyan, white and black.

Priced at around $249 (before carrier discounts), the Lumia 620 is the most affordable Windows Phone 8 device yet, according to Nokia. It will be available in January, starting in Asia, then Europe and the Middle East, before heading to other regions. No word yet on whether it will arrive in the U.S.

In addition to the Lumia 620, Nokia, as expected, announced the Lumia 920T for China. It is the first Windows Phone device compatible with the country’s TD-SCDMA network, and will be available through China Mobile by the end of the year.

Like the Lumia 920, it has a 4.5-inch HD display, an 8.7-megapixel camera and NFC support. It can also be charged wirelessly, and Nokia and Air China have partnered up to offer wireless chargers at Beijing Airport’s VIP lounges.

The partnership with China Mobile will be an important one for Nokia. Though early reports showed that the Lumia 920 was selling well both in the U.S. and Europe, Nokia’s sales continue to slip.

China Mobile is the largest service provider in the country, with more than 700 million subscribers, but it remains to be seen whether it will take to the device and Windows Phone.

State-controlled China Telecom, the country’s third-largest mobile phone operator by subscribers, and bigger rival China Unicom Ltd. have been awaiting government approval to sell the new smartphone, which Apple released in September in the U.S. and other markets around the world. China’s biggest mobile phone company, China Mobile Ltd., doesn’t offer the Apple device.

Read the rest of this post on the original site »

“In terms of iPhones in general in mainland China, we were incredibly pleased with our results,” Cook said. “We were up over 100 percent, year over year.”

That’s an impressive achievement. But Apple still has a lot of work to do in China before the iPhone claims the same levels of market penetration it enjoys in the U.S. In China, the iPhone has captured about 7.5 percent of the smartphone market, compared to rival Samsung, which has claimed more than 20 percent, according to IHS iSuppli. Despite its popularity in the country, the iPhone is still ranked seventh in the Chinese smartphone market.

Why? Two reasons. First, Apple doesn’t yet offer a truly low-end smartphone that appeals to price-conscious Chinese consumers. (To be clear, China Telecom is offering the iPhone fully subsidized, but it requires subscribers to sign a contract that ties them to a two-year $62 per month plan.) Second, and more importantly, the iPhone doesn’t yet support Time Division Synchronous Code Division Multiple Access (TD-SCDMA), China’s homegrown wireless standard. And until it does, China Mobile, the world’s largest wireless carrier, can’t offer it to its 688 million or so subscribers.

“Among all the international smartphone brands competing in China, Apple is the only one not offering a product that complies with the domestic TD-SCDMA air standard,” IHS iSuppli’s Kevin Wang said in a statement. “For Apple, this is a huge disadvantage, as TD-SCDMA represents the fastest-growing major air standard for smartphones in China, with shipments of compliant phones expected to rise by a factor of 10 from 2011 to 2016.”

In other words, if Apple wants access to the massive addressable market that China Mobile has to offer, it’s going to have to offer a lower-end iPhone variant designed specifically for TD-SCDMA, something it has been loath to do in the past, and hasn’t given any indication that it’s willing to do in the future. As Cook said during Apple’s last earnings call, the company feels that its business is strongest when it focuses on making the best products it can, not the most inexpensive ones.

“I firmly believe that people in the emerging markets want great products, like they do in developed markets,” Cook said. “And so we’re going to stick to our knitting and make the best products. And we think that if we do that, we’ve got a very, very good business ahead of us. So that’s what we are doing.”

The company has been trying to fuel growth in the mobile services business it bought from rival China Unicom (Hong Kong) Ltd. in 2008 as part of a government-mandated industry restructuring. In the six months ended June 30, China Telecom outpaced China Unicom and China Mobile Ltd. in the growth of users of third-generation mobile services.

