The Google v China face-off
So just who is going to blink first in this high stakes poker game?
The search giant says it may well pull out of China after discovering what it called a "highly sophisticated and targeted attack" on its corporate infrastructure.
And while that attack originated from China, Google did not actually accuse the government of orchestrating it. However you wonder what their suspicions are and their motivation given that cyber attacks are part of operating on the web.
Now Google is saying it will have to re-evaluate how it does business in the country.
The California based company has conducted operations over the last four years by agreeing to censor results.
Google, like Yahoo and Microsoft and a myriad of companies have always said this is the price they have to pay for doing business in China.
And the reason why companies are willing to play by these rules is surely because of the prospect of accessing tens of millions of potential customers.
China's internet audience already has soared from 10 million to nearly 340 million in the past decade. Google's market share is around the 30+% while rival Baidu commands about 63%.
So what lies behind all of this?
Some security experts reckon that the attack must have been sizeable and worrying for Google to engage in this kind of brinkmanship.
"For Google to pull up stakes and basically pull out of China, the attack must have been large in scope and very penetrating," James Mulvenon an expert on Chinese cyberwarfare capabilities told the New York Times.
"This attack highlights the fact that cyberwarfare has basically gone to the next level."
Google's chief legal officer David Drummond said this attack, while unsuccessful, "goes to the heart of a much bigger global debate about freedom of speech".
Fine words, but people like George Simpson at the Consumer Watchdog believes the company should have adopted this stance way back in 2006 when it did a deal to launch Google.cn in China.
"We commend the company, but they should never have agreed to censor results in the first place," he told the BBC.
Evgeny Morozov, an expert on the political effects of the internet and a Yahoo fellow at Georgetown University, questioned why Google had made the decision now after four years operating in the country.
"They knew pretty well what they were getting into. Now it seems they are playing the innocence card...It's like they thought they were dealing with the government of Switzerland and suddenly realised it was China," he said.
Mr Morozov told the Guardian that it could have been damaging for Google if news of the breach had emerged later and it appeared the company had done nothing.
According to the Wall Street Journal there was much consternation inside Google's Mountain View headquarters about what to do.
The newspaper cited two sources that said that Google chief executive Eric Schmidt was concerned about the potential backlash, while Google co-founder Sergey Brin has always had some concerns about operating in China given its human rights record.
Danny O'Brien of the Electronic Frontier Foundation says the spotlight is now on those other businesses operating in China like Microsoft and Yahoo.
"Our hope is that other tech companies will follow Google's lead. Too many of them have been willing to comply with Chinese demands that they check their values at the border."
This is a high stakes game for Google which has said that over the next few weeks it hopes to sit down with the Chinese government to work out a deal that would let it operate an unfiltered search engine.
In its blogpost, Google said it may well shut down its operation and close its office in China unless that happens.
So far the Chinese authorities have said nothing on the issue but there is little doubt that officials will be infuriated by this very public showdown along with such an ultimatum.
Some industry experts worry that it could complicate matters for other tech companies sensitive to being seen as accomplices of the Chinese government.
For Google, it could be argued that there is a lot to be gained from this situation.
Given that it is highly unlikely that China will relax the rules for Google, a mountain of great publicity awaits for the search giant taking such a strong stance after years of criticism.
Add to that an increase in user trust that the firm has gone public over such a breach and made the right noises about security.
Another benefit, as noted by CNET.com, is that Google could endear themselves to regulatory bodies because such a hard line with China could win fans in Washington DC.
Clearly it is an interesting game moving forward and both sides have yet to play their hand.