Chinese ad resellers to file lawsuit against Google

A group of Chinese advertising resellers are gearing up to file a lawsuit against Google and its former partners, alleging cases of bribery and corruption.

It is the latest stage in increasingly strained relations between the US based search site and China, with the seven resellers claiming that negotiations with Google broke down following the decision last Friday to shut down all the advertisements they dealt with.

A representative of the resellers appeared confident that the claims would be upheld.  “We believe they (certain employees of Google China) will be found guilty if we present the proof we have,” Fan Meiyong told China Daily.

The distributors had issued a public letter to Larry Page and Sergey Brin, Google’s founders, calling for dialogue at executive level.  In order to support this demand a week-long protest has begun outside Google’s offices in Shanghai.

It was announced late last month that Google would be terminating its contracts with seven advertising resellers, though apparently gave no reason for the move. The case echoes that of two resellers whose contracts were torn up in July of this year, and similarly congregated outside the Shanghai office in order to mount a protest.

Google has been on unsteady ground in China for some time now with its share of the search market in decline recently, falling from 24.2 percent to 21.6 percent in the third quarter, following the redirection of its traffic to an unfiltered server in Hong Kong.

According to analyst Li Zhi of research company Analysis International, the decision could continue to weaken Google’s position in China.

“The conflict will surely impact Google’s performance in China. It’s not known yet whether Google can find other advertising agents to replace the seven, and its current partners may lose confidence because of the conflict, and in turn, affect Google’s advertisers,” said Li.

And there are plenty of other search sites waiting in the wings to capitalise on Google’s position.  The dominant search engine in China, Baidu, has seen its share rise from 70 percent to 73 percent, while Sohu is aiming to take 20 percent of the market share in the next three years.