Baidu Vs. Google's Battle 

   Date:2006/12/31

Baidu has virtually copied Google's clean-screen look, but the rest of the Baidu game plan is original. It plays to nationalist advantage by attacking Google as a foreign invader. It promotes itself in such splashy ways as a huge neon sign on the banks of the Pearl River in Shanghai. And it has flourished by aggressively marketing itself in ways verboten at Google: Baidu lets advertisers pay for placement in its search results.

The formula is working. Despite a big marketing push from Google over the last year, Baidu is the first choice of 62 percent of Chinese users, up 15 points over 2005, according to a study released in September by the China Internet Network Information Center. Google's share dropped eight points, to 25 percent--a rare setback. If Baidu keeps winning, local players elsewhere might copy Baidu's tactics, disrupting Google's plan to expand globally.

The battle for China shows how tough it's getting for Google as it seeks to extend its record as the biggest phenomenon of the Internet economy. Google has changed the way people find old friends; do book reports and search for arcane information. The technologies it hasn't invented it has simply bought: from a gee-whiz mapping service to the popular video site YouTube.

Click by click, Google has helped transform the Internet from an entertainment medium into an engine for the new economy. With a stock price that briefly topped $500 late last month, up from its $85 initial public offering two years ago, Google also has become one of the hottest investments of modern times.

But the Google legend and its lofty stock price are built on expectations of almost unfettered growth. Foreign markets are a big part of that. Google's track record in China will say a lot about whether success can be sustained in the Internet economy, where a winner can become an also-ran at the click of a mouse.

China is Google's biggest and highest-profile foreign market. It's also the most competitive and perilous. The politics and pressure are so intense that they tripped up Google in a swap that tarnished Google's "Don't Be Evil" image: giving in to Chinese censors in exchange for market access.

 

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