Google Inc.’s feud with the Chinese government may be the smallest of its challenges as the search leader contends with slowing growth, regulatory scrutiny and a shift in ad spending.
While Google has the biggest share of online search at home and in Western Europe, it has been leapfrogged by social network Facebook as the most popular US Web site.
Google’s ventures in mobile, video and display ads have failed to match the success of search, and regulators may thwart efforts to expand through acquisitions.
As sales gains diminish, some investors are concerned that Google has begun to resemble Microsoft which generates billions of dollars in cash from its mature flagship business yet has struggled to conquer new markets.
Google’s sales increased 9 percent last year after almost doubling in 2005.
“They were the new kid on the block and everyone thought they were great,” said Daniel Morgan, a money manager at Synovus Financial in Atlanta, which oversees about $7.5 billion, including 27,720 Google shares.
“That kind of euphoric, love-at-first-sight status has changed.”
Last week, after a two-month dispute with China over censorship issues, Google shut its mainland Chinese search engine and redirected users to its Hong Kong site.
Google was second in the Chinese search market, behind Baidu.
Google shares, which doubled last year, had dropped 8.6 percent in 2010 before yesterday, the sixth-biggest decline among the 75 technology stocks in the S&P 500 index.
The stock, 24 percent below its peak of more than $740 in 2007, rose 41 cents to $567.12 in Nasdaq trading.
Google spokeswoman Jane Penner declined to comment.
One of Google’s biggest challenges comes from Facebook. This month, Facebook surpassed Google as the most visited Web site in the US, accounting for more weekly visits than Google.com, according to research firm Hitwise.
Advertisers including Starbucks and JetBlue are eager to get their marketing messages in front of Facebook’s 400 million users and are spending more on social media while holding steady on search.
“Facebook is not an experiment for us anymore,” said Chris Bruzzo, vice president of brand, content and online at Starbucks. “It is a key part of how we go to market.”