Baidu Continues to Keep Google Out of China

Baidu Inc. (NASDAQ: BIDU) is much smaller than Alphabet Inc.’s (NASDAQ: GOOGL) Google. However, Baidu is only in one market — China — which Google desperately wants to penetrate. China is by far the largest nation of Internet users, and a pot of gold for Internet companies.

Baidu posted revenue of $10.3 billion in 2015, up 35%. Google’s revenue for the same period was $74.5 billion. As a measure of how differently Wall Street measures the two: Baidu’s market cap is $55 billion, while Alphabet’s is $486 billion.

Baidu’s user base is mammoth. It had 657 million mobile search monthly users in December. There are 675 million Internet users in China, almost all of whom use mobile devices to get online. Google’s penetration of the U.S. Internet market is comparable to Baidu’s in China.

Google has made no improvement as its tries to elbow into China. Baidu’s piece of the market is 80% to Google China’s 12%. That is not very different from five years ago. Experts believe that Baidu’s advantage may be based on two things. The first is that it is the local language search engine. The other is that the central government has blocked Google’s activity in China. It wants to protect the status of its home-grown company. And it distrusts a U.S. search engine company when it comes to the restriction of search results that may be negative for the government.

There is not a single thing to show that Baidu’s rapid growth will be arrested, nor that Google can do it any competitive damage at all.

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