Last week’s rumor of Microsoft paradoxically contracting for search results from China’s Baidu search engine looks to be at least partially correct based on a brief report from Dow Jones Newswires:
Baidu.com Inc. (BIDU) said Microsoft Corp. (MSFT) agreed to display Baidu.com’s paid search listings on certain search results pages in China.
Baidu.com, a Chinese based Internet search provider, said Microsoft will display the listings on MSN, Live and other partner Web sites in China.
Baidu.com said the alliance started in December.
No financial terms of the deal were disclosed
It’ll be interesting to see the details and spin on this one. “Paid search listings” almost sounds like Microsoft is outsourcing Chinese search ads.
Update: It is ads and as odd as it may seem, Baidu won this eyeball auction. I guess Microsoft’s adCenter doesn’t have to worry about doing China. The press release at Baidu:
Microsoft (NASDAQ: MSFT) and Baidu (NASDAQ:BIDU) today announced a strategic alliance on paid search services, which will officially commence in December 2006. As a result of this strategic alliance, Microsoft will display Baidu’s paid search listings on the search results pages of certain Microsoft websites, including MSN, Live, and other partner websites in China.
“Microsoft is committed to bringing innovative online services and software, including search services, to Chinese Internet users,” said Erik Johnson, General Manager, Microsoft Online Services Group, Greater China. “China is one of our most important markets and the strategic alliance with Baidu will help us provide new opportunities for advertisers which will further enhance our search business in China.”
“Baidu’s partnership with Microsoft recognizes the huge potential and rate of growth of the Chinese online search market”, said David Zhu, COO of Baidu. “We are delighted to share our rich business experience and channel resources with our partners and contribute to the overall development of the Chinese search market.”
Update: One hopes that Microsoft has the guys with green eyeshades watching the Baidu results closely since they reportedly have more than the usual problem with click fraud. More here.
Update: WR Hambrecht analysts James Lee and Xiaofan Zhang provide some more commentary here including the fact that MSN China previously had no search monetization.