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Google's Loss Is Really Baidu's Gain

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Google's loss is really Baidu's gain

Chinese search engine Baidu Inc on Thursday said it benefited from Google's partial exit from the country and anticipates more customer gains in the next few quarters.

Analysts, however, said that Google's bleeding might slow in the second quarter, as mainland users' continued access to the Google Hong Kong site may ease advertisers' concerns.

Robin Lee, chief executive of Baidu, said the company benefited from Google's decision to move its search engine to Hong Kong last month. "We have seen more confidence and higher customer loyalty since the end of last quarter," Lee said during a conference call on Thursday.

Google's loss is really Baidu's gain

Baidu also benefited from the overall market growth and the deployment of its new online advertising platform "Phoenix Nest".

The company said on Wednesday that its profit more than doubled in the first three months of this year. Net income for the period rose to 480.5 million yuan (US$70.4 million) from 181.1 million yuan a year back.

Incidentally this is the first earnings report from Baidu after its closest rival Google said in March that it was moving its search engine on the mainland to Hong Kong.

The US search company's decision led to most of its advertisers reducing spending by about 30 percent.

"The fall of Google's market share in the first quarter reflects the advertiser's concerns on the future of Google's Hong Kong site and its soured relationship with the Chinese government," said Edward Yu, president of Analysys International.

"Since the site is still accessible to users in the mainland, we expect Google's market share to recover in the second quarter," he said.

According to Analysys International, Google's market share in China fell to 30.9 percent in the first quarter from 35.6 percent three months earlier. Baidu's market share rose to 64 percent from 58.4 percent, the Beijing-based research firm said.

The search engine market share is based on revenue, rather than user numbers.

Access to Google's new site in Hong Kong has been normal for most mainland users. Google's other services, such as maps, video and music search are also functioning normally.

(China Daily April 30, 2010)