Even though Google’s rate of growth outside the US and UK exceeds the US by some 20%, it still seems significantly behind both the Chinese performance of Baidu at 85% growth over the same quarter in 2010 or Yandex’s 65% growth over the same period.

Of course, both Baidu and Yandex are helped by their market leading postions in growing economies. The IMF is forecasting 9.4% growth for China in 2011 and 4.2% for Russia. By comparison, the UK’s growth rate is expected to be 1.1% and the US a rattling 1.5%.

Google Baidu and Yandex Compared Financially

The chart above shows the relative revenues of Google versus Baidu and versus Yandex which gives us a great perspective on what we’re talking about. Although Google growth is less than the other two engines in percentage terms, in real dollars, it’s actually a much much bigger number.

Strong Growth Markets Help Baidu & Yandex

Additionally, looking at percentages is a little misleading when we consider that many of the economies where Google is successful, such as in western Europe, have very high penetrations of Google use and the scope for growth is much more limited.

Both Yandex and Baidu have all their operations in countries where Internet penetration is relatively low giving them great scope for advancement.

Google Baidu and Yandex Compared In Revenues As a Percentage Of The Total

This second graphic above seems to suggest that Google is losing market share internationally. There is a grain of truth in drawing that conclusion – but it is a relatively small “grain”.

Firstly, Yandex only become a publicly quoted company this year giving us much more insight into the statistics relating to its performance and enabling us to include its figures on this chart.

However, what it does suggest is that Google is missing out on two key markets where the search engine market is growing rapidly meaning that both Yandex and Baidu are increasing their share of the global market — at least in dollar terms.

Stellar Performance From Baidu With Room To Grow

Baidu CEO Robin Li described the results as “stellar”. He also highlighted the fact that China’s search industry is still in its early stages and that Baidu has “Enormous room for continuing growth as users and online marketing customers become increasingly sophisticated.”

Mr. Li also pointed to three factors which had helped Baidu along in this quarter namely traffic growth, improved monetization from the Pheonix platform which drives the contextual ads and greater uptake of search advertising by large corporate advertisers.

The use of more sophisticated keyword matching for Pheonix Nest through something called “Advanced [quick] match” has been particularly successful at capturing user intent and generating strong click through rates.

Personalized Search Lands On Baidu’s Homepage

Robin Li has expressed particular satisfaction at the launch of the Baidu personalized homepage, which is not personalized search as we know it — but automated changes to the content shown on the initial homepage before the user even begins to search. This is based on search history, of course, and if a user has a history of searching for movies, for instance, then they will likely see a link on the homepage to local cinema times.

Turning to mobile, ironically, Baidu is now also the default search engine on over 80% of branded handsets in China that use the Android system — which just goes to show that Android dominance hasn’t so far been leading to greater search query shares for Google.

Yandex Says Hello To Turkey

For Yandex, this is only the second quarter where we have detailed financial information but CEO Arkady Volozh highlighted the market benefit, “While our markets are fluid and competitive by nature, they are large and are growing rapidly.” Yandex also made the first major investment in a new market with their launch in Turkey which will have had very little impact on the quarter’s figures.

Panguso faces more than censorship challenges, as it confronts Baidu’s whopping 76% market share in China, according to Analysys International, a Beijing-based market research firm. This is especially true given that once-popular Google has slipped beneath 20% market share now that its servers are no longer located in China.

According to a report appearing in Reuters a Baidu senior executive told an investment conference that growth will “moderate” during 2011. Investors send Baidu shares down yesterday after the remarks became public:

Baidu shares fell $6.42 to close at $100.42 on the Nasdaq after the comments. They had soared more than 160 percent this year after the firm’s main competitor, Google, said it would shut its China search page after a serious hacking episode and on censorship concerns.

Baidu controls 73 percent of the Chinese search market and has ambitions to expand outside of China. Baidu wants to expand horizontally and globally, into games, e-commerce, online payments and online video.

