What Google is really saying is that the Chinese government is trying to hack Google, to get this data. That's something Google simply isn't going to stand for.
In a fairly lengthy blog post, David Drummond, SVP, Corporate Development and Chief Legal Officer of Google outlined the company's reasoning behind the move. He also was quite clear as to what this might mean for Google in China.
"These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. 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."Like other search engines, Google has cooperated with the Chinese government, blocking, for example, images of the Tiananmen Square incident. Google also has informed the State Department of its findings, after which the State Department issued this press release:
We have been briefed by Google on these allegations, which raise very serious concerns and questions. We look to the Chinese government for an explanation. The ability to operate with confidence in cyberspace is critical in a modern society and economy. I will be giving an address next week on the centrality of internet freedom in the 21st century, and we will have further comment on this matter as the facts become clear.As China is one of the biggest (though still nascent) markets there is, why would Google do this? First of all, we all know that Google trolls through all our data. If we suspect our data is not safe, we won't be using those services now, will we?
Secondly, Baidu is the big gun in China. As hard as it is to believe, Google isn't No. 1 in that country, so it has little to lose, at least for now. So, based on the above, it's not so much a moral issue with Google, much as people might want to believe their "Don't Be Evil" slogan (they are a corporation, so there is plenty of evil to be had). No, it's all about money.
Additionally, if people really want to get to Google, they can, by using proxy servers. It's not something the typical Chinese citizen would do. In fact, it's been reported that many in China are aren't even aware of "what they're missing" via all the censorship.
It will be up to the Chinese government to decide what steps they want to take. They could block Google.cn, like they have blocked other sites in the past. It's possible the two sides will talk and come to some agreement.