Google drew a line today – delineating just how far it will not go in compromising privacy and in supporting censorship. Whether this is simply a public relations ploy for today’s “news cycle” or a genuine delineation of the limits of American-Sino economic development will be determined in the weeks and months ahead.

Will the Chinese government back down over issues of “human rights” censorship and open access to content globally? Highly unlikely from a political regime that has broken new ground in purges following the “Great Leap Forward” to the “Cultural Revolution”. Highly unlikely from a government that continues to brutally suppress Tibet, uniquely enforces a draconian “one child” policy that is unprecedented in human history and that orchestrates cyber attacks on email accounts to spy on its own people. And you think we have “big government” issues in the US?

Will Google really pull the plug on China? Certainly, its not the preferred option for Google, particularly given their duration in the Chinese market and previous commitment to censor searchable content for the Chinese government . In this light, if Google does pull out of China it probably says more about doing business in China than it does about Google’s ethics or morality. A cynic might say that it’s a lot easier to do the right thing when the cost of making that decision doesn’t break the corporate treasury. But it is probably more a case of simply not being able to execute your business plan and gain a competitive advantage that will make Google’s decision to pull out stick.

The Chinese government is not going to release control on content and communications to Google, or to anyone else. That kind of control is fundamental to enabling government control, and government control is the “prime directive” in Beijing. So, when Google pulls out of China, after all the ballyhoo when it entered, every business person will pause for just a moment to reconsider China – is it promise, or is it wishful thinking? Some will stick with their China strategy, but it says here that the Chinese gold rush has reached its high water mark.

The Wild West era of the Internet has been slowly winding down in recent years. The seminal event may have been the beat-down the music industry played on Napster. But the past several weeks have been even more interesting. It turns out that Murdoch and Microsoft are planning something quite innovative – that frankly represents a classic disruptive approach to the Internet. As pretty much everyone has learned, the plan is to limit access to Murdoch’s news content to searches conducted through Microsoft’s Bing search engine. We assume Microsoft will pay Murdoch an unspecified royalty for that content, or for the number of users accessing it, or employ another similar usage-based payment schedule. What does that mean?

Well, it potentially redefines the search engine market. It suggests that content-flavored brands of search engines are a business opportunity for existing and new search engine market entrants. It means that the hegemony of Google as a universal search engine is being challenged in a fundamental way. It changes the Internet user’s decision on search. That decision today is simply “Google it.”  With the balkanization of the Internet via content exclusivity deals, the user may be compelled to make a decision on which search engine is the preferred one, or to choose the right search engine for that particular search. What’s setting up is another era of innovation on the web. The “free for all” is getting reined in, and the web is about to become a real, broadly-based business platform. For media companies and search engine entrepreneurs, this is where the rubber meets the road.

If you think I’m going overboard, consider this: For the first time in memory Google has responded defensively to a Microsoft initiative by announcing this week that it would begin to offer newspapers the ability to limit the amount of their content available through Google – perhaps setting up a pay-for-access model where more thorough or more complete information from the newspaper site requires an online purchase or subscription. In my view, this will prove to be a lame band-aid from the get-go. The appeal of the Microsoft-Murdoch alliance is that the content will be fully available within Bing to users at no fee, which Microsoft will monetize via advertising revenue reinvested in the purchase of quality content from Murdoch. At least that is the way I understand the arrangement. If that is the case, Google has a compelling reason to re-think its model … now. Microsoft is sitting on a ton of cash and has the unique ability to buy market share in the search market through this approach. Much of the money that was made in the desktop market over the past 20 years is sitting at the ready to build Microsoft 2.0 – Microsoft, the disrupter. It’s enough to make you wax sentimental about a nerdy young Bill Gates and the incredible company he built while the IT titans dithered.

You have to love this stuff. We’re living in really interesting times that offer incredible new opportunities. For my peers on the content side of the business, the media side, it’s time to drop the Prozac prescription ,get busy aligning your content with the right search engine and go back to creating the kind of content that really draws interest. As for Google – we are going to find out just how agile this company really is now. The initial shot back at Microsoft was quick, but shallow and defensive in a telling way. Remember: the best defense is a good offense, and Redmond is on the offense again with this move.

P.S. – With the budget deficits looming at the state and federal level, tax-free Internet shopping may well be a casualty in the wake of the incredible surge in Internet buying taking place this holiday season. Happy holidays.

Thomas J. Wilson, President, Unisphere Media

A couple weeks past Oracle OpenWorld now and we are still awaiting some kind of word from the EU on the Oracle acquisition of Sun. Looking back to the conference, we saw HP participating in the keynote and various “third-party” vendors making announcements and exhibiting on the floor. As a friend of mine, representing a certain German applications company put it, “It’s very open here.”

That much is true and certainly to Oracle’s credit there exists a rich community of third-party vendors supplying options, alternatives and competing voices in the “Oracle market.” The “open ecosystem” approach is nothing if not a pragmatic one for enriching the solutions options for users while growing the overall level of involvement in the market by both users and vendors. And every so often, one of the third-party innovators is acquired and permanently absorbed into the Oracle DNA.

But speaking of “open,” we didn’t hear much about MySQL in San Francisco … understandable given EU concerns about its fate once acquired by Oracle. On the surface the European concern looks reasonable. But in reality, MySQL had a marginal upside in the enterprise on its own and, in our view, that’s why MySQL management shuffled the assets over to Sun in a lucrative-appearing asset sale in the first place.

Frankly, it’s just as likely that Oracle might find a useful role for MySQL in the Oracle “ecosystem” as not at this point. Why? Well, because in addition to IBM investing in open source EnterpriseDB, we have learned on Tuesday that Red Hat has weighed in with an investment in the company as well. It’s pretty clear that an open source database is going to be an option moving forward, whether it’s EnterpriseDB, MySQL, or both. For the EU, the operational adage today is that “new information has come to light.”

The question is whether the EU wants to see it, or recognize that the persistent high-stakes competitive game among the major IT players is likely to keep the open source database option viable. The real question remaining is whether enterprise users really care and whether the presumed cost-of-ownership advantages of the open source database model really hold up over the long haul.