Google's loss is Baidu's gain
Baidu leads China's search market
According to market researcher iResearch, China's search market by revenue grew 53.2% in Q2 to 2.64 billion yuan (approximatively $390 million).
Baidu's share of the market rose to 70.8% in the quarter ended in June from 67.8% in the first quarter, whereas Google’s market share fell to 27.3% in Q2, compared to 29.5% in Q1.
Baidu has therefore reinforced its leading position in China's search market. In the end of 2009, Google's market share was 32.8% versus Baidu's 64.8%.
Google's incidents in China
Baidu's gain may be due to the several episodes between Google and the Chinese government.
Latest January, Google threatened Beijing to stop filtering its search results in China after a serious hacking episode. In March, Google decided to redirect all queries from its Chinese site to its Hongkongese site.
By doing so, Google was taking a risk to be kicked out of the country. Since Google's ICP was expiring end of June, the US search giant decided to stop automatically redirecting its Chinese users and created a dedicated page on google.cn in order to have more chances to get its license renewed.
The Chinese government gave Google the permission to continue its activities in China beginning of this month. But some damage has already been done as research data show. Baidu was actually already gaining market share in the beginning of the year at Google's expense.
Baidu to win the battle?
Google won't currently be able to be the default search provider on software and online products in China, which has been crucial in growing their market share in the US and other countries.
The question is now to see what Google's next move will be. They recently announced that they wanted to add other services to their Chinese page.
Following Google's lower-than-expected Q2 earnings, Baidu is expected to report robust Q2 results tomorrow.
Mobile search war
The fierce competition between Google and Baidu isn't merely about regular search. It's also about mobile search.
Google’s mobile OS Android is becoming more and more popular in China. However, China’s officially sanctioned version of Android is using new local platforms, rather than Google applications for the phones. And Baidu is also leading the competition for new mobile Internet search platforms.
Anyway, there is still plenty of room for a share of the pie. According to a government report, China's online population, already the world's largest, has surged to 420 million by June. And the number of mobile Internet users in China has hitten 277 million and is expected to reach 957 million by 2014.