The dirty business is that Microsoft is willing to cooperate with the Chinese government and censor its search results. Google publicly pulled out of China precisely because it was unwilling to do that. Even so, China did renew Google's Internet license, and they do run ditu.google.cn (un-offsetted maps, possibly only accessible from within China).
Google is not actually blocked by the firewall. Gmail is slow, occasionally lots of dropped packets, and other passive-aggressive behavior, but not blocked. Search generally works ok, unless, say, you are a tourist searching for information about a certain popular tourist destination in the center of Beijing. Groups, Docs, and other free exchange of information services are blocked, though.
Censor its search results? You mean Microsoft cope with the government to filter the result. Great! Today they filter the results. Tomorrow they will share the user data with government.
You are right, Google is not actually blocked by GFW. If you search something the government think it's sensitive (just they think), they will block you from Google for serveal minutes. After that, you can connect to Google again. I say, what the hell is that? Fuck the government.
Google is not actually blocked by the firewall. Gmail is slow, occasionally lots of dropped packets, and other passive-aggressive behavior, but not blocked. Search generally works ok, unless, say, you are a tourist searching for information about a certain popular tourist destination in the center of Beijing. Groups, Docs, and other free exchange of information services are blocked, though.