Google's (GOOG) share of the global online search market fell to 69.7% in the second quarter from 71.1% in the first quarter, according to research firm Strategy Analytics. Google's troubles in China, which led the company to temporarily move its operations from the Mainland to Hong Kong, contributed to the loss.
Baidu (BIDU), the largest search engine in China, now has a global share nearly as large as that of Microsoft (MSFT) and Yahoo (YHOO). "Google's search revenue growth continues to slow down as the Western search market reaches maturity and Google struggles to gain share in the fastest-growing Asian markets," said Martin Olausson, analyst at Strategy Analytics, Reuters reports.
The report from the research house shows that Baidu's global market share is 4.5% compared to 4.8% for Microsoft and 5.4% for Yahoo. The total global advertising search market was $6.2 billion, up 2.2% from the first quarter. The Microsoft and Yahoo market shares are so modest that it's hard to imagine that even when they are combined, as is planned, they will grab much more than 10% of the global market.
The report's findings most likely indicate that Google's growth in the market has peaked. This could be the primary reason its stock is trading at $490, down from a two-year high of over $625. While Google's stock is up 10% from its price a year ago, Baidu's is up 120%. One of the reasons that Google will probably not return to its share peak is that Baidu is expanding its piece of the largest and one of the fastest growing internet markets in the world -- China. The nation has close to 400 million people online. Another 700 million have wireless handsets, many of which have Web browser capacity.
The wireless market is the next huge battlefield for search engine growth. Google needs to grab a larger market share in this sector if it wants to continue to grow.
Why do investors make the decisions that they do?View Course »