However, in five to 10 years and in later decades, Google's decision may yield great benefits, because it has likely endeared the search company to many young Chinese Internet users, said Ben Sargent, an analyst with Common Sense Advisory, a market research company.
"Google will sit on the sidelines for a while, and meanwhile they've made a big impression on the young Chinese," he said.
While the reasons behind Google's decision are varied and complex, and include concerns about espionage, piracy and cyberattacks, Google is stressing the free speech and social justice angle, which likely resonates with the young, who are more likely to be free thinkers and Internet-savvy than previous generations, he said.
"Google has never gotten the traction in China that it has in most of the other markets. It's not the dominant player and doesn't own the market in China," Sargent said.
"So, in the long term, if it wants to change the penetration rate and become a dominant player in China, it needs to win the hearts and minds of the next generation," he added.
By adopting a long-term strategy, Google is ironically acting similarly to the way the Chinese approach matters.
"As a culture, China is much more long-term thinking than most other cultures. No other government takes such long-term views as the Chinese government," Sargent said. "So Google is trying to out-Chinese the Chinese in terms of making a really long-term play for young people's hearts and minds in China."
"This is one of the most interesting business cases that I can remember in the last 10 years," he added.
All along, Chinese government officials have said Google must comply with local laws if it wants to continue doing business in the country. They have also said China's government has never been involved in any cyberattacks against Google or anyone else.
After their initial, combative announcement on Jan. 12, Google officials, particularly CEO Erich Schmidt, have sounded more conciliatory regarding the matter.
"We wish to remain in China. We like the Chinese people, we like our Chinese employees, we like the business opportunities there," Schmidt said during the company's earnings conference call on Jan. 21. "We'd like to do that on somewhat different terms than we have, but we remain quite committed to being there."
He also seemed to ease up on Google's original certainty that the hacking originated in China, describing the attacks as "probably emanating from China with the origin details unknown" and adding that the matter was "still under investigation."
After Jan. 12 and until now, Google continued to censor Google.cn, blocking results about topics the Chinese government finds politically sensitive, like the 1989 Tiananmen Square pro-democracy protests and Tibet's exiled spiritual leader the Dalai Lama.
Sign up for Computerworld eNewsletters.