Thursday, September 15, 2005

Google Plans to Buy Baidu?

Baidu says we were not and will not be for sale

( Yesterday, Google successfully issued secondary stock offerings. It collected $4.18 billion, and increased it's cash on hand to $7 billion. CEO Eric Schmidt and founder Sergey Brin held a lunch party at St. Regis hotel in New York where they revealed Google's acquistion and products plan. Fund manager from Gabelli, Howard Ward said that many contents of the talks are related to China. Investment manager from Morgan Stanley, David Schiller pointed out directly, that the best case is that Google could buy some search company and online gaming company from China.

Google is still focusing on its core business of search. They are very interested in expansion into the Chinese market. It's dare challenge to Microsoft in court is a good example. The biggest Chinese search engine Baidu owns 37% of the market. Yahoo spent $1 billion to purchase shares in China's largest e-commerce company Alibaba last month. Ranked second with 23% of Chinese search market share, Google is facing very formidable competitions in China.

One side, there is a rush to expand Chinese service. On the othe hand, there is the intensified competitions. It could become a costly battle. Many American companies like to go around to reducing risks. Merger and acquisition are commonly used tools as well as short cuts.

Google's CEO Eric Schmidt said in July this year, that Google has two choices in China: First is that Google simply stays as a shareholder of Baidu; Second is that both sides further develop collaborations, and Google will purchase more Baidu shares, even as a joint company. The second choice can lead to a final takeover of Baidu by Google to make Baidu the Chinese subsidiary of Google. With the fresh obtained $4.18 billion, Google again signaled that they want to "purchase search engine and online gaming companies from China". Google already owns 3% of Baidu, and the coincidence with the sharp falling of Baidu's market price to make it very likely that Google will buy Baidu to gain the lead in the Chinese search market.

As to the news that Google possibly will buy Baidu, how Baidu looks at this? A senior executive said that it was not likely. Baidu never been and will not be for sale. Baidu's goal is to make a Chinese brand and will go outside to the whole world to establish the brand.

To sum it up, the ambitiously expanding Google is keen on the Chinese market. Even they cannot use other means to gain the control of Baidu, they can still find another target on other Chinese search engines.

Translated From Yihao's Chinese Version


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