Google's operations and long-term prospects in China were shrouded in confusion , as it emerged that it is still censoring search services for its partners because of contractual obligations.
The world's leading search engine hoped to resolve two months of uncertainty with Monday's announcement that it had closed its mainland search service and shifted its Chinese-language facility to Hong Kong.
The territory has different laws under the "one country, two systems" formula adopted after the 1997 handover and that allows Google to display results without removing sensitive material, as promised.
But the company has over a dozen syndication deals with internet and telecommunication firms on the mainland. Those sites would break the law if they offered uncensored searches.
"Over time we won't be syndicating censored search to partners in China but we will fulfil existing contractual obligations," a spokesman said.
But mobile and online service provider Tom.com – controlled by Hong Kong tycoon Li Ka-shing – has already dropped the Google search box from its portal, switching to Chinese rival Baidu.
The New York Times reported that the state-owned telecoms company China Mobile was expected to cancel its search agreement with Google "under government pressure".
Mobile search service google.cn/m also appeared to be censored last night, but it is thought its hosting will soon be transferred.
While Google plans to keep its research and development team and advertising sales staff on the mainland, it is unclear what will happen to other parts of the business.
It has only weeks to renew its internet content provider licence if it wishes to continue operating services such as maps and music on Google.cn.
"We'll review each on a product-by-product basis and decide how to proceed," the spokesman said.
Earlier, the company's co-founder, Sergey Brin, said there was a lack of clarity about whether the Hong Kong-hosted service would remain available from the mainland.
The Chinese government played down the dispute after initially lashing out at Google's decision.
"The incident is just an individual action by a company and I can't see its impact on China-US relations unless someone wants to politicise that," said a foreign ministry spokesman, Qin Gang.
Earlier, an unnamed official from the state council information office described Google's move as "totally wrong".
Some sources suggest that the move to Hong Kong was part of an unofficial deal brokered with Beijing after two months of intense negotiations.
Experts suggested the move could cost the Californian company as much as $4bn over the next five years.
"Google's value to advertisers in China will have been diminished," said Steven Chang, who runs the Chinese arm of the advertising company Zenith Optimedia.
A small number of Chinese supporters left flowers and other gifts outside the company's headquarters in Beijing today.
Google said in January that it was no longer willing to self-censor google.cn. It cited a Chinese-originated cyber-attack targeting information on human rights activists and intellectual property, as well as increasing censorship.
Beijing says most countries control internet content and denies any connection to cyber-attacks.
Chinese voices
Xinruochen, blogger "Why does Google always try to politicise the issues? Leaving the Chinese market, what will you have left, Google? Since you have come to China to do business, you should obey Chinese law and regulations."
"Qualified citizen", blogger "Google is leaving and that is good – it leaves now before causing more damage. What it wants to do is to establish a monopoly as the source of information for people."
"Idstory", blogger "We should applaud Google – how much courage must a company have to give up on a market of more than tens of millions of people?"
Liang Qiushi "I'm a Google fan, but I think leaving China won't influence the service they can provide – it's only a superficial change. It's impossible to totally block a website: Twitter is blocked, but a lot of people here still use it in various ways."
Wang Jun "I like Google and use it frequently so I think it's a shame it has to go."
