It took Google more than a year to make the decision that offering a censored version of its search services in China would be a lesser evil than boycotting business in the country altogether, according to Google CEO Eric Schmidt.

"We concluded that although we weren't wild about the restrictions, it was even worse to not try to serve those users at all," Schmidt said. "We actually did an evil scale and decided not to serve at all was worse evil," he said, referring to the company's famous "don't be evil" creed.

Schmidt's remarks came during a panel discussion on Friday at the World Economic Forum (WEF) in Davos, Switzerland, on the theme "Digital 2.0: Powering a Creative Economy."

Schmidt talked about Google's planned Chinese service in response to a question from an audience member about the issue, which has been in the headlines this week after Google disclosed that the new service will comply with Chinese government policies requiring Google to block results to searches on politically sensitive topics. Google has also been under pressure from the U.S. government, which has requested extensive Google usage records to further an investigation into online pornography. Google said it intends to fight that subpoena.

Without specifically mentioning either of those issues, Schmidt cited overly aggressive government policing as one of the threats that could derail the information economy's rapid growth.

"Things that could slow down this very rosy picture are bizarre or unreasonable laws and regulations, or fear on the part of end users who are dying to use these [technologies] but are afraid," Schmidt said. Great volumes of information are now available online, and "exactly who has access to that, what their rights are ... [those questions] are going to loom very, very large in the citizens' minds."

Schimidt's fellow panelist Bill Gates, Microsoft's founder, didn't join the discussion of Chinese censorship, but he weighed in on the topic during a previous talk at WEF on Friday. Microsoft, too, has faced criticism for acceding to censorship demands from the Chinese government.

"Access to the outside world is preventing more censorship," Gates said at the conference, according to an Associated Press report. "I do think information flow is happening in China. ... There's no doubt in my mind that it's been a huge plus."