By JOE McDONALD and MICHAEL LIEDTKE, AP Business Writers Joe Mcdonald And Michael Liedtke, Ap Business Writers  – Tue Jun 29, 6:21 pm ET

BEIJING – China is threatening to revoke Google’s business license over the company’s decision to redirect Chinese traffic to computers in Hong Kong that are not governed by the communist government’s censorship practices.

The latest skirmish between Beijing and the Internet search leader threatens to cripple the company in one of the Web’s biggest markets.

Google agreed Tuesday to dismantle the virtual bridge to its Hong site that was created in March, but it was unclear whether that will be enough to stay in business in China. The license is required for the company to continue providing its mapping and music services in China.

Google hopes to keep its license by turning its Chinese website into a so-called “landing page” anchored by a link that users must click on to send visitors to the Hong Kong search service. The company has no plans to revert back to its previous practice of omitting search results that the Chinese government considers subversive or pornographic.

“This new approach is consistent with our commitment not to self-censor and, we believe, with local law,” David Drummond, Google’s top lawyer, wrote in a blog post.

A foreign ministry spokesman, Qin Gang, said he had not seen Google’s announcement and could not comment on it. However, he added, “I would like to stress that the Chinese government encourages foreign enterprises to operate in China according to law.”

The impasse could drag on for months, analysts predicted, as both Google and the Chinese government jostle in a heavyweight wrestling match unfolding on an international stage.

Google Inc. announced in January that it would no longer comply with Chinese censorship after being hit by a hacking attack traced to China. The high-profile challenge irritated Chinese leaders, even though they want foreign companies to help develop the country’s technology industry.

Google met a Wednesday deadline to apply to renew its Internet license in China. It’s not clear how long the Chinese government will take to review the application, but BGC Financial analyst Colin Gillis expects the company “to twist in the wind for a while.”

Google’s uncertain fate in China could become a distraction for management, but it’s one that is probably worth the trouble, said Gartner Inc. analyst Whit Andrews.

That’s because China already has about 400 million people online, making it the world’s largest Internet market, and that figure is expected to steadily grow for decades to come.

“Google knows its shareholders think it’s important to be in China, and a lot of its future value is riding on that,” Andrews said. And China’s government knows it has to flex its muscle because “if it looks like Google is running the show, it could affect their power.”

Google shares fell $17.82, or nearly 4 percent, to $454.26 on a rough day throughout the stock market.

China has not produced a big windfall for Google yet, partly because it’s one of the few markets where the company’s search engine is not the most popular. (The homegrown Baidu.com holds a 60 percent share compared with about 30 percent for Google.)

Analysts estimate Google gets $250 million to $600 million in annual revenue from China, or about 1 percent to 2 percent of its total revenue.

Even if Chinese regulators approve Google’s new navigation tool, the added click to reach Hong Kong could still drive away some users.

If that were to happen, “then advertisers will panic and cut spending,” said Edward Yu, president of Analysys International, an Internet research firm in Beijing.

Google could still remain in China even if the government pulls the plug on its website in that country. The company has indicated it would like to retain its engineering staff in China to take advantage of the country’s technology talent and to maintain a sales force that also sells ads to Chinese businesses trying to reach customers outside the country.

If Google.cn is shut down, mainland Chinese users could still reach Google’s services by manually typing in the address of the Hong Kong site. But China’s government could also use its own technology tools, sometimes called a “Great Firewall,” to prevent its citizens from connecting to Google’s sites outside the country.

The Mountain View, Calif.-based company launched its China-based site in 2006 after Chinese government filters blocked many users from reaching the company’s U.S. site.

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Liedtke reported from San Francisco.

By TOM KRISHER and DEE-ANN DURBIN, AP Auto Writers Tom Krisher And Dee-ann Durbin, Ap Auto Writers   – Tue Jun 29, 4:16 pm ET

DETROIT – When it comes to car shopping, Americans are tapping the brakes.

Forecasters think U.S. sales of cars and light trucks have slowed in June after months of improvement. It’s another sign that people are beginning to doubt the economic recovery with unemployment still high.

