Last week Google made two seemingly contradictory decisions. On one hand they promised to "vigorously" defend against the US government's request for data on searches . On the other hand they are willing to censor their own search results to comply with requests made by the Chinese government. I guess "do no evil" has different meaning in the two languages!
In the US context, just the request made by the government may have caused the share price to drop. In related news, it seems that MSFT and Yahoo had agreed to comply with a similar request made to them by the US government. The Chinese market is very important to any search enginge provider. Given that a key metric that determines success is the number of unique visitors, the Chines market of 100 million (and growing) internet users is very important to feed the network effects.