there was a large-scale effort to root out dissidents by hacking into Google and up to 20 different companies and the Chinese Government is implicated.
To put this in proper perspective - what you have to look at is simply http://www.baidu.com/ . That is the number one search engine in China, not Google. They are eating Google's cheeze on a large-scale while emulating them across the board. What is interesting is when you crunch the numbers with regards to the number of users. There are a LOT of people in China with computers today.
The implications with regards to human rights and the freedom of speech are very deep indeed. I find this particularly fascinating since most large tech companies today are doing everything that they can to do business with China. Bucking this trend in the name of actual freedoms is a political move that fits perfectly with their original mantra of "Don't Be Evil".
But it has taken them a while to properly define 'Evil' in this context.