Read the rest of this post on the original site »

Ciccarese Design

Berger figures that Apple could sell as many as 250 million units of the new iPhone over the product’s life cycle, generating a some heady profits. “We expect the iPhone 5 … has the potential to generate the most promising device upgrade cycle in Apple’s history,” Berger declares, going on to say, “We calculate that the device represents an opportunity to generate earnings of $50 per share throughout its life cycle. We estimate that Apple should sell 250 million iPhone 5 units at an average ASP of $575, generating nearly $144 billion in revenue, $77 billion in gross profit, and $47 billion in net income.”

Those are some very big numbers. Clearly, Berger doesn’t seem much worried that upgrade eligibility and carrier subsidy issues will impact the next-generation iPhone’s earnings potential.

The reasons? There are a few. Berger believes that smartphone upgrades are often driven more by the debut of a new marquee device than by eligibility status. He feels that demand for the new iPhone will be so strong that unit sales may exceed those of the iPhone 4S by 25 percent in the device’s first four quarters at market.

But most of all, he’s counting on the iPhone debuting on China Mobile some time in early 2013. China’s largest wireless carrier, China Mobile, currently boasts about 683 million subscribers — that’s more than twice those of Verizon, AT&T and Sprint combined. And Apple has had its eye on it as a carrier partner for some time. Now, with the iPhone already available on China Unicom and China Telecom, the time would seem to be ripe to sign up China Mobile, which represents a massive addressable market of new iPhone users, and one that Apple can’t ignore much longer.

(Image courtesy of Ciccarese Design)

“China Mobile and Apple both have the will to strengthen cooperation,” Chairman Xi Guohua said, according to Bloomberg. “When there is more specific news, we will disclose it.”

The company reportedly indicated that it is unclear whether a deal will be reached this year. An Apple representative was not immediately available for comment.

However, sources have said that a meeting with China Mobile was among the stops CEO Tim Cook made during a China trip earlier this year.

With roughly two-thirds-of-a-billion users, China Mobile is the biggest carrier in the world, as measured by number of customers. The company’s current 3G network doesn’t work with today’s iPhone, but a next-generation iPhone could well work with China Mobile’s 4G network, which is currently in a few spots.

China Mobile has also applied to offer service in the U.S., Reuters said, but it is unclear how well that bid will be received.

But Cook’s trip may have had another purpose: Finalizing Apple’s long-in-the-offing iPhone deal with China Mobile, China’s largest wireless carrier. Sources say Cook visited China Mobile’s Beijing offices, and while they offered no details beyond that, it’s not much of a leap to conclude that he was there to talk about the iPhone, which is currently offered by China Mobile rivals China Unicom and China Telecom.

“We wouldn’t be surprised if Cook was exploring a deal to distribute the iPhone with China Mobile, Mainland China’s largest mobile phone carrier,” Barclays Capital analyst Ben Reitzes said in a note to clients. “We believe that China Mobile could sell the upcoming iPhone 5 by C1H13, after a fall launch in the U.S.”

That seems a reasonable prediction. Certainly it’s in Apple’s best interests to sign a distribution deal with China Mobile. If, at long last, it was able to add the device to the carrier’s portfolio, it would gain access to an additional 120 million subscribers. That’s a massive addressable market, and one that Apple can’t ignore much longer.

According to data from Gartner, Samsung’s smartphone market share in China is more than triple that of Apple’s — 24.3 percent to Apple’s 7.5 percent. A massive gap, but the reason for it is simple: Samsung currently has deals with three of China’s 3G mobile networks, while Apple has two. And that missing third deal is an all-important one with China’s largest carrier, China Mobile, which has about 655 million subscribers.

Apple has long been in talks with China Mobile to bring the iPhone to its network, but discussions have reportedly been difficult because of the carrier’s insistence that it be given a cut of App Store revenues.

As I wrote last year: “Historically, Apple has never done this, and almost certainly doesn’t want to begin doing so now. And with 10 million unlocked iPhones already on China Mobile’s network, and the carrier encouraging them with gift cards for free Wi-Fi service (the iPhone isn’t compatible with the carrier’s TD-SCDMA 3G network), there’s little reason to rush into a deal, particularly one that will require it to produce a TD-SCDMA-compatible iPhone. So Apple is sitting back and focusing its efforts on the 4G TD-LTE iPhone that will presumably succeed the 4S, and working to ensure that it will be compatible with China Mobile’s network.”