The company also wants to take Baidu abroad and possibly beyond Asia. Baidu founder Robin Li recently told BusinessWeek that he wants Bauidu to become a global internet power:

I hope in ten years, Baidu will become a household name in 50 percent of the world. Sooner or later you will see a China-based company that really has a global impact and I think Baidu has a chance to become one of those companies. We should be able to compete on a global basis.

See related posts:

• How Google Could Have Bought Baidu And Other Fascinating Details About China’s Largest Search Engine
• Google Seeing Red Star Fade In China: Alibaba Passes It For Ad Share
• New Google China Dilemma: Get Maps License Or Get Lost
• Google Resumes China Talks Despite Evidence Of Govt-Hacking Connection

Li is set to speak at 5:15pm Pacific, and he’ll be interviewed on stage by John Battelle. Live blogging to start shortly. There’s also a live stream here.

Don’t know much about Baidu? China’s largest search engine. BusinessWeek just did a big profile about it, which you can read here or get the highlights from our How Google Could Have Bought Baidu And Other Fascinating Details About China’s Largest Search Engine post.

John: Baidu is largest search company and portal in China, welcomes Robin on. Says it’s his first talk at an industry conference in the US. Mentions Eric Schmidt’s comment in the BusinessWeek profile as a great gift to Baidu.

Robin: 5 years ago, people asked him what would you do to win China. Said he would stay 6 months to a year in China. Eric didn’t take his advice.

John: Your stock is double since January, market cap is pushing $40 billion.

Robin: Puts up roughtly to eBay.

John: Do you feel pressure to continue that rocketship ride?

Robin: When I founded this company 10 years ago, I never knew that search could be so profitable. I really liked to search and thought search could be useful. Used by 100s of millions of people, and I knew I could achieve that. Now, I don’t need more money, but I need to make our product better. That’s the driver behind my daily work. Not the stock price. Maybe some know 5 years ago when public, the Baidu price was $27 and closed at $22 (I think). That was more pressure. The stock has been up or down every year. I’m used to that. What’s important that the users keep growing, other things keep growing. We have plenty of room for growth. In US took about 10 years for internet market to mature. In China, started at roughly same time in 1995, but internet penetration is only about 1/3.

John: But that’s like 400 million people. How big can it get?

Robin: Lots of mobile phones, thinks can get to 800 million (think he said).

John: How many use Baidu?

Robin: about 99%. We have a lot of coverge (laughs from the audience). Answer more queries than any other search engine in their market.

John: Including Google in the US.

Robin: Yes [me: worldwide, Google reported by comScore last year as handling still far more than Baidu worldwide, I'll try to drop a link later).

John: Google got the sense with hacking and govt interference they weren't on a level playing field and China was a favored son.

Robin: That's a common misperceptions. People think there are no choices and Baidu is favored. But the reality is there are more choices in the US than in China. Here you have Google and Bing and what's the number three? In China, named one (didn't catch), and there's Sodu and there are a couple more. Many other Chinese companies are doing web search and places from outside China are offering it.

John: Why else do you think Google wasn't successful in China?

Robin: China is a very different market. It's a large and growing, meaning the market condidtions change every day, and you have to be close to it. Second, lots of VC money, lots of Silicon Valley VCs poured money into it. Third reason is that there are a lot of Chinese engineers here in the US that are very well trained, many of them are willing to go back to China and start their own company or join an existing one. If you're not prepared to compete in this type of market, you're not going to be successful. With Baidu, I think we did try harder. When I moved back to Beijing 10 years ago, I gave up all my stock options here (he was an Infoseek engineer).

John: You wrote a PageRank like algorithm before?

Robin: Before hired, Infoseek liked his research. Had the first patent on it in the US he believes. But he gave all that and focused on Chinese search. We were close to the market, came up with a lot of innovative ideas. For example in 2003, before Web 2.0 idea was coined, they started adding user generated content into their results. A query based online community, they have a bar or message board system where you can ask question, answer those from others or make comments. In early days, there wasn't enough Chinese information online. So we made this product [kind of like how YouTube created video content that in turn helped power a video search revolution]. Chinese users have already answerd 100 million questions on the system. We added a lot of social community so our users feel they really belong here. It’s very hard for them to leave.

