Why Is Baidu Spending Nearly $2 Billion on App Stores?

Chinese search giant Baidu  (NASDAQ: BIDU  ) stole headlines this week, when it popped more than 10% after earnings. The catalyst for the surge in Baidu's share price was mobile; the company had been struggling to find traction with mobile advertising to offset slowing desktop spending. After being coy about how much mobile ad spend it was collecting, Baidu revealed that mobile was now contributing 10% of revenues and is growing fast. 

However, beyond its disclosure in its last earnings release of how much the company is actually making in mobile, Baidu has also been on the acquisition trail recently. In the following video, Fool analysts Lyons George and Eric Bleeker look at the company's acquisition of 91 Wireless on July 15. The key idea for investors is that app stores in China are a fundamentally different idea from what they are in America. 

For example, very few Android phones in China use Google Play. Instead, third-party application stores have sprung up to dominate app downloads. Even on Apple's more controlled iOS, reports indicate that one-third of all iPhones are jailbroken, enabling third-party app-store downloads. While in most of the world, apps are a battle dominated by Android vs. iOS, the Chinese market is open to other app platforms. 

To see Lyons' and Eric's discussion on China's app economy and why Baidu's move gives them another upper hand in the Chinese mobile market, watch the video. 

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