The reasons for that are twofold. Foremost, the iPhone is already killing it in China without China Mobile. And as much as Apple would like to put the iPhone on the world’s largest wireless carrier, it’s not going to do so unless it gets the terms it wants. And right now there’s some disagreement between the two companies over App Store revenue.

Industry sources tell Sterne Agee analyst Shaw Wu that China Mobile is looking for a cut of App Store revenue. Historically, Apple has never done this, and almost certainly doesn’t want to begin doing so now. And with 10 million unlocked iPhones already on China Mobile’s network, and the carrier encouraging them with gift cards for free Wi-Fi service (the iPhone isn’t compatible with the carrier’s TD-SCDMA 3G network), there’s little reason to rush into a deal, particularly one that will require it to produce a TD-SCDMA-compatible iPhone.

So Apple is sitting back and focusing its efforts on the 4G TD-LTE iPhone that will presumably succeed the 4S, and working to ensure that it will be compatible with China Mobile’s network. Presumably, by the time that device is headed to market, the two companies will have finally signed a deal. And in the end, that’s the best move for Apple. China Mobile has more than 628 million subscribers in China, and could potentially double Apple’s market share in the country.

“The total number of iPhones in China Mobile’s network has reached 10 million — and we didn’t pay any subsidies,” Jianzhou told Reuters, adding that the company is still working to ink an iPhone deal with Apple, hopefully one that will involve an LTE-compatible version of the device.

“We have not yet got agreement with Apple,” Wang said. “Apple promised to provide, when they develop the iPhone for LTE, that it will include TD-LTE. We are discussing the details.”

[Image credit: NeonPunch]

Discussing the carrier’s latest earnings with analysts today, China Mobile Chairman Wang Jianzhou said high-level conversations with Apple continue.

“I met Steve Jobs several times already, but we haven’t come to an agreement yet,” Wang said, according to Reuters. He offered no timetable for a deal, but once again stressed both companies are interested in inking one. “All I can say is, it’s a common wish of China Mobile and Apple to come to an agreement as soon as possible,” he said.

According to Ticonderoga Securities analyst Brian White, China Mobile has more wireless subscribers than any carrier in the world, well over 600 million. And despite the lack of an official agreement with Apple, it has some four million iPhone owners accessing its network via a special mini-SIM card. Which bodes well for the device when it officially launches on the carrier.

If that’s the case, it’s great news for Apple, as a deal with China Mobile would greatly accelerate iPhone adoption. Said White, “This would represent a landmark agreement for Apple, providing the company with access to the largest wireless carrier in the world, with 611 million wireless subscribers at the end of May or 68 percent of the total China wireless market.”

[Image Credit: NeonPunch]

During a Thursday news conference, China Mobile Chairman Wang Jianzhou said the company has reached some sort of consensus with Apple on the type of iPhone to be offered by the mobile services provider–a 4G TD-LTE version of the device.

Which is both good news and bad for China Mobile.

Good news in that it appears the carrier will finally get the iPhone, bad news in that the version it’s evidently getting won’t run on its current 3G TD-SCDMA network, but on its next generation 4G TD-LTE network, which won’t be fully lit up for 12-18 months. But when it is fully operational, and the carrier is able to sell an iPhone compatible with it, expect a surge in sales of the handset.

[Image Credit: NeonPunch]

Jefferies & Co. analyst Peter Misek too says the device will be largely similar to the iPhone 4, but with significant improvements under the hood.

“We believe the likelihood of the iPhone 5 launch in September including LTE [Long-Term Evolution] is now remote,” Misek said in a note to clients. “According to our industry checks, the device should be called iPhone 4S and will include minor cosmetic changes, better cameras, A5 dual-core processor, and HSPA+ support.”

