Intellectual Property Law

Search Engine Competition in China

By Frank Pasquale

Chi-Chu Tschang’s article on Baidu illuminates how an unscrupulous search engine can exert a great deal of power once it attains dominance. Baidu has over 60% of the market in China, and can make or break an online business:

Salespeople working for Baidu drop sites from results to bully companies into buying sponsored links, say some who have been approached. Former clients say their rankings fall precipitously after they stop buying search-related ads from Baidu. At least one Baidu salesperson acknowledges they’re right. “The key is whether a company buys Baidu’s sponsored links,” says Zhong Hongjun, a salesman from a company that represents Baidu in the central city of Wuhan. “If they don’t, the search engine won’t find them. If they do, they’ll be in there.”

Some hope that consumers will punish Baidu for manipulating search results–a result that may mollify the concerns of Bracha and I in our article Federal Search Commission. It appears that Baidu is also getting into trouble for not managing its search results enough:

Peter Lu, managing partner at China IntelliConsulting . . . says Google’s traffic surged in November after the mainland’s largest TV network, CCTV, ran an exposé about a patient getting fleeced by an unlicensed hospital he found on Baidu. The report highlighted Baidu’s practice of mixing paid sponsored links from unlicensed hospitals and pharmaceutical companies with unpaid results. Baidu has since pulled all paid searches from unlicensed health-care companies, which the company said accounted for as much as 15% of revenue.

These events point to a new vacuum for search companies to occupy: safety certification where authorities fail to do this job. From StopBadWare to StopBadMedicine: it’s search engine as FDA.

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Full post as published by Madisonian.net on January 05, 2009 (boomark / email).