Baidu takes full advantage of Google’s pull out of China

In March 2010, Google decided to stop censoring its search results in China, the Chinese version of Google now redirecting all queries to its Hong Kong version.

What are the consequences of Google’s move in the Chinese Internet search area ? 

Baidu gains market share, Google loses positions

Google’s decision to pull out of China results in giving a boost to Baidu. Baidu was already leading the Chinese Internet search market even before Google’s announcement ; this decision has given a more dominant position to Google’s rival.

In the end of 2009, Baidu’s market share was 58% while Google held 36% of the market. The figures provided by Analysys International, a Beijing-based market researcher, show interesting results. For the first quarter of 2010, there has been a significant increase in Baidu’s market share (now at 64%) while Google’s went down at a level of 31%.

Source : Analysys International

Other search engines in China do not take advantage of Google's announcement

One could have guessed that Google’s decision would have a negative impact on its market share. One would have been right. Nevertheless, more surprisingly, not all other actors took advantage of Google’s withdrawal : only Baidu has actually gained market shares in Q1 2010 compared to Q4 2009. Other competitors, including domestic companies such as Sogou and Soso, have dramatically lost positions.

Baidu announces excellent financial results

From a financial point of view, Baidu also took advantage of the situation.  The Chinese firm reported that its revenue rose 59.6 percent year-on-year in the first quarter to 1.29 billion Chinese yuan and that its forecast for the second quarter would break a new record.

Where are Yahoo and Bing ?

I am wondering what Yahoo and Bing (Microsoft’s search engine) are doing. They have stayed rather discreet till now, but it is certain that a rival’s withdrawal is a good opportunity for both of them. I am sure they will strive to take advantage of the situation : China remains the biggest market with a population of 384 million users connected to the Internet, as of December 2009. Thus, even 1% market share represents almost 4 million of potential customers…