This week the PC industry stared into the eyes of the red dragon and the dragon blinked. In a surprising move, Chinese officials announced at the 11th hour that it would delay the deadline for PC manufacturers to install the controversial Green Dam Youth Escort internet filter on new shipments to the country.

Under a decree issued by Ministry of Industry and Information Technology last month, China told PC makers that they would have to install the mandatory spyware on all computers sold in the country starting July 1. Though some manufacturers were ready to comply—Sony, Toshiba and Acer, for instance—the entire industry had lobbied against Green Dam from the get go.

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The software was reportedly created to prevent Chinese web browsers from viewing “unhealthy” material such as porn, but it is widely known to include censorship elements that help the Communist state clamp down on free expression of ideas. Beyond the moral dilemma of collaborating with such tactics, worldwide PC makers faced the tough task of complying with such sweeping bundling demands under a tight deadline.

Last week the Information Technology Industry Council, the Software & Information Industry Association, the Telecommunications Industry Association and TechAmerica jointly released a statement on behalf of their members for China to reconsider. And even the U.S. Department of Commerce stepped into the fray, issuing a strongly-worded letter that claimed the Green Dam mandate was against World Trade Organization rules and that the deadline put companies in an ‘untenable position.’

Perhaps the biggest concerns, though, that made Chinese officials reconsider their deadline were the technical roots of the program itself. Over the course of the month the security community has found numerous flaws in the program that would allow hackers to own the boxes of nearly the entire Chinese computing community if exploited.

"People say the software is not very stable and has many technological problems," Joerg Wuttke, the president of the European Union Chamber of Commerce in China, told Reuters, calling the Chinese effort "hasty."

The final sticking point surfaced this week, when the U.S. software company Solid Oak accused the Chinese developer of Green Dam of blatantly ripping off code from Solid Oak’s CyberSitter software to create the censorship application. In an injunction request by Solid Oak against Jinhui Computer System Engineering, Solid Oak says that the underlying code includes specific references to CyberSitter.

While China hasn’t scrapped plans entirely for Green Dam, there is no word yet on a new deadline for mandatory installation.