So much for the world wide web. If Google follows through on its threat to quit China, the world's largest market by internet users, China could be on the way to becoming a one-country intranet.

Google has had a high tolerance for state meddling. Since 2000, when the company began offering a Chinese-language portal, it has endured frequent blocks and accusations that it was purveying porn and vulgarity. But the apparent hacking of users' email accounts is of another order.

Efforts to portray this as a principled stand are not wholly convincing, from a company given to self-dramatisation. Google's spine has almost certainly been stiffened by some increasingly anti-censorship rhetoric from the US government. But the China growth strategy, if prone to setbacks, was working. Yes, Baidu – the lookalike Chinese site, with few qualms over censoring its content – accounted for an average 62 per cent of China's paid-search market in the nine months to September, compared with 30 per cent for Google, according to Beijing-based Analysys International. But over the same period in 2006 Google had an average 15 per cent, Baidu 50 per cent. Provisional data suggests the US company increased its share to 35 per cent in the fourth quarter, while Baidu – installing a new advertising system – slipped to 58. Estimated search revenue for Google of $234m in the first three quarters of last year, up almost ten-fold from 2006, will not be surrendered lightly.

China has tied itself in knots trying to regulate a shape-shifting industry. Google reports to the Ministry for Information Industry on network issues, the Bureau of Publishing on content, the Ministry of Culture on entertainment, and the Bureau of Broadcasting and Film. But even without joined-up thinking, Beijing should realise that the de facto expulsion of a $187bn company is not in its interests. Last year a public backlash forced it to abandon attempts to install Green Dam filtering software in every new PC. Some kind of compromise looks more likely than not. Google needs China, and China needs Google.