These specs are essentially the same ones Concord Securities analyst Ming-Chi Kuo reported back in April, so Misek’s not particularly telling us anything new, with the exception of one very interesting detail. He expects Apple to launch the the iPhone 5/4S on a handful of new carriers, Sprint, T-Mobile, and China Telecom among them.

“Industry checks indicate AAPL has or is about to announce new carrier deals in time for the holidays with T-Mobile and Sprint,” Misek wrote. “Additionally, we believe another China carrier could launch the iPhone in the next 12 months. On Apple’s last earnings call, management responded to a question about launching the CDMA iPhone at other carriers as “we are constantly looking and adding where it makes sense, and you can keep confidence that we’ll continue to do that.”

Because while the country is a key global market, doing business there is rife with all kinds of thorny challenges and troublesome compromises.

So, despite its progressively weaker denials, numerous sources said Facebook is preparing to launch in China. Now, the social networking giant is working out the details of a localized Chinese offering and trying to execute them as quickly as is prudent.

Perhaps the most important detail of Facebook’s planned China offering is that it will likely be connected to the greater international Facebook community, rather than operated as an independent social network.

While some had advised Facebook to start with a closed Chinese service, sources said the company seems inclined to launch it as a network linked to the rest of the world.

That’s not a decision without controversy, due to the strictures of operating within an authoritarian state.

When Facebook users outside China connect with users inside China, sources said they will need to click through a warning that any material visible to Chinese users may also be visible to the Chinese government.

Over the past few weeks, NetworkEffect has spoken to numerous sources in and around Facebook about how Facebook.cn will come to be.

Picking a Partner

As has been reported elsewhere, Facebook will almost certainly launch its China version in partnership with Baidu.

While Facebook insists that no deal has been signed with anyone, sources within and around the company described Baidu as the most serious competitor.

Alibaba had also been in the running, but sources said its leaders had voiced disagreement with Facebook’s vision for connecting Chinese users to one global social graph, rather than first starting with a closed system.

Alibaba advised the more conservative approach, given that the Chinese political situation is currently quite tricky and the U.S. government would likely find fault with Facebook seeming to play any role in censoring its users in China, said sources.

A source familiar with those talks said of Facebook’s inclination to go with Baidu over Alibaba, “It was an issue of Mr. Right Now instead of Mr. Right.”

Other partners considered included Sina, Tencent and China Mobile, but Sina and Tencent have their own social offerings that were judged to be too competitive with Facebook, said sources.

In the meantime, Baidu–often called the Google of China–is very much like Google in that it has little in the way of social strategy.

Facebook, led by its CEO Mark Zuckerberg, has increased its sense of urgency about having a presence in China. Zuckerberg visited China in December, where he met with entrepreneurs from Baidu, Sina and China Mobile.

Baidu leaders then came to visit Facebook twice in February, at which point some say a deal to work together was struck, although Facebook emphatically denies any official papers have been signed.

Facebook’s current official statement on the matter: “We are currently studying and learning about China, as part of evaluating any possible approaches that could benefit our users, developers and advertisers.”

Baidu had no comment.

The Perfect Time Is Never

Facebook, which is currently blocked in China, finds the market hard to resist despite the ethical implications of cooperating with its government. Zuckerberg said in an interview at Stanford last fall that Facebook determined in 2010 that China was one of the four remaining target countries it was not yet “winning or on a path to win,” along with Korea, Japan and Russia.

Of China, Zuckerberg said specifically: “How can you connect the whole world if you leave out 1.6 billion people?”

Leaders at the company–whose mission is to “make the world more open and connected”–feel it is important to include Chinese users as part of the larger global social network, rather than keeping them separate. The solution they have apparently arrived at is to show the warning messages about connections between the larger Facebook network and the Chinese-censored Facebook.

That sentiment could be looked at as laudable–as it brings a modicum of openness to China–or cynical, in that it requires a major ethical compromise.

That said, Facebook already employs censorship in several countries it operates in currently, such as Pakistan and Germany, in order to abide by local laws.

“It was a very active dialogue inside the company, but there was no other way to operate in China,” said a person familiar with the discussions.

