Chinese Internet search firm Baidu looks forward to life after Google

Baidu, whose logo was displayed at a recent Beijing event, had a major stock surge after Google's announcement last week.
Baidu, whose logo was displayed at a recent Beijing event, had a major stock surge after Google's announcement last week. (Andy Wong/associated Press)

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By Steven Mufson
Washington Post Staff Writer
Monday, January 18, 2010

BEIJING -- In 2000, a 31-year-old software engineer named Li Yanhong, a.k.a. Robin Li, left his job in Silicon Valley and returned home to China to start an Internet search engine. He raised $26.2 million in venture capital, including a modest investment by Google.

Ten years later, Li's company, Baidu, has become the dominant search engine in China, a goliath with 7,000 employees and a market value of $16.2 billion on the Nasdaq Stock Market. Google, which sold its stake in 2006 when it launched its own Chinese site, has lagged far behind, capturing less than half of the market share Baidu has here.

In a country obsessed with economic advancement, Li, a graduate of Beijing University and SUNY at Buffalo, has attained what Chinese newspapers have called pop-star status, with fans thronging Baidu conferences. And to many here, his company's success has become a point of national pride, even though its initial investors were virtually all American.

Now investors are betting that Baidu will reap the benefits if Google ends up exiting China over its dispute with the government about alleged cyberattacks on Google e-mail and source code. Since Tuesday, when Google announced that it would stop censoring its search engine even if that meant losing its Chinese business license, Baidu's stock on the Nasdaq has surged 21 percent to a new high, adding $2.8 billion to the company's market value in just three days.

Although investors are happy, China watchers are worried about the political consequences of Chinese Internet users depending too heavily on Baidu for news and information.

The company has been accused of altering search results for advertisers, by either deleting content or pushing firms' sites higher up on the search result lists in return for payments. The charge has prompted the company to launch an overhaul of its listings.

Moreover, as a Chinese company, Baidu has little choice but to comply with government demands for censorship. An industry source familiar with the firm said officials from the Ministry of Industries and Information Technology are stationed at its offices.

The company does not pretend to have a mission, as Google does: "Don't be evil."

"Baidu does face the same censorship issues, but without the corporate culture that resents censorship," said Jeremy Goldkorn, founder of a blog called Danwei.org and an online media expert in Beijing.

In an item he posted last week on his blog, Baidu's chief product designer, Sun Yunfeng, said that in China, "every enterprise or every individual must dance with shackles."

"This is the reality," Sun wrote. "Do as much as you can is the real attitude to have as a business or a person." The posting was later taken down from his blog, but reprinted on other sites.

"Whether it's Baidu or Chinese versions of YouTube or Sina or Sohu, Chinese Internet sites are getting daily directives from the government telling them what kinds of content they cannot allow on their site and what they need to delete," said Rebecca MacKinnon, an Open Society fellow and co-founder of GlobalVoicesOnline.org, a network of bloggers and online activists.


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