Google first entered China in 2000, but elected not to open an office in the country until 2005.   The company's hesitation made it lose out to other American-based companies also looking to cash in on, but it quickly rebounded and became the leading U.S. search company in the country.

According to the company, Gmail and other Google services have undergone countless attacks by unknown sources  -- it seems the email accounts of Chinese human rights activists were accessed and other nefarious actions were performed on not only Google, but other tech companies.  

“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,” wrote Google Chief Legal Advisor David Drummond on the company's official blog. “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 been briefed by Google on these allegations, which raise very serious concerns and questions," U.S. Secretary of State Hillary Clinton noted to reporters.  "We look to the Chinese government for an explanation.  She added "the ability to operate with confidence in cyberspace is critical in a modern society and economy," but the U.S. government still doesn't have an exact stance on the issue.

Similar to other western companies, Google adhered to Chinese government policies, and has agreed to terms of service that would not be accepted in North America and Europe.  Google, Yahoo and Microsoft all hope to have a large presence in China, but have struggled to compete with Chinese Baidu  search engine.

If Google leaves China, Microsoft and Yahoo will desperately attempt to stop those users from switching to Baidu.  Microsoft disclosed at the end of 2009 that China is the most important search market it must focus on, as Google is the No. 2 search engine behind Baidu's 63.9% control.