“The two big issues with consumers right now are employment growth and income growth, and they’re not seeing much of either,” said George Pipas, Ford Motor Co.’s top sales analyst.

Three firms that track auto sales predict automakers will report a sales decline of anywhere from 9.5 to 12 percent from May to June when they turn in their figures on Thursday. A double-digit decline would be the biggest monthly drop since January.

There is good news for shoppers: If sales keep falling, automakers will be more tempted to try to lure car buyers in with low-interest financing, rebates and sweet lease deals.

The U.S. economy has been sending mixed messages for months, but lately the signs are worse. Last week, the government lowered its estimate for first-quarter economic growth because people spent less than previously thought. On Tuesday, a widely watched index showed a jarring drop in consumer confidence, with June down nearly 10 points.

Unemployment has been stuck around 10 percent all year. While the pace of layoffs has slowed, the number of people seeking first-time unemployment benefits is about the same as in January. And sales of new and previously owned homes fell last month.

All this makes potential car buyers uneasy.

“People are just nervous about signing up for a three-year loan, so I think people who normally would’ve cycled out of a car a little sooner are deciding, ‘Hey, I’ll just drive this car for another year,’” said Tom Folliard, CEO of used-car dealership chain CarMax Inc.

Automakers sold 1.1 million vehicles in May, the best month so far this year. J.D. Power and Associates, Truecar.com and Edmunds.com are predicting that June sales will drop below 1 million.

At that number, sales would be well below a typical June over the past five years, which is 1.3 million, and far below the peak during that period of almost 1.7 million in 2005, according to Ward’s AutoInfoBank.

If the weakness continues into summer, automakers will have to sell more to rental car companies and other fleet buyers. Otherwise, sales won’t be too much better than last year’s dismal 10.4 million, the lowest since 1982.

“With the recovery not progressing as expected, it’s gut-check time for the automotive industry,” said Jeff Schuster, executive director of global forecasting for J.D. Power.

J.D. Power expects a decline in sales to individuals. If that happens, automakers will be tempted to lower prices with big sales promotions — good for drivers but bad for the industry’s bottom line.

One big change from a year ago could help automakers: They generally have kept inventories low after going through the trauma of restructuring in bankruptcy court. Recently, though, they have raised factory production.

Still, Bob McInerney, vice president of a Toyota dealership north of Detroit, has noticed a drop in the number of customers out looking for cars. He blames economic fears. The first two weeks of June were quite slow, although sales have picked up lately as he’s pushed deals.

“It seems like people are conditioned to buy the last two weeks of the month,” he said.

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AP Business Writer Michael Felberbaum in Richmond, Va., contributed to this report.

By ROBERT H. REID, Associated Press Writer Robert H. Reid, Associated Press Writer   – Mon Jun 28, 2:53 pm ET

KABUL, Afghanistan – A weak and troublesome Afghan partner. A war strategy increasingly questioned. Sniping between military and civilian officials. Military deaths at record levels. A deadline to begin withdrawing troops that may come too soon.

Gen. David Petraeus faces daunting challenges when he assumes command in Afghanistan following what by all accounts will be quick approval by the Senate.

Petraeus is no stranger to the role that awaits him. He was widely credited with turning around the Iraq war after he assumed command in January 2007 at a time when the country was spinning into chaos.

Afghanistan may well prove tougher. The country is poorer than Iraq, and the government is weaker. Fighting is scattered throughout much of a large country with formidable terrain rather than focused in Baghdad and a handful of major cities.

There is no sign of a revolt within insurgent ranks comparable to the Sunni uprising against al-Qaida in Iraq that gathered steam as the surge troops arrived. And insurgent havens across the border in Pakistan offer the Taliban and al-Qaida sanctuary beyond the reach of American ground forces, although CIA-run missile strikes have killed numerous key figures in the militant command structure.

Petraeus will need all his formidable skills as a communicator to assure a nervous Congress that the war is on track while explaining to skeptical Afghans and his own troops that the counterinsurgency strategy crafted by him and his predecessor, Gen. Stanley McChrystal, can succeed in turning back the Taliban.

