I don't think that fact disputes my argument. Let's consider a few assumptions to try to see a more well-rounded view of the firewall problem. Consider for a moment that all domestic firms must comply with self-censorship or be forced offline (see Papi Jiang's recent problems with cursing in her programming and being forced offline). From this we can assume that censorship issues are not only an issue for foreign firms, but also a primary concern for domestic companies. If we accept these assumptions, then censorship is just a market condition in China, the same way that bad infrastructure or government instability are market conditions in some countries. The difference is that through the internet, foreign companies can escape this market condition and still compete with domestic firms. Whereas in a country with poor infrastructure all companies are subject to the market condition. Without a firewall, domestic firms would be at a severe disadvantage because foreign companies would be able to easily escape government discipline.
Now, under these assumptions we can consider the Google case. Google tried to compete under these market conditions and lost. Thus, if we accept that the firewall is a way of the Chinese government extending market conditions to force fair competition, then any argument that Google could have beaten Baidu in the Chinese market is wrong.
Of course, this assumption may not be correct, but unless you work in the Chinese internet bureau it is not possible know the motivations behind the firewall. I'm simply presenting a devil's advocate view.