Baidu feels the heat in search rivalry

Growing competition among the top three search engines in the mainland's buoyant internet market could prove to become a clash of the titans.

For the moment, Baidu remains the top player, claiming more than 80 per cent of web-page searches on the mainland in September. But it is already feeling the pinch from challengers, struggling in particular to keep mobile users.

In September, internet giant Tencent teamed up with Sogou, a subsidiary of the country's major internet portal Sohu, to bolster its presence in the search market. Tencent invested US$448 million for a 36.5 per cent stake in Sogou, and merged its Soso search engine and QQ Chinese input with Sogou. The tie-up between the two will pit them in a pitched battle with the top two providers Baidu and Qihoo 360.

"The competition can now be expected to become even more intense," said Lucy Zhang, an analyst with internet consultancy iResearch.

In the fast-evolving internet industry, search engine business is an important battlefield because search services are mature products with a stable business model, according to Zhang. "Growth in search advertising exceeded that of traditional display advertising in the past couple of years."

Nasdaq-listed Baidu, whose core business is selling advertisements online, posted a year-on-year rise in revenue of 42.3 per cent to 8.9 billion yuan (HK$11.3 billion) in the third quarter of this year.