Google cuts ties with two domestic advertisers

Google (GOOG.NASDAQ, GGQ1.FWB) has decided to sever ties with two Chinese advertising agents out of the 25 with which it holds contracts nationwide, state media reported. The two companies are Universal Internet Media and Xi’an Weihua Network. "The partnerships ended a couple of weeks ago because both sides felt there were no longer any mutual benefits," a Google spokesperson said. The announcement prompted speculation that the move was made in response either to Google’s fractious relationship with the Chinese government earlier this year, or because the company’s domestic market share dropped from 31% in the first quarter of 2010 to 24% in the second quarter. Google’s rival Baidu (BIDU.NASDAQ) has reaped rewards from its competitor’s travails, achieving a record market share of over 70% last quarter.