Google faces possible lawsuit from Chinese ad resellers

IDG News Service - Google could face a lawsuit in China from a group of protesting advertising resellers who are now considering legal action against the company for terminating their contracts.

The seven Chinese ad reselling companies have been protesting at Google's Shanghai office after the U.S.-based company notified the resellers in September that it would be ending its partnerships with them. The resellers say they have spent the last four to five years selling online advertisements for Google, only to see their contracts terminated without fully knowing why. They demand Google issue an apology and compensate the companies for US$7 million.

The protests were put on hold in November when Google and the ad resellers held talks to negotiate a settlement. Google had put forth an agreement that would pay $ 2.5 million to the companies. But the resellers refused to sign it, believing that certain conditions in the agreement were unfair, said Fan Meiyong, a representative for the ad resellers.

Among the conditions is that the ad resellers would no longer be able to enter any Google offices or Google sponsored activities, according to a copy provided by the group. The ad resellers would also be prohibited from characterizing any payment from Google as a form of compensation.

"We feel like they should treat us as equals, they shouldn't try to discriminate against us," Fan said, adding that the time to sign the agreement has already expired.

The ad resellers re-started protesting activities outside Google's Shanghai office a week ago. They are now looking at the possibility of filing a lawsuit against Google if the search giant does not resolve the matter soon, Fan said.

Google could not be reached for immediate comment. But in a past statement, the company said, "We do not discuss individual cases, but there are a variety of reasons why we choose to end relationships with certain partners. In all cases, we do so lawfully and in line with the terms of our contract."

The protests come as Google has seen its share of the search engine market fall in China. The company currently has a 21 percent share, a decline from the 35 percent it had at the end of 2009, according to Beijing-based research firm Analysys International.

Under the agreement's conditions, Google required the ad resellers to apologize to their company employees for holding protests at the Shanghai offices and for encouraging participants to damage Google's property. The search giant also wanted it agreed that it "would not be incorrect in saying" that less than 6,000 advertisers were affected by the termination of the partnerships, and that the protesting companies only represented less than 10 percent of reseller advertising.