John: So do you have Holy Grail of social and search that Google and Facebook seem to be looking at?

Robin: [Sorry, didn't catch first part]. System is designed to make people feel they belong, introduces high switching costs.

John: Would it make sense to have Facebook Connect in Baidu?

Robin: We don’t have a full blown social graph yet. But happy to add that.

John: Mark Zuckerberg will be here tomorrow, so I’m sure you’ll be happy to talk he jokes.

You’ve worked in both markets, what is it like to build a company with an entrepeneurial culture in China, with a very different environment and government. What can we learn?

Robin: China is an emerging market, not everything is developed, so you have to be patient. In US, company can be set up in 1 day, in China, it can take 20. He said it’s OK, hired a consultant, got office space while waiting for license. It doens’t hurt so much, as long as you keep open minded and control what you can. You can’t control censorship or slow internet connections.

John: There’s a perception in the US here that there’s no censorship versus China, that you search the whole web. Is that a frustration for you, along with low bandwidth.

Robin: My first reaction was also let’s move to Hong Kong (over censorship issue, when he first started). But I realized that wouldn’t work. If I were to move to Hong Kong, they’d call me some type of anti-government company, and my life would be ruined. If an American company moves, they’ll still call them “strategic partners.”

John: Found it interesting that the Chinese govt announced it might start a search engine, since Baidu has so much share.

Robin: It’s not a new thing. It’s OK. Providing more choices to the Chinese users is not a bad thing, but we are allowed to compete.

John: It would be unthinkable for the US to do such a thing.

Robin: China has a very strong govt.

John: I think you made an understatement.

Robin: I’m not worried.

John: Let’s talk about mobile. How is that developing in China, and if you ran a mobile app start up, what would be the things you should know.

Robin: There are about 800 million mobile phones but large portion of them aren’t internet enabled, maybe 150 million. But there’s a catch. Most of them use 2G phones to go on the internet, which means it’s slow and expensive, carriers charge by number of bytes. Most high-end people who use them don’t care about the cost. Vast majority of Chinese people are low income, can’t afford a PC, nannies or migrant workers, at night they lie back and go on the internet. It’ll change as the mobile network grows, user behavior will grow, and product will change, but we don’t know yet what the killer app will be. The status is not really stable. We don’t even know what the most poular device to go online.

John: Could Baidu provide it, like Google does with Android.

Robin: Our box idea is that something that boots up within one second and you get a box that lets you do whatever you want to do. It replaces the operating system. you can search, find apps, publish your tweets. The box is intelligent enough to understand.

John: How do you execute that vision?

Robin: One key part is to understand intention. People put all types of queries into their search box, so they know for certain user needs, like weather, there are probably 200 different needs to express the same meaning. So we can better understand intention, and once we have it, it’s easier to deliver it.

John: Lots of entrepeneurs here. One of the great stories is the moment when offered an ungodly amount of money to sell their company and they say no. That narrative is mythic in the valley. That’s happened to you a number of times. $1.5 to 2 billion offered by Google, Yahoo and Microsoft. Why say no?

Robin: Because I knew Baid u had more potential than 1-2 billion. At that time, China’s market was still knew. In 5 years, revs gone up 30 times. Don’t think Google Yahoo Microsoft knew that.

Q&A Time: Why doesn’t India have its own Baidu?

Robin: Most of India speaks English, writes in English, so Google already solved the problem. For China, it was very different. When I went back, people used to wait for 5 seconds to get answer. No space for words in Chinese language, you have to parse it differently. We had to help users create content and the speed of information growth was very high. In the first 3-5 year, we basically tripled our index size. Search engines here think overall growth 30-50 percent, then I’ll grow my index by that, and it’ll be good enough. But in China, we were able to keep up with the growth.