And there aren’t good examples of American Internet companies successfully operating in China for Facebook to draw inspiration from.

Google’s internal moral dilemmas about operating in China are well known. But while Google is primarily a search engine, Facebook’s product is a platform for communication and organizing.

The situation in China is even more challenging following revolutions in the Middle East and North Africa that have been closely tied to Facebook and social media.

Facebook has been careful not to claim any credit for popular uprisings or to align itself as a force of democracy, but others outside the company have made those connections for it.

Facebook currently has about 400,000 active Chinese users, many of whom access the site by evading the so-called “Great Firewall of China” through use of virtual private networks.

Meanwhile, social sites within China are rocketing up in usage and becoming financially significant. Sina Weibo, which is much like Twitter, is said to have something like 100 million users.

And RenRen, the social network that has followed Facebook’s execution step by step, has filed to go public on the New York Stock Exchange with a $4 billion valuation.

Sources close to Facebook said that RenRen’s U.S. fundraising, in particular, is a significant motivator for Facebook to launch its China offering sooner rather than later.

“I would not discount the need for Facebook not to sit by and watch a significant competitor gain that much advantage,” said one person close to the situation.

Nuts and Bolts

Under discussions now taking place, sources said Facebook’s proposed plan could have Facebook and Baidu share the cost of setting up servers in China, and share revenue from the local version of the site. The local partner, Baidu, would presumably manage the censoring of the site and ongoing dealings with Chinese authorities.

As described above, when users outside China opt to connect to those inside China, they would see a warning message about the Chinese government.

As we all know, users are notoriously good at clicking through pop-up warnings without reading them, although this one is sure to get more notice.

Facebook could also use a combination of what it calls input filters and display filters, where Chinese users won’t be able to post or view content that’s objectionable to the Chinese government, but the rest of Facebook can run normally, sources said.

It will be a somewhat complicated technological endeavor to ensure that non-Chinese portions of the site don’t get stored in China.

Finally, Palo Alto, Calif.-based Facebook is considering sending a small group of its employees to help manage operations, but sources close to the company said this issue is still being debated due to safety considerations related to China’s oppressive government.

Ready, Set, Controversy

Net Jacobsson, who led Facebook’s previous effort to enter China–a translated version of the site that was launched around the time of the Beijing Olympics and was live for only a few days before being blocked–said in an interview with NetworkEffect that it’s not just entering China that’s difficult, but what comes after.

Jacobsson is no longer with the company and said he does not have direct knowledge of its current plans.

In addition to complying with rules forbidding political speech, gambling and pornography, as well as government requests for user information, American companies operating in China have to deal with ruthless local competition and incensed and vocal politicians in the United States.

“It will be difficult just trying to manage those two different worlds in a world that is so transparent,” Jacobsson said.

Obviously, Facebook getting involved in censorship in China will be a difficult concept for many people to swallow. In China, censorship is largely expected and normal and citizens are used to reading between the lines.

In the U.S., it’s considered a serious compromise of freedom.

Sources close to Facebook maintain that the company already censors some user contributions in accordance with local laws in Germany, Pakistan and Italy, so abiding by Chinese censorship rules is consistent.

But China’s size, importance and–more to the point–its suppression of free speech are unmatched.

(Please see the disclosure about Facebook in my ethics statement.)

People’s Daily, which Reuters reported Monday may be planning an initial public offering in Shanghai this year, launched a microblogging service last year and a search engine in December called Goso.com, appointing the former head of Google’s research institute in China as its chief scientist last month. Xinhua launched its own search engine, Panguso.com, in February in partnership with China Mobile, and CCTV has been operating an online video platform CNTV since the end of 2009.

“We cannot rule out the possibility that Panguso, like Goso, is a government tool to tighten control of the information search field,” an Internet user said on a Baidu online forum, under the name iaspecjack.

“Google studied how to find information … Baidu later studied how to find only parts of the information … Goso came in the latest and it studies how to not find information,” a user from Guangdong wrote on Chinese microblogging service Sina Weibo.

Read the rest of this post on the original site