Also, the article includes a revenue share chart (page 1) and eye tracking study of Baidu users vs. Google users (page 3).
"A lot of Chinese people have wondered if knowledge really means power in today's market economy," Li says during an interview with Forbes in Baidu's no-frills Beijing conference room. (By year-end the company will move to a new headquarters designed to resemble an enormous, long rectangular search box.) "I think I've proven that it does."
That proof won't do much to hold off Li's biggest rival. While Baidu has a 2-to-1 lead in China, Google has been steadily winning eyeballs there (see graph, right) and plans a near-doubling of its sales force, now in the hundreds, over the next 12 months in what is shaping up as an epic battle to dominate the world's search business. "China's going to be the largest Internet market in the world," says Gary Rieschel, a cofounder of Qiming Ventures in Shanghai. "If Google isn't the leader there, will it really be the leading search company in the world?"
On another front, China's e-commerce giant, Alibaba, has declared war with Baidu over online shopping.
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Once an investor with 2.6% of Baidu, Google sold its stake in 2006 and got a government license to operate as Google China.
It's no longer quite that simple. According to a couple of studies with no connection to either company, Google is now demonstrably better at Chinese language search. Asked to rate each service, Li Yinan, Baidu's chief technology officer, squirms. "I'm not in a position to compare the two results side by side. The evaluation of quality of search results is based on personal opinions," he says.
"We have, hands down, the best Chinese language search product," boasts Lee Kaifu, who was president of Google's China operations until he resigned in September to start an angel investment firm. But, he concedes, "we're learning that [market share] is about more than the product."
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Much More After the Jump
Much More After the Jump
Today Baidu has 63% of the search business, Google 33%, according to Iresearch in Shanghai.
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Executives are quick to point out that less than 5% of the site's traffic today comes from MP3 search and that more than twice that amount comes from sources like Postbar, a vibrant bulletin board community. They also tout innovations like Aladdin, a "deep Web" project designed to give users access to hidden data like planes' flight times and sports scores.
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The proposed cure for what ails Baidu: a gradual separation of church and state. Since April ads for some search terms appear only on the right side and top left corner of the screen. The new system, called Phoenix Nest, could give a boost to the company's quality competition with Google and repair its lingering sores from the quackery scandal. "
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A 2008 eye-tracking study by a firm called Enquiro Research of Kelowna, B.C. showed that searchers take twice as long to find their desired link on Baidu as they do on Google China--partly because of the mixing of ads and search results.
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For the past two years Google has been fighting to stick its search engine in China's face whenever possible. One tactic is partnering with Web portals like Tianya.com and Sina.com--two of the most popular sites in China--to display Google's search bar prominently. The Mountain View, Calif. firm has also tried to increase its visibility in Chinese universities, recruiting young "Google advocates," offering executives for on-campus lectures and hosting "Google Camps," daylong conferences to try out various Google apps.
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In March Google found its long-overdue answer to Baidu's MP3 search, a feature it calls Google Music Search. By investing in the online music service Top100.cn, Google now gives Chinese users the ability to stream or download practically any song or album.
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Despite Google's depredations, 85% of cybercafe searchers say they prefer Baidu, reports Analysys International, a Beijing consulting firm. Baidu has its own university marketing push: a six-month contest that challenges students to build Web sites and e-commerce businesses for rural villages using Baidu's platform.
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Civil liberties advocates worldwide may howl at Google for caving to the rules of censorship, but it blocks results for one-third fewer search terms than Baidu, according to a study last year by the OpenNet Initiative.
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One possible line of attack for Google lies in a fertile area where the battle lines haven't yet been drawn: cell phones. China has 700 million mobile phone owners but only 155 million mobile Internet users. At last count Google held a slim lead in that budding market--26.6% of mobile search traffic to Baidu's 26%, according to Analysys. That number has been driven partly by Google's deal to provide its search to China Mobile, China's leading carrier with 400 million subscribers.
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