Shares of Google Inc. inched lower Monday following media reports that the search giant is close to shutting down its search engine in China.
Meanwhile, U.S.-traded shares of Baidu Inc. leapt on the news. China-based Baidu holds the majority of the Chinese search market and would stand to benefit from Google's exit.
China has the world's largest Internet population. Google holds about 35 percent of the country's search market, compared with about 60 percent for Baidu. Reports surfaced over the weekend that Google was close to shutting down its China search engine after its negotiations with the Chinese government over censorship stalled. Google declined to comment.
Google had said in January it was prepared to shut down its search site in China if the government there did not relax its rules requiring censorship of content it deems subversive. Google had found that hackers had tricked human-rights activists protesting Chinese policies into exposing their Google e-mail accounts.
Standard & Poor's Equity analyst Scott Kessler pointed out that the possibility of Google pulling out of China search has been known for two months. The company's stock retreated Monday because some investors may not have appreciated the potential gravity of what's going on, he said.
But he also said that Google.cn, the company's Chinese search engine, accounts for less than 1 percent of Google's total revenue.
Shares of Google fell $20.22, or 3.5 percent, to $559.32 in afternoon trading. Google shares have traded between $527.74 and $579.16 since the beginning of March.
Baidu's American Depositary shares rose $20.76, or 3.8 percent, to $571. Earlier, the stock hit a 52-week high of $628.50. It has ranged from $158 to $559.47 over the past year.
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