There seems to be a security issue with the leading mobile browsers in China. The University of Toronto's Citizen Lab issued a report earlier this week calling out Tencent's (OTC:TCEHY) (OTC:TCTZ.F) QQ browser for transmitting personal user data of its users to QQ servers without encryption and for its vulnerability to arbitrary code execution during software updates.
Tencent beefed up its mobile browser once alerted by Citizen Lab, but the latest update still has some flaws.
Tencent's QQ isn't the only browser platform that has come under fire for having unencrypted shortcomings. Citizen Lab has now called out China's three leading mobile browsers -- UC, QQ, and Baidu's (NASDAQ:BIDU) namesake solution -- for leaving user data vulnerable through lax encryption standards.
This could be seen as an opportunity for Baidu. It's the undisputed leader when it comes to paid search in the world's most populous nation, but its mobile browser is a distant third to UC and QQ. If it's able to improve its encryption, and obviously that's no easy task or all of them would be doing so after getting called out, it could gain market share.
Mobile has become a bigger part of Baidu's business. It generated 56% of its revenue from mobile advertising in its most recent quarter, nicely higher from the 42% slice it commanded a year earlier. You don't need to be a leader in mobile browsers to excel in mobile search, but it does make life easier when that happens.
It's not as if Baidu will be standing still as the three tech giants behind the UC, QQ, and Baidu mobile browsers battle to see which one can be less vulnerable to encryption lapses. It's been busy trying to make its mark in everything from mobile app marketplaces to the suddenly crowded realm of software for self-driving cars.
This doesn't mean that it shouldn't continue to pursue better positioning in the mobile browser market. The Wall Street Journal drew attention to the encryption shortcomings of all three of the leading Chinese browsers earlier this week so now it's an issue that will be front and center with the investing community. However, Baidu has a lot more going on these days if it decides that it's just not worth the hassle, particularly in China were folks are naturally going to feel more vulnerable about putting their data out there like that.
Baidu hasn't become one of the best performing growth stocks over the past decade by accident. It'll figure this out, and that means deciding if it's a battle worth fighting instead of just trying to fight to win.