Question: What can the US learn from China?

Robin: Most of the ideas China learned from the US and its early start. But in recent years, there are innovations coming out for search, because we have the largest market. The addition of social layer makes search sticky and hard to switch. For social, Chinese company called 10 cents [I think] with hundreds of millions of users, started with instant messaging and added much to their platform. These kind of things, maybe US can pay more attention. Going forward, you should pay more attention to that market [the Chinese market] because it’s so large, and they’ll encounter new problems, and you’ll start to innovate.

John: Are you coming to the US?

Robin: We do have ambitions to expand outside of China. Been in Japan for two years. But US is probably not a high priority because it’s a large and mature market. We’d have to thnk carefully about it.

And that’s it.

Baidu holds a 73 percent market share in China, the world’s largest internet market. The company is worth $38 billion and is 57 percent larger than Yahoo. Its shares have doubled in value since Google “withdrew” from China to Hong Kong earlier this year.

Baidu CEO Robin Li (41) got a masters at SUNY Buffalo. He once worked at Infoseek and is now the second richest man in China.

The piece contains a number of allegations, which Baidu denies, about unethical practices:

For years legions of advertisers have complained on Chinese Web forums that Baidu secretly penalizes the search rankings of websites that decrease their spending on Baidu . . . In 2008 the company quickly denied Internet chatter claiming it had taken money from Sanlu Group, a dairy producer that had sold milk powder tainted with the toxic chemical melamine, to keep the scandal out of search . . .

Baidu says it is not a kingdom built on Internet piracy, though music companies say its popular MP3 service allows users to download just about any song ever recorded for free. The recording industry sued in 2005, but Chinese district and appeals courts sided with Baidu . . .

Censorship is also willingly practiced by the company:

Like all Chinese Web companies, and Google’s Chinese language site until this year, at the behest of the Chinese government Baidu blocks pornography or references to topics such as Taiwanese independence, the Dalai Lama, and the 1989 Tiananmen Square massacre. The practice is called zi lu, or “self-discipline,” and Baidu does it well. Last year the company accepted one of 20 awards from the Internet Society of China, given for what the group calls “industry self-regulation.”

Baidu was the direct beneficiary of Google’s ouster from the mainland. It’s unlikely that Baidu had anything to do with the GMail hacking incident that caused Google to declare it would no longer cooperate on censorship. But there have been persuasive allegations that the Chinese government or its surrogates were behind the hack attack. If so perhaps the government was trying to indirectly bring about what has in fact happened: the marginalizing of Google in China and the elevation of a cooperative partner, Baidu, to near monopoly status.

Google saw itself as a force for change and helping open up Chinese society by degrees. The Chinese government obviously doesn’t want any part of that.

The story also touches on another success issue, that the Chinese government may have helped Baidu with making Google unreliable:

Google never materialized as a threat, for reasons that no one can agree on. What’s clear is that Google’s China service was mysteriously unreliable, particularly when the Chinese government was angry with the U.S. Google also documented several instances when it was the victim of what’s called domain name system poisoning; users typed in Google.cn and found themselves at Baidu instead.

A New York Times Magazine article from 2006 details this more:

But even after being unblocked, Google still had troubles. The Great Firewall tends to slow down all traffic coming into the country from the world outside. About 15 percent of the time, Google was simply unavailable in China because of data jams. The firewall also began punishing curious minds: whenever someone inside China searched for a banned term, the firewall would often retaliate by sending back a command that tricked the user’s computer into believing Google itself had gone dead. For several minutes, the user would be unable to load Google’s search page — a digital slap on the wrist, as it were. For Google, these delays and shutdowns were a real problem, because search engines like to boast about delivering results in milliseconds. Baidu, Google’s chief Chinese-language rival, had no such problem, because its servers were located on Chinese soil and thus inside the Great Firewall. Worse, Chinese universities had virtually no access to foreign Web sites, which meant that impressionable college students — in other countries, Google’s most ardent fans — were flocking instead to Baidu.

