BEIJING,CHINA,24 FEBRUARY 2011 - China's largest search engine, Baidu, is facing a potential antitrust investigation after the company was accused of blocking and degrading the search query results of a Chinese online encyclopedia website.
The company behind the Wikipedia-like site Hudong.com said it has successfully filed its complaint with China's State Administration for Industry and Commerce (SAIC). The complaint requests SAIC to begin an anti-monopoly investigation against Baidu and to fine the search giant 790 million yuan (US$120 million).
Hudong, however, does not know if or when an investigation of Baidu will begin. SAIC could not be reached for comment.
Hudong started its business in 2005, a year before Baidu launched its own online encyclopedia. Hudong said that its articles on popular topics are ranked low in the query results when searched on Baidu. Other search engines such as Google and Microsoft's Bing, however, rank Hudong's articles at the top.
"We believe that Baidu has used its dominant position to bully and block competitors," said Pan Haidong, CEO of Hudong.
A Baidu representative said the company did not want to comment because the spokesman was not available.
Baidu is the dominant search engine in the country, with a 75.5 percent market share according to Beijing-based research firm Analysys International.
Baidu has faced similar accusations from Chinese websites alleging that the company has a deliberate search bias, said Mark Natkin, managing director of Beijing-based Marbridge Consulting. "None of the previous accusations of this sort have had any noticeable impact on Baidu," he said.
In its defense, Baidu could always argue the company uses a different search algorithm to rank query results than its competitors, Natkin added. "I don't think it will make a difference," he said of Hudong's complaint. "There's been no case in which (Baidu) lost millions of dollars or had to significantly alter its business."
Baidu's dominance in the search market, however, has no doubt given it advantages over the smaller Internet companies hoping to stay visible in the market, said Dong Xu, an analyst with Analysys International. "The smaller companies want a level playing field, and this is very important for them," she said. "They believe the government needs to take measures to make the Internet market more viable for them."
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