Microsoft's Golden Opportunity

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Media reports over the weekend claimed that Google (Nasdaq: GOOG  ) is nearly certain to pull out of China in the coming days or weeks, and the news had a predictable effect on stocks yesterday. Shares of Google took a 3% hit, while Chinese leader Baidu (Nasdaq: BIDU  ) hit a new all-time high before closing out the trading day 5% higher.

Lost in all of the shuffle was Microsoft (Nasdaq: MSFT  ) , as its shares were practically unchanged during the trading tempest.

Why should we care about Microsoft? Well, if Google is serious about abandoning, no one stands to benefit more from its departure than Microsoft.

As I noted on CNBC yesterday afternoon -- and as The Wall Street Journal points out this morning -- Microsoft's Bing could be in a sweet spot to gobble up a big chunk of Google's market share.

It's simply in China's best interest for Baidu to have a strong outside competitor, as long as the competitor is willing to color within the country's restrictive censoring lines. Having Bing emerge as China's second most popular search engine, rather than homegrown Baidu rival such as's (Nasdaq: SOHU  ) Sogou, would send a message around the globe that the world's most populous nation is open to outsiders.

This is a rare opportunity for a search engine to matter this late in the game. Arriving early in the Web-migration peocess is huge. Just ask Google about Japan, where it had a hard time competing once Yahoo! (Nasdaq: YHOO  ) paired up with Softbank.

Speaking of Yahoo!, we can't count the Yahooligans out in making a second run at relevance in China if Google bows out, but this really is Bing's silver platter to lose. This morning's Wall Street Journal points out that Microsoft has already swiped at least three Google employees in China, seemingly just deserts after the Kai-Fu Lee courtroom showdown.

Microsoft is just in a better public position than Google or Yahoo! in kowtowing to China's repressive website demands, since it has to adhere to government rules globally with its larger software business. It won't face the same scorn from human-rights activists as Yahoo! would if it tried to slip into Google's emptying shoes.

Mr. Softy couldn't have scripted this any better, quite frankly.

Microsoft is a Motley Fool Inside Value recommendation. Baidu, Google, and are Motley Fool Rule Breakers picks. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz has been to China once and still admires the nation's dot-com revolution from afar. He owns no shares in any of the stocks in this article and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

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