I have to admit that I’ve always been a big admirer of GOOG as a company over the years. I loved it when they told the establishment on Wall Street to f***** off when they did their IPO in a “dutch auction” style. I admire the fact that they push for open systems to the greatest extent possible. And from what I’ve heard from those who work for them their dining room serves better grub than most restaurants in NYC.

One of the few things over the years where I felt like they came up short was on how they dealt with the oppressive regime in China. As an internet search provider they are caught between a rock and a hard place because the government forbids its citizens from reading about certain topics on the web. If you do a search for the Dalai Lama on a Beijing computer zero results appear.

Based on the news reports being released tonight its seems as though GOOG has concluded that the Chinese government attempted to breach its servers in an effort to hack into the gmail accounts of Chinese human rights activists. It appears that is the straw that broke the camels back. GOOG has issued the following direct challenge to the Chinese government.

“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,”

This story is huge. As far as I know there has never been this type of direct challenge issued to the Chinese government by a major company. Can you imagine Wal-Mart playing hardball with them? This is going to be all over the news for days if not weeks. Other companies may actually be put on the spot or called out by media outlets as to their business practices with respect to China.

We will take a look at GOOG and BIDU as possible stocks to trade tomorrow. Normally we steer clear of these names as they tend to move erratically with very wide spreads. But when they are in play they tend to offer some great risk/reward setups.

I observed GOOG drop briefly below the key 580 support level in after hours trading. It then traded up to 587.

BIDU had a much more pronounced move off of the news. It initially popped to 396 from 386. Then it traded up very quickly to 412 where a few thousand shares were offered for sale. Once those shares were cleared it traded as high as 415.