Still Baidu must constantly “curry favor” with the communist regime. According to the article, government displeasure can result in investigations or critical profiles in state-run media:

In November 2008, government-operated China Central Television aired several in-depth investigations about Baidu surrounding allegations that the company earned millions on ads from unlicensed medical providers, and prominently displaying these ads when users typed health-related queries. The first story ran on Li’s 40th birthday, timing that no one at Baidu dismissed as coincidental. The following quarter, Baidu boosted its ad spending by 41 percent, with the bulk of the increase going to CCTV. Few Chinese Internet watchers thought it was a coincidence when the negative coverage ceased.

Baidu now wants to expand horizontally and globally, “into games, e-commerce, and online payments, establishing a Hulu-like video site called Qiyi, and exporting the Baidu brand abroad.” Li is quoted in the article saying he wants Baidu to be a global internet power:

I hope in ten years, Baidu will become a household name in 50 percent of the world. Sooner or later you will see a China-based company that really has a global impact and I think Baidu has a chance to become one of those companies. We should be able to compete on a global basis.

Generally Li comes off relatively well in the article, as a humble Chinese engineer living in the US who was inspired by Yahoo’s co-Founder Jerry Yang. Li had come up with a “link analysis” system similar to Page Rank. And there are other interesting parallels between Baidu and Google, not all of them coincidental.

Though Baidu is Chinese through and through, Silicon Valley money started the company. And early investors made a huge killing, comparable to what happened with Google, when it went public. Interestingly Baidu initially modeled itself on inktomi, which powered search at Yahoo before Google came along.

Li and Xu were much more interested in being the next Inktomi . . . Baidu licensed its search index to Sina and Sohu.com, then the dominant portals in China, and charged them each time a user conducted a search. Busy copying Yahoo’s portal business model, those companies didn’t realize search’s potential, concedes Charles Zhang, chairman and CEO of Sohu. “

Later the company developed its own site when its relationships with the Chinese portals went sour. It was at this point that the company was almost acquired for $40 million by Yahoo:

Finian Tan, then a Hong Kong-based partner at ePlanet, says he was so worried about the company’s prospects that he contacted Jerry Yang, an ePlanet investor, and offered to sell Baidu to Yahoo for $40 million . . . [Yang] referred the matter to a Yahoo colleague, who did not respond. (Yang declined to comment for this story.) Baidu had no choice but to devote its energies to its own website. “We became Baidu.com because we were forced into it,” Tang says.

That wasn’t the only acquisition attempt. There were several near acquisitions of Baidu before it went public, which sound very similar to the early history of Google.

In 2004, “Google contributed $5 million to Baidu’s $15 million third round of financing . . . [the] investment was meant to lay the groundwork for a possible acquisition and ward off the possibility that rivals could buy it.” Later, SoftBank founder Masayoshi Son “wanted to keep Baidu private and offered to invest $100 million at a $1 billion valuation. Yahoo and Microsoft  made acquisition offers at a little over $1 billion . . . Google … ultimately made a $1.6 billion bid.”

One of the early investors and Baidu board member, Asad Jamal, said that “a $2 billion bid would have cemented an acquisition. ‘I personally think that was a missed opportunity for Google.’”

Missed opportunity? Clearly.

Google’s post was titled “A new approach to China.” A good search engine, at least the American-based ones that I’m familiar with, will generally find the “original” source of a story when you search for it by title. So what happens on Baidu, when I look for a new approach to china?

Hmm. The official post doesn’t show in the top results. Censored? As you’ll see, almost certainly. Successful? Well, no, since there are many copies that are still listed. If I click on the first link in the screenshot above, I can read what the post said — just not on the official Google Blog itself.

