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The Associated Press

BEIJING — (Nasdaq: GOOG) says launch of its mobile phone efforts in China is being postponed amid dispute over Internet censorship and e-mail hacking that the search giant says may force it to leave the country.

The delay affects separate phones made by Motorola and Samsung. The handsets are both powered by Android, a mobile operating software system developed by Google. Both phones were scheduled to debut this week, with China Unicom Ltd. serving as the carrier.

The change in plans is the latest aftershock from Google’s threat to close its Internet search engine () and pull out of China unless the government relents on its rules requiring the censorship of content that the ruling party considers to be subversive.

Google decided to challenge the restrictions on free expression after uncovering a computer attack that targeted its software coding and the e-mail accounts of human rights activists protesting the Chinese government’s policies.

The postponement of the new mobile phones in China show the country stands to lose more than just the world’s best-known search engine if Google leaves.

Both the Samsung and Motorola phones are geared to run Google’s search engine and other Internet services. With the availability of those services remaining accessible in China now in doubt, it made sense to put the sale of the phones on hold for now.

Google still wants to remain in China if a compromise can be reached with the government in the next few weeks. The outcome of those discussions appear likely to determine whether the Samsung and Motorola phones will be sold in China. The nation is world’s most-populous mobile phone market, with more than 700 million accounts, and has an increasingly prosperous populace eager for the latest technology.

"It is postponed," Google Inc. spokeswoman Marsha Wang said. She said a launch ceremony planned for Wednesday was canceled but declined to give a reason for the decision or to say when the launch might be rescheduled.

One person briefed on Google’s decision said it was linked to the company’s threat that it will shut its Chinese-based search engine if restrictions aren’t eased.

The company concluded it would "not be a good experience" for consumers to receive a phone right now with its applications, said the person, who spoke on condition of anonymity due to the sensitivity of the issue.

Wang,  however, only said the planned Wednesday ceremony with local carrier China Unicom Ltd. was postponed. She declined to give a reason or say when the launch might be rescheduled.

China has the world’s most-populous mobile phone market, with more than 700 million accounts and increasingly prosperous customers who readily pay for the latest technology and services.

Also Tuesday, a Foreign Ministry spokesman said the search giant must obey China’s laws and traditions, suggesting the government was giving no ground in talks over Internet censorship and Google’s threat to pull out of the country.

"Foreign enterprises in China need to adhere to China’s laws and regulations, respect the interests of the general public and cultural traditions and shoulder corresponding responsibilities. Google is no exception," Foreign Ministry spokesman Ma Zhaoxu said.

It was the government’s first direct comment on Google since the U.S. company said Jan. 12 it would no longer censor search results in China and might shut down its China-based site The announcement prompted an outpouring of support from Chinese Web surfers, who left flowers at Google offices and pleaded with the company to stay.

Google’s phone is an effort by the company to join in competition for a share of China’s mobile phone market, which is the world’s most populous.

Google’s announcement shocked the international business community and cheered many free-speech advocates.

The Chinese government blocks access to Web sites abroad run by human rights groups and dissidents and material deemed subversive or pornographic.

Google’s announcement Jan. 12 that it might quit the huge Chinese market shocked the international business community and cheered many free-speech advocates.

The Chinese government imposes strict Internet controls that communist leaders believe they need to protect their monopoly on power. Beijing blocks access to Web sites abroad run by human rights groups and dissidents and material deemed subversive or pornographic.

Google said last week it is hoping it can persuade the Chinese government to agree to changes that would enable Google.cn to show uncensored search results. If a compromise isn’t worked out within the next few weeks, the company intends to shut down its search engine and pull out.

Google has said it would hold talks with the government over the issue. Ma told a regular news conference he did not know if any talks had been held.

A pullout would be awkward for China. Chinese and foreign businesses rely on Google’s e-mail, maps and other services based abroad, which could lead to disruptions if authorities try to retaliate for a Google withdrawal by blocking access to its U.S. site.

Chinese filters blocked Google’s main site outright in 2002. Scientists pleaded that they needed it to find information online, and the government of then-President Jiang Zemin relented and eased access.

Google said last week that a sophisticated attack in December from China targeted the Mountain View, California-based company’s infrastructure and at least 20 other major companies from the Internet, financial services, technology, media and chemical industries.

The Foreign Correspondents’ Club of China sent an e-mail Monday to its members warning that reporters in at least two news bureaus in Beijing said their Gmail accounts had been broken into, with their e-mails surreptitiously forwarded to unfamiliar accounts. One of the accounts belonged to an Associated Press journalist.

Ma said China strictly prohibits computer hacking in any form.

The head of China’s e-commerce giant Alibaba — in which Google rival Yahoo Inc. has a significant stake — said Tuesday that foreign companies such as Google should not pull out of the Chinese market.

"It is easy to give up, but one must hang on," said Jack Ma, chief executive of the Alibaba Group, commenting on the challenges in China.

"China will set the rule of game in the 21st century, and businesses must not go to the mainland for the profit motives only but rather to take part in setting the rules," Ma told a business conference in Taipei, Taiwan.

Yahoo closed its offices in China several years ago when it sold much of its business to Alibaba Group. Yahoo retains a 39 percent stake in Alibaba, which represents one of Yahoo’s most valuable assets.

China’s online population has soared in recent years to 384 million people, bigger than the entire population of the United States.

Google.cn, set up in 2005, trails local rival Baidu Inc., with a 35 percent market share to Baidu’s 60 percent.