Google faces hunger strike in China from ad resellers

IDG News Service - Google is facing a hunger strike in China from a group of advertising resellers who are protesting the company for terminating their contracts.

Starting this week, about 200 employees from the seven Chinese ad reselling companies began protesting outside Google's offices in Shanghai, said Fan Meiyong, a representative for the group. About 40 of those participating have gone on a hunger strike that will last until the group's grievances are resolved, Fan added.

In September, Google notified the seven ad resellers that it would be ending the partnerships. But the companies say they do not know the reasons behind the termination. Since then the ad resellers have said they have held talks with Google about the matter, but the issues are still unresolved. The group has even written an open letter to Google founders Larry Page and Sergey Brin, asking them for their intervention.

"Our companies have been working with Google to sell only their online advertisements. For the last four to five years we've been growing as a company and working with them," Fan said. "But we don't know why they suddenly wanted to end the partnerships. Now it's difficult for us to operate as a business."

The ad resellers want Google to apologize and pay US$7 million in compensation. However, in an emailed statement, Google said, "We stand behind our decision."

"We do not discuss individual cases, but there are a variety of reasons why we choose to end relationships with certain partners. In all cases, we do so lawfully and in line with the terms of our contract," Google added. "We hope to find new resellers to partner with so we can provide even better service to our advertisers."

The protests come during a difficult year for Google's operations in China. In March, the company started to stop censoring its search results in the country. Now the Google.cn site no longer operates as a search engine, but instead provides a link to Google's Hong Kong page, which offers unfiltered results. The Chinese government, however, still blocks certain searches, and prevents access to such popular Google sites like YouTube or Blogger.

Since then, Google has also seen its market share drop from the 35.6 percent it had at the end of 2009 to what is now 21.6 percent, according to Beijing-based research firm Analysys International. Domestic search engine giant Baidu claims a 73 percent share of the market.

Since Google decided to redirect online searches in China through its Hong Kong page, selling ads for the search engine company has been difficult, said Fan. "But we didn't care. We thought things would improve over time," he added.

The ongoing protest could be another blow for Google in China, with the potential to hurt the company's business reputation, said Ben Cavender, an analyst with China Market Research Group.

"Strained relationships with resellers are one more issue that will make it a challenge for Google to compete successfully in China," he said. "If you are an ad reseller you are not going to have much confidence in Google or its stability as an advertising platform."