Google has parted ways with two Chinese advertisers, it said yesterday, in the latest potential setback for the company after its standoff with China's government over censorship.

The news comes after data last week showed Google's share of the world's biggest online market fell following its threat to pull out of China.

The US-based internet giant had cut ties with Universal Internet Media and Xi'an Weihua Network, two major advertising agencies that worked with Google in eastern and northwestern China, the official China Daily said, citing Marsha Wang, Google China spokesman.

"If both sides feel there is no need (to continue) to cooperate, then there comes the end of the partnership," Mr Wang said when asked about the report.

She would not confirm the names of the advertisers.

In January, Google said it would no longer knuckle under to Chinese government pressure to censor its content, and threatened to pull out of China entirely.

It later effectively shut down its Chinese site google.cn, re-routing mainland users to its uncensored site in Hong Kong.

In March, a group of 27 Chinese advertising agencies sent Google a letter calling for talks over compensation for possible business losses amid the censorship wrangle.

Google's share of China's online market fell to 24.2 per cent in the three months to June, from 30.9 per cent in the first quarter, research firm Analysys International said in a report last week. Meanwhile, Chinese web search engine Baidu increased its dominance, with its market share rising to 70 per cent in the second quarter from 64 per cent in the first three months of the year, the report said. Google currently has business relationships with more than 20 advertising agencies in China, according to its website.