SAN FRANCISCO (MarketWatch) — Investors sold Expedia Inc. shares Tuesday following a report that it has lost a quarter of its search visibility on Google due to the search giant penalizing the company over so-called “unnatural links” involving search terms related to the online travel agency.

Expedia EXPE, -3.08% shares ended the day down by 4.5% at $67.67, after Internet search information site SearchEngineLand said Expedia’s search visibility on Google GOOG, -2.37% has recently fallen by 25% due to a penalty imposed by the world’s largest search engine. The penalty is meant to punish Web sites that pay for links on other sites in an effort to get better search results on Google. Expedia is said to have seen big declines in several travel-related keywords such as hotels, tickets, vacation and airline.

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Daniel Kurnos, an analyst with the Benchmark Company, said that with Google a major driver of Web traffic, “we’ve seen similar situations where sites end up in the penalty box for link buying,” which ends up inflating a company’s search-engine results.

“Expedia agrees to affiliate links that have little to do with their product or relevant verticals, or buys additional, irrelevant keywords to ‘fool’ the algorithm into thinking Expedia is a more ubiquitous and relevant search return than it actually is,” Kurnos said. “Thus, when a truly relevant keyword comes up, Expedia ranks more highly in terms of overall traffic and search popularity, and so its results are ranked higher by Google’s algorithm.”

It is not yet known if the paid-linking effort was done directly by Expedia or through an outside company, but Kurnos called the practice “an old, old game. Only the players change. Everyone cheats. It’s just about not getting caught.”

For its part, Google shares rose by $13.17 to close at $1,163. Before the market opened, analysts at Pacific Crest and Credit Suisse both raised their price targets on Google to $1,450 a share.

Apple Inc. AAPL, -3.17% rose by $8.40 a share to $549.07, helping boost the Nasdaq. Societe Generale analyst Andy Perkins cut his rating on the company to hold from buy.

Among tech companies reporting quarterly results Tuesday, IBM Corp. IBM, -1.72% was down by almost 1% to close at $188.43; Texas Instruments Inc. TXN, -1.23% shares also fell nearly 1%, to $43.85 and Advanced Micro Devices Inc. AMD, -2.11% slipped by a penny a share to $4.17.

Read more on IBM and AMD after hours.

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