The dispute between China and Google is well-known within the tech world. About a week ago, Google.cn was removed and all traffic was redirected to Google.com.hk, Hong Kong's uncensored version of Google Search. Now, China Unicom, which is in the process of releasing several Android phones, has decided to remove the Google Search function from their phones.
China Unicom's president said that they can't work with Google currently because they are not abiding by Chinese law. Additionally, including Google search into their phones when Google.cn is no longer up doesn't make much sense.
This is a big obstacle in Google's path for dominating the Chinese search market. According to the article quoted in the Phandroid article, more people in China own and use cellphones than there are Chinese internet users. Google Search does not enjoy the dominance it has in the West. China has a largely untapped market in regards to search (both computer and mobile) market share that is very attractive to Google.
Expect to hear more announcements of this type from other Chinese companies.