The Stranglehold of China’s Search Engine Baidu on Google

The only chance for Google to come out of the hold is by slowly acquiring Baidu’s shares, where it has already acquired around 2.6 % percent. The stranglehold, more or less, started when Baidu refused Google’s attempt to buy it, with a belief that it will be much better off if it continues doing what it is doing by its own. The truth of the matter is Google is not doing badly either when the percentage of users is taken into consideration from the 103 million users in China. Baidu.com has a share, as of September 2005 of 51.5 percent, while Google has around 32.9 percent. The other major palyers that includes Yahoo and its subsidiary called 3212 search engine company that it paid 120 million for has 3.7 percent, Sohu and Sina the other major local players hold close to 9 percent.

One major difference is the type of users that are flocking to the two search engines. Google has appeal to those who are well-educated and higher income earners, whereas Baidu has appeal to those who are low-income earners and mainly students who are attracted to its MP3 free music download. The speculation is as the students graduate, will they remain loyal to Baidu or will Google’s offerings entice them?

Baidu and Google have a few similarities that are worth mentioning. Both are addressing the number 100 in their names. Baidu in Chines means “one hundred times” and it gets its name according to reports from a 12th century Song Dynasty poem that has to do with searching for a beautiful woman among the big number of the masses. Whereas, Google is a slightly altered form of googol, which is 10 to the power of 100. Also the term Google is a little bit altered form for dog in Chinese and Baidu is using a dog’s paw print for its logo, which shows the founder was, more or less, an insider, in fact a byproduct of the dot.com era. Baidu has claimed that it has more than 300 million searchable Web sites and the size is still growing.

The founder of the company, the thirty-six old Robin Li owns 25.8% the company’s stock. A recent release revealed that the founder could be worth $1 billion whereas the company is $4 billion worth. He holds a bachelor’s degree in information science from Peking University and a master degree in computer science from the State University of New York at Buffalo. He was working for Infoseek, one of the pioneers of search engine technology from 1997 up to 1999 as a staff engineer, and earlier, from 1994 to 1997, he was working for IDD Information Services.

One of the main sources of Baidu’s income is from P4P “pay-for-performance” advertising, which uses the same method Google and the other search engines are using with their cost-per-performance method. The number five most visited Web site in the world, however, earned a modest income of $8.5 million while Google’s take for the last quarter was around $1.38 billion. The reason cited for the gap, aside from what was touched on above is, in China alone there are different economic strata groups that are frequenting each sites. Moreover, the disposable income of the Chines is very low when compared to the US where it hovers around $30,000 compared with $1500 annually in China, even for those who are well off economically.

As a result, those who do not have money are less likely to spend on ads giving the better edge to Google as far as generating better money is concerned, even if China is not yet the best place to make money from advertising, despite the fact that its economy is continuously growing. In addition, credit card usage is not yet widespread in China the key and the preferred medium to close sales over the Internet, where people are known to buy on impulse.

The most likelihood is even if Google will step up its effort to get a better foothold in China’s search engine market, like it was attested when Kai Fu-Li from Microsoft was hired to work on the local connection, which is key in doing business in China, Baidu hand-in-hand with the other local search engine service providers will make it very difficult for Google to succeed.

However, there are some weak points that might legitimize Google as the only search engine that will do better in the long run, because Baidu has a lot of problem with copy right infringement where the MP3 download for the most part breaches the copyright law, and it is putting it in hot water more frequently. Even if it is difficult to speculate on what will ensue, since MP3 is the main engine for driving traffic to Baidu’s search engine, if some kind of a cap is placed on the free downloading binge, it could affect it severely, which might not do any good to Google though, because most of Baidu’s users could find other local alternatives easily.

Consequently, except its staggering number, 103 million surfers, that is second to the US, it is difficult to say what is there for search engines unless they generate advertisement income, which is reported to be at a low-ebb. Google itself has not furnished a satisfactory reason why it is highly attracted to the Chines market knowing that there are local search engines that are giving service that is comparable, even better in some case than Google as far as the local need is concerned. For example, one of its recent strongholds, map service, is said to be delivered in a much better package by map.baidu.com, which somehow had managed to have the local detailed city maps available, while Google is still relying on satellite photos. It is not only that whenever there is a need for documents that are in English, being among the better resorts, searchers will seek for Google, even if there will be stiff competition.

Most probably, that is why Google wants to buy Baidu and be done with the competition for good. Even if it does not mean the possibility is out of reach, when Google makes it there, it definitely might have to cough up a hefty price.

Leave a Reply

Your email address will not be published. Required fields are marked *


seven × 8 =