Baidu.com Wednesday made its formal response in view of the rumor that Google Inc will hold more Baidu's shares or purchase it, saying that "Baidu is a Chinese language website with advanced technology as core competitiveness. Enjoying a huge market share in China, Baidu believes independent development is its best way out''.
According to sources, Eric Schmidt, CEO of Google who just concluded his visit to China, said recently Google would enter China's market this year, and how it enters the market would depend on its talks with Baidu.
There are two options for Google, said Schmidt. One is that Google holds shares of Baidu and the other is that both sides deepen cooperation, and Google would hold more Baidu's stakes or even set up a joint venture. This may lead to Google's takeover of Baidu, turning Baidu into its subsidiary in China.
The reporter noticed that the first option mentioned by Schmidt is that Google only "holds Baidu's shares''. In June last year, Google spent US$10 million in its third investment in Baidu with about 3 per cent of its stakes. According to insiders' analysis, this option may mean maintaining the status quo.
On June 28, 2005, Schmidt visited the headquarters of Baidu. However, what they talked about is unknown. Lu Weigang, an Internet industry analyst, told reporters in his recent interview that the best time for Google to hold more Baidu shares should be before Baidu's listing. Once Baidu gets listed, unless through tender offer it will not be feasible for Google to hold Baidu by buying it up through secondary market as Baidu's initial public offering will only be 25 per cent shares. Also it will cost Google dear.
In the meanwhile, Baidu's interactive search platform, known as zhidao.baidu.com, also went online yesterday after a two-week trial operation following Sina.com's interactive search engine, "iAsk''. Baidu said this is another move to optimize its search engine business.
Baidu still enjoyed the biggest share in China's market in the first quarter of this year, accounting for 37.4 per cent, a little more than the fourth quarter of last year, according to 2005 China Search Engine Survey Report released by iResearch, while Google's share was 19.1 per cent, ranking third, next to Yahoo.
By People's Daily Online