Wednesday, July 6, 2011

Microsoft Inks English-Language Search Deal With Baidu

Google's loss appears to be Microsoft's gain. The search engine landscape in China just changed in the wake of a search partnership between Microsoft and Baidu, the nation's largest Internet search engine.

Microsoft and Baidu inked a deal that will serve Bing's English-language search functions to Baidu's Chinese users. Financial terms of the agreement were not disclosed.

Announced Monday, the partnership rolls out more than a year after Google yanked its search engine out of mainland China as censorship controversies pitted the communist nation against the American search titan. When Google moved its servers to Hong Kong, the company handed Baidu handed nearly half its market share. Baidu now holds 83 percent of the market there.

China's English Searchers

Greg Sterling, principal analyst at Sterling Market Intelligence, received a statement from Microsoft indicating the partnership is currently limited to China. However, he noted, it appears to be a significant deal for Microsoft, which has been struggling to establish a foothold in the world's largest Internet market.

"Microsoft now gets to piggyback on Baidu's 80 percent China search market share," Sterling said. "It's not clear however what the volumes of English language search are in the country."

Not clear, but certainly important enough to Baidu to hook up with Bing. "More and more people here are searching for English terms," Kaiser Kuo, the company's spokesman, told the New York Times on Monday. "But Baidu hasn't done a good job. So here's a way for us to do it."

Censorship Issues

Google could not immediately be reached for comment on the Baidu-Microsoft deal, but declined to speak with other news outlets. Refusing to censor results on, the Internet giant has started directing search traffic to Google started offering uncensored search in simplified Chinese via its Hong Kong servers in March 2010.

Microsoft seems willing to play ball under China's rules. A Microsoft spokesman told the New York Times, "Microsoft respects and follows laws and regulations in every country where we run business. We operate in China in a manner that both respects local authority and culture and makes clear that we have differences of opinion with official content management policies."

Baidu's Travel Bets

Meanwhile, Baidu is pressing forward to make its search engine even more attractive for the 470 million Chinese Internet users. Last week, Baidu announced plans to invest $306 million in Qunar, becoming the firm's majority shareholder. The move comes about a year after Google announced plans to acquire ITA Software, a maker of flight information software.

Qunar offers Chinese consumers real-time searches for air and rail tickets, hotels, and tour packages. Qunar also provides travel-related resources such as group-buying deals and user discussion forums. According to iResearch, a China-based independent research firm, Qunar ranked number one among travel Web sites in China as measured by daily unique visitors in March 2011. Qunar has the widest coverage of any travel search engine in China, with more than 11,000 air routes and 102,000 hotels worldwide.

"Travel has long been one of the top categories on Baidu, and the number of travelers in China has been growing very rapidly, so this is a market of obvious strategic importance to us," said Jennifer Li, Chief Financial Officer of Baidu. "Our investment in Qunar will create an even better search experience for users planning trips."

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