Google nemesis Baidu faces a new legal battle at home

December 1, 2008

Google nemesis Baidu faces a new legal battle at home Have you looked at a set of search page results lately where you couldn’t tell which links were sponsored and which were organic? If you’re a Baidu user, then you have. Baidu is the Chinese equivalent of Google and it’s under fire from other Chinese companies for monopolistic policies, including the omission of many companies from its search index.

The new interest in mounting a legal case against Baidu stems from a new anti-monopoly law in China, which has given new footing to firms looking to level the playing field.

Baidu earns most of its revenue through the sale of keywords included in its search results, according to the Financial Times. The key difference between Baidu and other major search engine companies is its opacity to end users who can’t tell which links are sponsored and which are organic. It’s a throwback to the way search engines used to make money in the U.S. prior to the online advertising renaissance.

The cosmetic similarities between Baidu and Google are patently similar. Both use a spartan design with an equally simple list of search results. It will be interesting to see how the two companies continue to compete. But users in China may be losing confidence in Baidu as the company continues to place paid and organic search results indiscriminately.

Baidu home page

In light of its recent criticism Baidu is making some effort to improve itself:

. . . it has erased all unlicensed websites from its search results and is working on a new program that would mark sponsored search results more clearly. However, the company said it would stick to its overall business model centered on the keyword auctions.

Blocking the Web sites of some companies who don’t invest in search keyword listings is at the core of Baidu’s upcoming legal battle. The Chinese government has typically supported Baidu as an excellent competitor to foreign firms and it may face a difficult choice as a slew of other local companies are involved too this time.

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