Google has announced that it may end its operations in China following a "sophisticated and targeted" cyber attack originating from the country commenting that is it no longer prepared to censor its Chinese search engine - google.cn.

Last year, the search engine market in China was worth an estimated $1bn and analysts previously expected Google to make about $600m from China in 2010 with nearly 340 million Chinese people online, compared with 10 million a decade ago. Google has 31% of the market compared with about 60% controlled by market leader Baidu, which has a close relationship with the Chinese government. Yahoo has less than 10%.

David Drummond, SVP, Corporate Development and Chief Legal Officer of Google posted in a blog:

Like many other well-known organizations, we face cyber attacks of varying degrees on a regular basis. In mid-December, we detected a highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property from Google. However, it soon became clear that what at first appeared to be solely a security incident--albeit a significant one--was something quite different.

We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn,and potentially our offices in China.

The decision to review our business operations in China has been incredibly hard, and we know that it will have potentially far-reaching consequences. We want to make clear that this move was driven by our executives in the United States, without the knowledge or involvement of our employees in China who have worked incredibly hard to make Google.cn the success it is today. We are committed to working responsibly to resolve the very difficult issues.

As a side note, Baidu recently that it is creating an independent company to offer premium online videos to Chinese Internet users including movies, TV shows, sports, and animation, and it will generate its revenue through advertisements. This move with Google and the launch of this new service will no doubt secure Baidu as THE search engine for China.

For more information on this story see the article and short video on the BBC.co.uk site.