David Prosser: Google slips back in China

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Outlook After all the soul-searching at Google over its presence in China – staying true to your principles versus missing out on such an enormous market – the country's internet users appear to be voting with their feet. Baidu, the Chinese company that dominates internet search there, reported a doubling in its profits yesterday. Crucially, its market share has risen from 68 per cent to 71 per cent over the past three months. That was at Google's expense – it fell from 29 per cent to 27 per cent

It is possible some of the loss of market share – and the advertising revenue that will have followed – is temporary, a result of the run-in Google had with the Chinese authorities. However, the truth is that Google's catch-up efforts in China have never been convincing. Before the row, it was beginning to close the gap on Baidu, but only very slowly.

A small share of the Chinese growth story is better than no share at all, so Google will be delighted to have resolved its differences with officials. But in this part of the world at least, Baidu remains the real search giant.