Is it really censored, or perhaps Baidu just doesn’t have the actual page? An easy way to discover this on an American-built search engine would be to use the site: command. When you enter a domain name after that command, you get back only pages listed from that particular domain. Does this work on command work on Baidu? To test, I searched for site:google.com, as shown below:

The screenshot shows that the site: command DOES work, since we’re now getting only pages that are part of the overall google.com domain. So next, how about a restriction to just the domain that has the official Google Blog. I searched for site:googleblog.blogspot.com and got this:

Ouch! What’s happening is something I’ve long read about. The Chinese firewall will block someone from getting results at all in some cases, if they try searching for some verboten topic. In this case, trying to find all the pages from the Google Blog has locked me out of Baidu. After a few minutes, I’ll be able to search again.

The same thing happens if I qualify the search like this:

site:googleblog.blogspot.com a new approach to china

That search effectively says, “Look at the Google Blog and show me any page that has the words ‘a new approach to china” on them.” Do that, and you get locked out.

Interestingly, site:blogspot.com does NOT get blocked on Baidu. So it’s not all of Blogger pages that trigger a lockout (blogspot.com is the domain used for many Google Blogger hosted pages). It’s just anyone trying to narrow a search directly to the Google Blog itself that gets block.

By the way, this is what you get for a new approach in china at Google China:

There’s the official post, right at the top. Why didn’t Google censor it out? It could be that the Chinese authorities haven’t yet told Google to do so (Google is still obeying censorship rules despite yesterday’s post. That post simply said that in the coming weeks, it will stop doing this.

Caveat time. I’m using Baidu.cn rather than Baidu.com, as I assume that’s the main site used by those in China. But I found the same thing tended to happen on Baidu.com. I’m also not actually in China nor using a Chinese proxy, so the result and things happening might be different in both the cases of Baidu and Google.

Postscript by Barry Schwartz: I made this short video documenting the steps to trigger some of this activity:

I personally spotted this from Tamar who sent me a link to this Slashdot comment.

This morning, Baidu’s domain name registration in the United States was tampered with, leading to inaccessibility.

Here is a picture of the hack from @mranti:

This is the same group of hackers that took over Twitter’s web site for a short time period several months ago.

Let’s start with Google’s “I’m Feeling Lucky” count down to New Years. Remember when you hit the “I’m Feeling Lucky” button on Google.com, it would show you how many minutes to 2010? Well, when 2010 hits, it then shows you a fireworks display. Here is a video I made of it.

Now for the logos, which is basically a repost of my listing from the Search Engine Roundtable:

Google:

Yahoo (Animated):

Bing:

AOL:

Ask.com:

DogPile:

Baidu:

Clicker:

Sogou:

Cre8asite Forums:

Search Engine Roundtable:

Happy New Years All!

Qmyy.com required Baidu to stop blocking its web pages from appearing on its search results and pay 1.106 million yuan ($161,460) for the losses that such acts have incurred. Beijing First Intermediate People’s Court accepted the case on Dec 26.

According to Li Changqing, a lawyer representing Qmyy.com, the company made the decision to file a lawsuit after it failed to reach an out-of-court settlement with Baidu.

This is a mirror image of suits that Google has defended against in the US in the past. It’s not unlike the KinderStart case of 2006, for example, which was won by Google. Qmyy apparently also filed an anti-trust complaint with the relevant regulatory authorities in China prior to filing the court action.

According to China IntelliConsulting Corp., Baidu has a roughly 65 percent market share in China, while Google is second with 22 percent. Others, including Yahoo, trail far behind. Baidu is the third largest search engine in the world by users and volume, by virtue of the huge size of the Chinese market. Baidu is also now in Japan.

Here are some comScore data on the Asia-Pacific search markets:

Google’s Logo:

Yahoo’s Animated Logo:
Seems like Yahoo had a calendar that said December 31, but on New Years itself, they have nothing. Update, they had a logo for a few hours, a reader sent it to me, here it is:

Live.com’s Theme:

AOL’s Animated Logo:

Ask.com’s Theme:
2008…

2009…

DogPile’s Logo:

Baidu’s Logo:

BruceClay’s Logo:

Cre8asite Forums Logo:

Search Engine Roundtable’s Theme: