I disagree. What Schmidt missed is that Google has had great adoption, not just because of a good product, but because of good will from the public. By acquiescing to China's demands, they lost good will. In the long run, if they took Schmidt's path and became another media outlet for the state, they would probably end up more like Microsoft than Google, losing a lot of good will and customers in the US/Euro.

Despite what anyone says, the US/Euro market is their primary market, and the one they should be primarily concerned with keeping happy.