He must also find a way to deal with President Hamid Karzai and his ineffectual government, hobbled by corruption and a lack of resources to build effective administrations in areas cleared of Taliban fighters.

Petraeus will be taking command at a critical juncture in the nearly nine-year war. U.S.-led forces are preparing for a showdown with the Taliban in their southern stronghold of Kandahar, which NATO strategists consider the key to controlling the ethnic Pashtun south.

But delays in the Kandahar operation, largely due to public opposition in the city, have raised doubts that the U.S. and its allies can make enough progress by President Barack Obama’s July 2011 target date to begin withdrawing American troops.

U.S. soldiers and Marines also complain that the restrictive rules laid down by McChrystal have handed the advantage to the insurgents and put their lives at risk.

The former head of the British army, retired Gen. Richard Dannatt, said NATO forces must put “maximum pressure” on the Taliban so they don’t have the option of waiting for the U.S. and its allies to leave.

“What’s got to be remembered is these complex and difficult counterinsurgency campaigns always take time,” Dannatt told the BBC. “There’s a notion of strategic patience.”

Petraeus’ arrival in Iraq was followed by a sharp rise in combat that made 2007 the deadliest year of the war for the U.S. military with more than 900 Americans killed. Petraeus also made adjustments in the overall Iraq surge plan, shifting forces out of Baghdad to nearby provinces where insurgents had regrouped.

But American and NATO officials have played down talk of any major changes in the overall Afghanistan counterinsurgency strategy — based on protecting civilians and promoting economic development — that Petraeus pioneered in Iraq and McChrystal employed when he assumed command last year.

“This strategy will not change,” the chief spokesman for the NATO command, Brig. Gen. Josef Blotz, told reporters Sunday.

Any major changes in strategy will require Petraeus to win the trust of Karzai. The Afghan president maintained a close relationship with McChrystal but has had rocky relations with other U.S. officials, notably Ambassador Karl Eikenberry and special envoy Richard Holbrooke.

Karzai had been an outspoken critic of U.S. tactics, including the heavy use of airpower, warning that civilian deaths as a result of those attacks were turning the population against the international coalition.

Working with the mercurial Karzai, who in April threatened to join the Taliban in response to international pressure on his government, is a pillar of the Obama administration’s strategy to bolster the Afghan government and security forces to gradually take over the running of the country.

Eikenberry, a retired lieutenant general who once commanded troops in Afghanistan, warned last year against sending substantial numbers of troops because Karzai was not a reliable partner. McChrystal said in the Rolling Stone article that led to his dismissal that he felt “betrayed” by Eikenberry.

At the same time, the U.S.-led command had been encouraging Karzai to take ownership of major operations against the Taliban to promote the idea that the international troops are fighting in partnership with the Afghan government rather than as an occupying force.

All that requires someone in the U.S. civilian-military establishment to maintain good ties with Karzai, a role that McChrystal played. Karzai’s relationship with Eikenberry and Holbrooke has been strained because of their past criticism of the Afghan president’s weak leadership.

Petraeus faced a similar situation in Baghdad — a vacillating Iraqi prime minister and friction with the embassy. Petraeus overcame the challenge, in large part by forging a close relationship with the newly appointed U.S. Ambassador Ryan Crocker, who shared the general’s strategic vision and passion for jogging.

But with July 2011 only a year away, uncertainty is growing about how many American and NATO forces will remain here after that date.

Former Australian army officer David Kilcullen, who advised Petraeus on counterinsurgency in Iraq, said on CNN’s “Fareed Zakaria GPS” that the Afghan war has long faced problems.

“What makes them a crisis is the deadline,” Kilcullen said. “We’ve got to fix all these problems by next summer or we’re not going to meet the objectives.”

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Robert H. Reid is AP chief of bureau in Kabul and news director for Afghanistan-Pakistan.

