Google's opting-out may thwart business

08:34, March 24, 2010      

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The continuing tensions between Google and Beijing appear to be denting the company's business, the Associated Press reported on Tuesday.

The world's search giant Google Inc. moved to shut down its Chinese-language search engine in China's mainland and direct traffic to its Hong Kong site early on Tuesday, which the regulators in Beijing said “was totally wrong”, in addition to violating its prior promises while entering China market.

The maneuver has already unnerved its investors. Google's stock fell US$8.50, or 1.5 percent, to $549 on Tuesday.

The Associated Press reported in a story that the chief concern among investors is “whether Google poisoned its business in one of the world's most promising Internet markets”.

It quoted one market analyst critical of Google's move, who predicted the maneuver will cause the company's stock to fall by as much as $50 — or about 10 percent — in the coming weeks.

On Monday, Google began sending Web searchers in the mainland from the China-based Google.cn to Google.com.hk.

Meanwhile, TOM Online, a provider of online and mobile services in China that is owned by a Hong Kong tycoon, said it would not renew an alliance with Google to avoid violating any Chinese laws, said the AP report.

It said that owners of China-related businesses also may be more reluctant to advertise on Google in the future. Susquehanna Financial Group analyst Marianne Wolk expects China's Internet ad market to grow from about US$3 billion last year to as much as US$20 billion in 2014.

BGC financial analyst Colin Gillis said he expects Google's dustup with the Chinese government to reduce the company's market value by up to US$10 billion to US$15 billion, or US$30 to US$50 a share, according to The Associated Press report.

"What Google has done is a slick trick, but it's also a direct slap in the face to the government," Gillis said. "The repercussions from this will be going on for several years."

By People's Daily Online

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