Business, Cloud Computing

Microsoft Teams up with Baidu, Plays Nice with Chinese Regulations

With their search business struggling against market leader Google, Microsoft always looks for new ways to increase the market share of their internet search service Bing. In the past Microsoft already signed a remarkable cooperation with Facebook, while Google developed their own social technologies with limited success until now – with Google+ that might change. Now Microsoft’s efforts go into a very different direction. Microsoft reportedly struck a big deal with Chinese internet search market leader Baidu to provide search services in English to their users. This is one of the many developments, aside from the recent surge in cloud hosting technology, that we should closely monitor in the coming years.

Not too long ago, Google withdrew from the Chinese market over censorship concerns. Google essentially refused to implement filtering as the government demanded. Instead the company preferred to lose the market to competitor Baidu, than play nice by the rules of the sovereign powers. At the end of 2010, Baidu commanded 83.6% of the internet search market in China. Google is only available as an uncensored version designed for Hong Kong, which is hard to reach through the Great Firewall. Google currently focuses on selling online advertising services to Chinese companies.

Baidu's Robin Li and Bill Gates pose with "No Passive Smoking" T-Shirts. Credit: China Daily/Agencies

Baidu’s Robin Li and Bill Gates pose with "No Passive Smoking" T-Shirts. Credit: China Daily/Agencies

Now Microsoft apparently leverages the situation on the Chinese market and according to a report of the New York Times struck a deal to provide English search services to users of Baidu. According to a Baidu spokesperson, their search doesn’t work very well in English. Microsoft without doubt aims to increase the marketshare of Bing with this cooperation. On a daily basis up to 10 million searches on Baidu are in English, according to the company. There are an estimated 470 million internet users in China and with a population of about 1.4 billion, there is plenty of growth potential left.

Interestingly Baidu is competing with Microsoft on another front. The company announced in March to develop a custom browser that should replace Microsoft’s Internet Explorer. In China the majority of people use Internet Explorer. According to StatCounter, about 86.4% of users surf using the browser from Microsoft.

The integration of Bing into Baidu should be completed by the end of the year. The terms of the agreement have not been publicly announced yet. However, due to strict regulation of the internet in China, the results must be censored. As is well known in the western world, the government forbids access to content it deems inappropriate. This also includes critics of the regime and topics regarding human rights in some cases.

According to Microsoft, this shouldn’t pose a problem. The company already respects all applying laws in all countries it operates in, which includes China, a spokeswoman explained. That stands in contrast to the objectives of the Global Network Initiative, where Microsoft is listed as a member. This group aims to ensure, that freedom of opinion and expression and privacy are honored by themselves and their business partners. One of the cornerstones of the group is to incorporate these principles into decision making processes inside the participating companies.

We shall see whether individuals or companies complain about this deal Microsoft signed.