Mon Jun 28, 5:20 pm ET

NEW YORK – Apple Inc. said Monday that it sold more than 1.7 million units of its new iPhone model in the first three days, making it the most successful product launch in the company’s history from the standpoint of sales.

The iPhone 4 went on sale Thursday in the U.S., Britain, France, Germany and Japan. High demand for the model caused shortages and unruly crowds at some stores.

“This is the most successful product launch in Apple’s history,” said Steve Jobs, Apple’s CEO. “Even so, we apologize to those customers who were turned away because we did not have enough supply.”

Some stores sold out within hours. Analysts have said Apple is having a hard time procuring enough parts for the phone, such as its new higher-resolution screen. Apple has said the white iPhone it plans to produce has been more challenging than expected and won’t be available until late July. Only black models went on sale Thursday.

Apple sold more than 1 million units in the first three days when it launched last year’s model, the 3GS. Canada, Italy, Spain and Switzerland were then among the launch countries, but Japan was not.

Apart from the sharper screen, the iPhone 4 features a slimmer body and faster processor than the previous model, among other changes.

Shares of the Cupertino, Calif.-based Apple rose $1.60, or 0.6 percent, to $268.30 in trading Monday.

by Rory Mulholland Rory Mulholland   – Sun Jun 27, 5:40 pm ET

PARIS (AFP) – Burgled gold bullion, an eavesdropping butler, tax evasion, a minister and the super-rich L’Oreal and Peugeot heirs: a growing political row in France has all the ingredients of a blockbuster novel.

The man at the heart of it all is Labour Minister Eric Woerth, a high-flyer in President Nicolas Sarkozy’s government who was until recently nicknamed Mister Clean.

Woerth was already making headlines in recent weeks as the man overseeing pension reform that is so unpopular that on Thursday hundreds of thousands of French took to the streets to protest against it.

But then on June 16 a website published transcripts of tapes secretly made by the butler of France’s richest woman, Liliane Bettencourt, the L’Oreal cosmetics heiress with a fortune estimated at 16 billion euros (20 billion dollars).

The taped conversations between Bettencourt and her financial adviser reveal that the 87-year-old allegedly hid 80 million euros in Swiss bank accounts while making big donations to friends in Sarkozy’s UMP political party.

The butler’s tapes were the latest twist in a long-running family feud between the billionaire and her daughter, who claims Bettencourt is mentally unfit after she gave more than a billion euros to a photographer friend.

But the affair ballooned when it emerged from the recorded conversations that Woerth’s wife Florence worked for a company that managed part of Bettencourt’s fortune.

French papers and opposition politicians were quick to ask if the Woerths knew of the alleged tax fraud and to note that Woerth last year presented Bettencourt’s financial adviser with the Legion d’Honneur civic award.

Woerth, who in a previous post led a major crackdown on tax evasion, and his wife vehemently deny any wrong-doing.

On Saturday Sarkozy added his voice to government support for the minister, saying Woerth had his “total” confidence.

But the calls are growing for Woerth to put an end to an apparent major conflict of interest, even if few politicians have so far openly called for his resignation.

Green party member of parliament Noel Mamere joined the chrous on Sunday when he denounced Sarkozy’s ministers as “the high priests of zero tolerance who apply to themselves the principle of impunity.”

Woerth came under fresh scrutiny on Sunday when the Journal du Dimanche newspaper reported that another super-rich heir to a world-class French company had sought him out when he had tax problems.

The paper said Robert Peugeot, of the car manufacturer of the same name, dined with Woerth just days after gold ingots — worth an estimated 150,000 euros — were stolen late last year by burglars who broke into his Paris home.

Peugeot sought out Woerth because, according to sources the paper did not identify, “he was afraid of an inquiry into the origin of his gold.” The paper noted that Woerth earlier this month awarded a Legion d’Honneur to Peugeot.

Woerth’s advisors denied the minister had intervened in any way on Peugeot’s behalf.

The Woerth affair comes at a time when many French are outraged by reports that several government ministers are living the high life at the taxpayer’s expense while ordinary people are being told to tighten their belts.