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Google vs. China vs. Baidu: Who Wins?

Who do you think will be the biggest winner of Google's clash with China's government?
Author:

(Google-China-Baidu article updated with reports about a drop-off in advertising results for advertisers using Google in China.)

NEW YORK (

TheStreet

) --

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Google's

(GOOG) - Get Report

decision to walk away from the world's most populous country in a battle over China's censorship rules was, to many, a bold and heroic move on the company's part. It was applauded by those who had grown cynical about the ability of big multinationals like Google to value basic principles, as much as they do their bottom line.

For many, Google's refusal to acquiesce to China's censorship demands conveys a message of corporate and social responsibility.

Amnesty International's China researcher Corinna-Barbara Francis says the stance is worth the price: "There is no question that adopting social responsibility policies -- at least in the West -- is good for your image and good for business, "

The Sunday Times of London

reports.

Other companies might be looking to follow suit. Domain name company

GoDaddy,

for one, has decided to discontinue registrations of domain names in the country after the government pressured GoDaddy for personal information on customers. And according to some reports,

Dell

(DELL) - Get Report

has also implied that it's looking to do business in a country offering a safer business environment that China, from which it buys large amounts of components; Dell has thus far denied these reports.

Still, othere are those who feel that Google has made an imprudent business, and that by walking away from China -- and its 400 million Internet users -- Google is relinquishing valuable growth opportunities and doing its shareholders a disservice.

In pulling out of China, Google is also turning its back on 700 million cellphone subscribers, also a valuable Internet market. Already, major mobile operator

China Unicom

(CHU) - Get Report

said it would pull Google's search function from the new Android handsets that it worked on with Google. (China Unicom's president Lu Yimin told the

Financial Times

: "We are willing to work with any company that abides by Chinese law...; we don't have any cooperation with Google currently.")

Google has, since then, decided to redirect its mainland China traffic to its search engine in Hong Kong -- an island metropolis long hailed for its model of social and political freedom. But it hasn't been working out too well; China's response has been to tighten its grip on mainland user traffic to Google's Hong Kong search engine.

Meanwhile, Google's China competitor

Baidu

(BIDU) - Get Report

is reaping the benefits of Google's fallout with the Chinese government.

Baidu's price target was raised by Goldman Sachs (GS) - Get Report

to $675 from $575, following Google's decision to move out of China and begin redirecting Web traffic to Hong Kong.

In fact,

The Financial Times

reported on Wednesday that advertisers in China have seen a significant enough slowdown in their traffic since Google left China that they would consider moving to other search engines.

The paper quoted Beijing-based iResearch analyst Cao Junbo as saying that "monetization rates (search ad return on investment rates) for advertisers on Google have dropped by 30% to 50% compared with the period before Google moved its Chinese search to its Hong Kong site."

FT

also cited an official at medical equipment manufacturer Yangzhou Huike Electronic as saying that the company might switch over to buying ads on Baidu after seeing a plunge in ad clicks on Google this week.

For now, Google seems essentially alone in its rebellion against the Chinese government, despite

recent roadblocks foreign companies have recently experienced in China

, including mining companies like

Rio Tinto

(RTP) - Get Report

. Other companies in the tech or Internet spaces, such as

Yahoo!

(YHOO)

,

Cisco

(CSCO) - Get Report

,

Microsoft

(MSFT) - Get Report

and

News Corp.'s

(NWSA) - Get Report

are carrying on with their business in China amid the Google-China fray.

All of which begs the question: In light of Google's move out of China, who do you think is the biggest winner of its clash with the country's government? Take the poll below to learn what

TheStreet

has to say, and feel free to leave a comment. Hey, if that protester in Tiananmen Square could stand up to that tank, the least you could do is take 20 seconds to leave a comment.

-- Reported by Andrea Tse in New York

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