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Baidu Stock Drops As Google Plans Censored Search in China

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Alphabet (GOOGL - Free Report) shares opened higher and Baidu (BIDU - Free Report) shares slumped on Wednesday after reports suggested that Google is preparing to relaunch its core search business in China, featuring censored results in line with demands from Chinese regulators.

Google shuttered its Chinese search engine in 2010 amid what it called government attempts to “limit free speech on the web.” But according to a new story from The Intercept, the U.S. tech behemoth is planning to test the waters of the world’s largest Internet market once again.

Citing documents obtained by a whistleblower, The Intercept reported that Google has been developing a censored version of its search engine since last year and accelerated the plan in December 2017 after a meeting between CEO Sundar Pichai and a top Chinese official.

The project is filed under the codename “Dragonfly” and is being built through a custom Android app. According to the report, this app has been demonstrated to the Chinese government, with a finalized version ready to be launched in the next six to nine months if approved.

The censored version of Google would blacklist websites and search terms mentioning “human rights, democracy, religion, and peaceful protest,” The Intercept said. It would also filter out sites blocked by existing Chinese censors, including Wikipedia and BBC News.

The internet is heavily censored in China through what many have dubbed the “Great Firewall.” The Intercept’s whistleblower reached out because they were “against large companies and governments collaborating in the oppression of their people.”

The source also suggested that Google’s plans to censor itself in China “will become a template for many other nations.”

Google clearly still faces a strict regulatory process before any proposed search engine would see approval. Plus, as The Intercept touches on, its plan to reenter the market would almost certainly face severe public backlash, especially as internet rights issue become a larger talking point around the world.

Nevertheless, China is home to about 1.4 billion people and would mark a major potential market for Google. Shares of Alphabet surged about 1% to touch an intraday high of $1,245.90 in early morning trading Wednesday.

Meanwhile, Baidu shares tumbled more than 5.5% as investors reacted negatively to the potential entrance of a new competitor. Baidu is the current king of Chinese search, with many of its core services mirroring those of Google here in the U.S. and elsewhere.

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