Microsoft Buys Its Way into China with Baidu Search Deal

The Chinese internet market, for all of its troubles, remains incredibly attractive to outside companies. With hundreds of millions of users already and only a 30 percent internet penetration rate, its size alone is enough to draw foreign companies.

But those companies are having trouble finding success in China, Google being the most recent and prominent example of this.

That's not to say it can't be done, as Microsoft seems to be demonstrating with a new search deal with Baidu, the dominant search engine in China.

Microsoft will start powering all English-language searches made via Baidu, the company has announced.

Microsoft already has a search presence in China, but it is in name only, its market share doesn't even register. It already had a smaller deal with Baidu.

The search market in China is divided between Baidu, with close to 80 percent of the market, and Google, which still has about 20 percent.

Once the technical details are completed, Bing will be powering all English searches on Baidu. Bing already powers Yahoo in the US and other countries, while Google is behind Ask and AOL, for example.

In practice, on a global scale, there are now only two search engines in the world, Google and Bing.

The only notable, but local players are Baidu, which owns the Chinese market, but is limited to that, and Yandex which is the most popular search engine in Russian-speaking countries.

It remains to be seen what the Baidu deal means for Microsoft. At the very least, it guarantees its market share in China, even if English-language searches can't be that numerous. It also guarantees its access to the Chinese search ad market, which it will likely control along with Baidu.

Bing already censors search results in China so it was the obvious choice for Baidu, which is aiming to expand outside of the country as well as into other areas, like social networking.

Google has had a falling out with the Chinese government last year. It used to have a presence inside China and served censored search results, like everyone else.

However, a string of hacking attacks on its infrastructure, originating from China, determined the company to leave the country and set up shop in neighbouring Hong Kong.

Chinese users are directed towards the Hong Kong version of Google Search, which offers uncensored search results. However, all searches go through the Great Firewall of China and end up censored at their destination.