Commentary

Will Microsoft Strike Bing Deal With Baidu In U.S.?

GreatWall-of-China-

While U.S. workers enjoyed a long holiday weekend to celebrate Independence Day, Google executives learned about a new challenge the search engine will face in China. Its main U.S. rival, Microsoft, will support all redirected English-language searches on Baidu through Bing.

"The search results powered by Bing will begin appearing on Baidu search result Web pages starting in July 2011," said a Microsoft spokesperson. "We've been working with Baidu on the advertising front for some time. In China, Baidu's ad platform is used and is similar to adCenter in the U.S."

Baidu holds the majority of the search market in China. In fact, some stats put the share as high as 83%. The site powers about 10 million English-language searches daily, though only 30% of the Chinese population accesses the Internet -- a total of about 470 million users.

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Bing already filters out "controversial" search subjects in China such as information on pornography and political and governmental nonconformists. It's a move Google demonstrated against by pulling its Internet search service out of China in 2010.

Even more interesting than Microsoft's deal with Baidu in China is the potential for a deal that could bring China's Baidu to the U.S. market. A reverse deal would better support local searches on computers and mobile for Chinese nationalists who travel to the United States looking for a better life either by attending school, finding jobs, or having U.S.-born children.

With a growing Chinese population in the U.S., a deal between Microsoft and Baidu on American soil seems a likely next move, as the company sets up offices in the United States. However, the Chinese search engine might not need Bing and simply leapfrog the relationship.

Microsoft entered the Chinese market in the 1980s. "This relationship with Baidu reflects Microsoft's experience with working in China, albeit rocky at first," says Covario Co-founder and CEO Russ Mann. Through search ads on Baidu, his search firm supports big, high-tech companies such as Lenovo in China.

Calling the Microsoft-Baidu deal a hotbed for several "potential strategic offshoots," Mann points to the possibilities for mobile, local and a recent conference where he witnessed Microsoft demonstrating the latest Windows operating system on a Chinese-owned Lenovo touch-screen tablet.

"When I visited Baidu and Google in China, Beijing and Hong Kong, a couple of years ago it was less about English-language search and more about the differences between simplified and traditional searches in Chinese," he said. "In China, they use simplified Chinese, whereas in Taiwan and Hong Kong they use traditional Chinese."

If Baidu moves into the U.S. to capture the Chinese market, the question then becomes what percentage of searches on Baidu become traditional vs. simplified in the race to capture market share in the United States on computers and mobile devices.

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