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China technology

Baidu puts up brave front as rival Google’s China comeback looms

PUBLISHED : Tuesday, 07 August, 2018, 7:00pm
UPDATED : Tuesday, 07 August, 2018, 8:25pm

Robin Li Yanhong, the chairman and chief executive of Baidu, said the Chinese online search market leader is looking to beat Google in its return to China, despite increased speculation that the US technology giant could become a major internet player in the world’s second largest economy.

“If Google re-enters the market, it gives us the opportunity to PK with real swords and spears and win one more time,” Li said in a post on his WeChat account on Tuesday that was verified by Baidu. PK is the acronym for “player kill”, a term most often used in online role-playing games, that suggests the death of another gamer’s avatar in a virtual world.

His post followed reports that Google planned to launch new mobile search and news aggregation apps designed to meet China’s strict censorship laws, marking a major shift in strategy for the US company nearly a decade after it exited the country.

Google was also reported to be in talks with Tencent Holdings, Inspur Group and other Chinese companies to bring its cloud services operation in China.

Google could give Baidu a serious run for its money in China

On Monday, People’s Daily, the ruling Communist Party’s mouthpiece, posted a commentary on its Twitter and Facebook accounts that welcomes Google back to mainland China as long as it complies “with the requirements of the law”.

The commentary said Google’s decision to exit the Chinese market was a “huge blunder which resulted in the company missing golden chances in the mainland’s internet development”.

Google had some 14 per cent of China’s search traffic and 33 per cent revenue share before the company’s exit from the market in 2010, according to a Bloomberg Intelligence research note on Friday. Baidu’s search engine had 79 per cent of traffic and 63 per cent of search-related sales at that time.

“Over the years, Baidu was seen to have taken advantage of Google’s exit,” Li said in his post. He claimed Baidu never did such a thing.

Google’s search results, however proved different from Baidu’s about 85 per cent of the time in 2010, according to a study by Baigoogledu, a Chinese internet research site that compared the two services. That apparently showed how Google’s search engine was more accurate compared with Baidu’s, which is subject to monitoring by the state’s Great Firewall.

Despite initial optimism from some quarters, it seemed “unlikely” for Google to make a successful comeback in China, according to Zhan Jiang, a professor of journalism and communications at Beijing Foreign Studies University.

“The commentary made by People’s Daily was merely to put on a gesture of openness,” Zhan said.

The US company’s plan for a censored search app was first reported by The Intercept, while The information reported that Google also had plans for a news-aggregation app for China.

Both Baidu and Google have declined to comment.

People’s Daily posts commentary welcoming Google back to China, but stipulates it must observe local laws

Speculation over Google’s change of approach in dealing with China’s rigid censorship laws highlights how important the mainland Chinese market is perceived by major hi-tech companies in the US.

At stake is the world’s biggest online community of 772 million internet users, with almost half of the population still not connected to the internet, according to the China Internet Report co-authored by the South China Morning Post, its tech news site Abacus and San Francisco-based venture capital firm 500 Startups.

Although China’s internet penetration is just over 50 per cent, its sheer scale means that there are three times the number of smartphone users and 11 times the number of mobile payment users in the country than in the US, according to the report.

The mainland Chinese market, however, has been off-limits to the operations of Facebook, Twitter and Instagram, which are behind the country’s Great Firewall. Google’s search engine and other services are in the same predicament.

Google said to plan AI-powered news-aggregation app along with search engine for China market

The initial reports of Google’s return to China last week were enough to hammer Nasdaq-listed Baidu’s share price. Its shares tumbled 7.7 per cent to US$228.07 at the close of trading on Wednesday last week, which marked the firm’s steepest drop since May 18.

In addition, internet users who are looking for alternative services see the entry of Google as a welcome development, according to Kitty Fok, managing director at IDC China.

She said Google’s return to China’s online search market would enable it to start collecting fresh data that could help the company develop other domestic internet services.

Google is in talks with Tencent and others to bring cloud services to China

That could impact Beijing-based Baidu, which has branched out into developing artificial intelligence technology for autonomous driving and introduced mini-programs that would allow it to create a super app that would help expand its ecosystem of services.

Still, Baidu’s Li remained confident of his company’s future prospects.

“Tech firms in China have enough capabilities and confidence nowadays to come out strong amid healthy competition with global peers,” Li said in his WeChat post.

“The world is copying from China. That is what every global firm should consider seriously before entering China.”

With additional reporting by Yingzhi Yang