14 DAY TRIAL // The effects of the decision to stop censoring results in China are already starting to be felt at Google. According to new studies, Google lost a big slice of the search-ad market in the first quarter of the year, the first decline since the second quarter of 2009. It’s now clear that advertisers are worried that Google may not be able to reliably serve the ads they pay for, so they are going with the safer choice, in this case, Google’s main rival in the country, Baidu.
Bloomberg is citing a report by Analysys International that says that Google’s share of the paid-search market has dropped by almost five-percent points, going from 35.6 percent at the beginning of the year to just 30.9 percent at the end of the fist quarter. This is a significant drop, considering that Google hadn’t yet announced what it planned to do in China, except for the fact that it wouldn’t censor search results anymore. Google’s final decision came on March 22nd, in the last few days of the quarter.
As expected, Google’s loss has been Baidu’s gain. The Chinese company that already dominates the search market in China picked up some considerable Steam in the first three months of the year. Its share of the paid search market has jumped from the already solid 58.4 percent to 64 percent.
Google failed to come to an understanding with the Chinese government, as it was widely expected, and started redirecting all traffic for Google.cn to its servers in Hong Kong, outside mainland China. From there, it now serves uncensored results, though they don’t get through China’s so-called Great Firewall. China may block the Google search engine entirely at any point.
It should be interesting to see if, now that Google’s stance is definitive, the search engine will lose even more advertisers. It is very likely that some will switch to Baidu, but, if China doesn’t start blocking Google more aggressively, the company may end up keeping at least part of its customers.