Google has produced a special Chinese search service that blocks access to information that the government designates as sensitive.
The decision is highly controversial and follows widespread criticism of Microsoft earlier this month when it shut down a Chinese blogger's site at the request of the government.
Google argues that it is better to provide some service rather than none at all, but this holds little sway with critics who argue that providing a censored service goes directly against the company's stated philosophy.
The site, Google.cn, will block results of Internet searches deemed likely to offend Beijing, but will tell users the search has been blocked because it is politically sensitive. Pornography will also be blocked on the site, as it is in several other countries.
The move could raise protests from a growing number of organisations sensitive to free speech issues in China. Microsoft has been criticised for its censorship, and Yahoo came under fire late last year for turning e-mails over to Chinese authorities that helped land a local journalist a 10-year jail sentence.
"In order to operate from China, we have removed some content from the search results available on Google.cn, in response to local law, regulation or policy," said Andrew McLaughlin, senior policy counsel at Google. " While removing search results is inconsistent with Google's mission, providing no information - or a heavily degraded user experience that amounts to no information - is more inconsistent with our mission."
A fierce internal debate took place over the issue, but ultimately the company decided to play by Beijing's rules so it could compete in China.
All companies offering Internet services in China must comply with local law or face being shut off by authorities in Beijing, which also monitor data crossing international communications networks. Google has operated a search engine aimed at users in China from the US for a while, but decided to open a server center inside China to speed up searches, since Chinese government firewalls and censors mean download times from outside the huge country tend to be slow.
Google also faces stiff competition from China's number one search provider, Baidu.com, which displays a minimalist home page similar to Google's and launched a hugely successful public stock market offering last year, filling its corporate war chest with funds to use in the battle against encroaching US Internet giants.
Google is currently rolling out the service, so some of it is still run from servers outside of China, and some searches appear blocked and others don't. Searches for some politically volatile issues, such as independence for the democratic island of Taiwan, which China regards as a renegade province and has vowed to take over, came up with nothing. But a search for 'free Tibet' led to a host of links, including The Government of Tibet in Exile and a Free Tibet group.
The spiritual movement Falun Gong, which Beijing has worked so hard to stifle over the past two decades, was also available on Google.cn.
To balance what can often be heavy handed censorship from Beijing, Google intends to disclose to users when information has been removed from its search results in response to local laws and regulations, as it does in other countries such as Germany, France, and the US.
The company said it also plans to move slowly on introducing other services in China, such as Gmail and Blogger, to make sure it can balance the user experience with its legal responsibilities.