Baidu Makes Gains on Google

Baidu’s Profit Rises After Making Gains on Google

Photographer: Nelson Ching/Bloomberg

Baidu Inc., owner of China’s most popular search engine, said fourth-quarter profit more than doubled as the company outpaced Google Inc. in boosting advertising sales in the world’s biggest Internet market.

According to Baidu Inc, “net income climbed to 1.16 billion yuan ($176 million), compared with 427.9 million yuan a year earlier,” Baidu said on January 31. That exceeded the 1.03 billion yuan average of eight analysts’ estimates compiled by Bloomberg. Sales increased 94 percent to 2.45 billion yuan.

In China, search-engine market will become a new diverse competition. Not only search functions, online video and e-commerce will be part of future goals from Baidu. “The migration to Baidu from Google will continue this year, albeit at a reduced pace,” Jake Li, who rates Baidu shares “accumulate” at Guotai Junan Securities, said before the earnings. Baidu is bolstering its services, such as video, social networking and wireless search, Li said.

For the U.S. companies, to avoid Web censorship rules, they have to prompt some customers and partners to defect to Beijing-based Baidu. Today, Google’s status is still solid in China. The company’s head of sales in Asia, Daniel Alegre said in December, without disclosing details. Google’s combined revenue in China from display ads, online search and Chinese companies marketing on Google’s global sites increased last year, Alegre said at the time.

However, the increasing number of the usage in Baidu cannot be ignored now. Baidu accounted for 75.5 percent of China’s search-engine market by revenue in the fourth quarter, rising from 73 percent in the previous three months, according to research company Analysys International. Google’s share dropped to 19.6 percent from 21.6 percent, the research firm said.

So, what is the next step for Google to compete with Baidu this year?

About shaolinh

Shaoling Hsu holds a B.A. in Computer Science Studies from Taiwan and is currently a first-year M.A. candidate in the Communication Management program at the University of Southern California’s Annenberg School of Communication & Journalism. She has traveled many countries, including China, Singapore, U.S. and Canada. She is proficient in Mandarin, Taiwanese, and fluent in English.
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