Baidu accused of abusing dominant position

08:36, February 23, 2011      

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Baidu Inc may face anti-monopoly scrutiny after a Chinese website launched a complaint against the country's biggest search engine.

Hudong.com, an online encyclopedia, is alleging that Baidu unfairly blocks its Web pages from search results in favor of its own encyclopedia service, Baidu Baike.

The complaint will be a new test for China's anti-monopoly watchdog, the State Administration for Industry and Commerce (SAIC), which launched new regulations in January to facilitate more investigations, according to analysts.

Hudong.com said on Tuesday that it has filed a complaint with the SAIC demanding an investigation into the search engine and that the administration impose a fine of 790 million yuan ($120 million), or 10 percent of Baidu's annual revenue last year.

"Baidu has used its dominant position to bully and block competitors," claimed Pan Haidong, chairman and chief executive officer of Hudong.com.

He said that his company's website has always ranked first in the search results of other engines, including Google, Microsoft's Bing and Sohu's Sogou. However, its position in search results on Baidu has been supplanted by Baidu Baike, he said.

Baidu declined to comment on the allegations, but told China Daily that every product and service has an equal opportunity in an open market.

It is unclear whether the SAIC will accept Hudong.com's complaint. At least three complaints against Baidu concerning monopolistic behavior have been rejected since 2008.

Xu Dasheng, a lawyer from Beijing Shunhe Law Firm, who is acting on behalf of Hudong.com, said he estimates that there is a 50 percent chance that the SAIC will launch an investigation into the complaint. Inquiries to the SAIC went unanswered on Tuesday.

According to figures from the research company Analysys International, Baidu's market share in China surged to 75.5 percent in the fourth quarter of 2010, while Google's declined to 19.6 percent.

Baidu's increased share came after Google's retreat from the Chinese mainland, which has raised some concerns.

Fang Xingdong, the board chairman of Chinalabs.com, a Beijing-based IT think tank, said on Thursday that Baidu, Tencent and Alibaba are the leading oligopolies in China's Internet market.

"The Internet market in China has entered the monopolistic competition stage," said Fang, noting that the government "urgently" needs to formulate new rules to prevent the abuse of dominant positions.

China launched its anti-monopoly law in 2008, but regulators have launched few investigations.

Last month, the SAIC issued a new regulation designed to provide detailed guidelines for the anti-monopoly law. "The SAIC may start dealing with monopoly complains much more actively in the future," said Liu Jifeng, a professor at the China University of Political Science and Law, who participated in the drafting of the new regulation.

China Daily
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