Joel Gross

Crouching Facebook, hidden Baidu

A news story, that I thought deserved significant attention, but that seemed to get very little in the mainstream press, was the apparent union of Facebook, with Chinese search giant Baidu. This is the equivalent of Facebook marrying up with Google on many levels. China’s massive population, its explosion onto the internet, and its economic growth, all make this a deal that should have gotten major airplay.

But, shockingly, not much coverage has been really offered on it. While the details of the actual deal are sketchy, it sounds primarily like Facebook will help Baidu with the launch of a new social network in China.

Facebook, like Google, has not succeeded because of the extensive censorship rules that neither company wants to abide by. Apparently Mark Zuckerberg feels that by partnering with Baidu, he will be able to dodge the outcry from humanitarian groups and Chinese expats who detest anything resembling tacit consent of Chinese government regulations. He’ll be able to shrug his t-shirted shoulders and say, hey, we’re just a billion dollar investor, not the actual bad guy…. (Sounding plausibly deniable?)

All of the political and humanitarian ramifications aside, this is a huge move that no one is looking at. I want to point out that the latest estimates put China as having 420 million internet users with only a 35% penetration into the population. That means almost a full quarter of the current internet users on earth come from China! When you add in satellite states that use primarily Chinese sites and technologies, that number might be larger. All of the Americas only have 470 million internet users. For those of you who want to check my data, you can visit the www.InternetWorldStats.com.

By co-opting with Baidu, Facebook suddenly has a very large search engine and access to a market that Google has difficulties in reaching. If Baidu is also developing a Twitter-like product, then Facebook has officially elbowed in on some of the largest internet user bases on earth.

Facebook and Google fight, but Baidu lurks in the woods

Facebook vs Google, but what is that in the woods, ahh a Baidu!

Sure the companies are in China, and end users are notoriously staunch in their behaviors (which is why Microsoft still exists), but Facebook could efficiently move Baidu stateside by incorporating it into its existing property, Facebook.com. Suddenly, advertising in social networks like Facebook might have much better ROI. Facebook has wanted to get into the search market almost as much as Google wants into the social network. By buying in, Facebook may be mitigating risk and costs in entrance. As we’ve predicted here repeatedly, when you get to be the size of Google and Facebook, there isn’t much incentive to try and grow, they often settle and defend. Buying into, or buying up other companies, is an easy way to ensure that no significant changes in user behaviors occur. This has long been the strategy for technology companies.

BUT, when the time comes and this Baidu deal turns out to be bigger then just another US company trying to make it in China, I want all of your advertising dollars directed to Coalition Technologies advertising, PPC, and SEO in Los Angeles.

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