2 Signs that Baidu is in Trouble

There has been a lot of press lately about Qihoo (NYSE: QIHU  ) , a Chinese antivirus company that's recently entered Baidu's (Nasdaq: BIDU  ) turf by introducing its own browser and search engine. Baidu has had a long healthy run of being the "big fish," but things may be changing for the company.

Chinese search companies met today with a government-sponsored trade group to discuss a code of conduct for the search market, the end result being an agreement to "maintain fair competition and a fair and orderly market environment."

With Qihoo dominating 8% of the search market in less than a year after launch, this small company is nothing to laugh at. Now that it knows the government will support a competitive search landscape, rather than tacitly backing Baidu's monopolistic success, that 8% could get a lot larger in a short scale of time. analyst Lyons George has the full scoop on the big fish vs. the little fish in the video below.

Regardless of your short-term view on this story, there still may be opportunity in Baidu (aka the "Chinese Google"). Our brand new premium report breaks down the dominant Chinese search provider's strengths and weaknesses. Just click here to access it now.

Lyons George has no positions in the stocks mentioned above. The Motley Fool owns shares of Baidu, Facebook, Google, and Yahoo! and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Baidu, Facebook, Google, and Yahoo!. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On November 01, 2012, at 11:17 PM, mmoser105 wrote:

    That was interesting. Please remember BIDU will be the default search engine on Apple iPhones sold in China along with a large deal with China Mobile. Where is 8% Qihoo's mobile presence? Welcome to the "free market" mentality.

  • Report this Comment On November 02, 2012, at 9:26 AM, topsider12 wrote:

    When Qihoo 360 replaced Google search with their own in August, they simply transferred those already using Google to their own search offered on their browser. If anything, it took share away from Google but little if any from those already using Baidu. In the most recent earnings conference call COO for Baidu, Jennifer Li, said that their was no noticeable erosion of Baidu's market share not referring to any competitor by name. Her statement is supported by the most recent survey by Analysys International. That survey said that Baidu's market share was 78.6%.

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