Recent high-profile disputes with the Chinese government don’t seem to be cutting into Google’s revenue there. The company’s second-quarter ad revenue in China is expected to increase by 25 percent, compared to the first quarter according to BrandRepublic, which cites domestic reports (via Marketing Pilgrim). Operating revenue is also expected to be up between 45 and 50 percent from a year ago. Google (NSDQ: GOOG) hasn’t set a date for its official second-quarter earnings report yet.
Last month, the Chinese government publicly warned Google that it was making pornography available on its site and told the company to stop linking to certain foreign websites. BrandRepublic points out that Google’s search engine was also blocked several times during the period. Those disputes have since been resolved and the site is back up.
One reason for some of the gains could be the apparent success of the company’s new music service in China, which officially launched in April. Bloomberg News reports that it brought in 22.4 million visitors during its first full month (That’s significant, considering that China has 316 million internet users).
Nevertheless, Google still faces an uphill battle with Baidu (NSDQ: BIDU), which dominates China’s internet market. There’s dispute among analysts about how much the new music service will actually benefit Google. Credit Suisse analyst Wallace Cheung said in late April that the music service, coupled with other new initiatives, would cut away at Baidu’s lead, although Bernstein Research Analyst Jeffrey Lindsay has said it is a “too-late gambit” noting that most Chinese internet users were already familiar with the comparable Baidu offering. Lindsay expects Google’s revenue in China to be roughly $280 million this year and to grow to $360 million in 2010 — if the company can keep its search engine from being blocked.