China is still a tough marketplace for Google

Noting that the Chinese government can "arbitrarily decide" the level of service Google Inc. can provide in China, the company's chief executive, Eric Schmidt, said "we don't know" if what seems to have been a relatively minor disruption of Google's search availability in China Thursday was evidence of that government power.

Thursday's blockage was apparently the first incident of note affecting Google's services since the company obtained a license earlier in July to continue what have long been controversial operations in China. Google said Friday its search services in China are fully or mostly accessible.

Speaking Friday to The Wall Street Journal editorial page and news editors, Mr. Schmidt recounted some of the circumstances that led the company to first remove its technical operations from China to Hong Kong, and then later reach an agreement with the Chinese government that allows limited Google searches on the mainland Chinese Web page, with the ability to link to the Hong Kong site's much broader offerings.

The cyber attacks late last year against Google in China were a "wake-up call to Google and other American companies" and were quite sophisticated in nature, Mr. Schmidt said. The source of the attack is still under investigation, and Google has provided information to U.S. law enforcement authorities.

Mr. Schmidt later said he was an advocate of entering the China market, figuring it was better to engage even if Google had to operate with restrictions. That decision was reversed because of an accumulation of events. "Day-to-day stuff just drove us crazy," he said.

Mr. Schmidt said China is the only nation that practices "active censorship" of the Internet, though other countries block certain Internet sites.

In response to a question, Mr. Schmidt said there was "no evidence" typical Chinese Internet users were fearful to use Google.

On other topics, Mr. Schmidt said in five years most consumers of newspapers would be reading on digital devices smarter and faster than the ones in use today. Google is widely rumored to be working on products in this area. Mr. Schmidt said, "watch this space."

Those readers will be able to access news targeted to them, based in part on information they decide to provide. The serendipitous experience of current newspaper reading could be recreated, and there will be much more video. In addition, he said, readers will have the ability to go "arbitrarily deep" on a subject.

A combination of targeted advertising and subscription fees will be the basis of this future news business, Mr. Schmidt said, adding that brands will remain important for readers to sort through the overwhelming amount of news and information. The question is whether current or not-yet-created brands will dominate.

Looking at the world of social networking, Mr. Schmidt said Facebook was "already a company of consequence" and repeated his view that Google isn't out to copy it since the world doesn't need another version of Facebook.

When Google was on the rise, its founders famously said one of its goals was "don't be evil." Asked Friday how Google was holding up to that aspiration, Mr. Schmidt said a Google critic would be better placed to answer. He then said the company has done "generally well," adding that the company has made a few mistakes. China is a notable one, he said.

When Google entered China, the company said it would revisit its decision, Mr. Schmidt said, "and we have revisited it."