Feeds

China 'orders Baidu cleanup'

When the music's over, turn out the lights

The essential guide to IT transformation

The balance of power in China's internet search market could soon change, as the government orders home grown music services to clean up their acts. But it could be worse news for Wall Street investors who have backed the Chinese giant without fully assessing the risks.

According to sources cited in the Wall Street Journal, the Ministry of Culture will require search engines to provide links only from licensed music sources. This is ominous news for Baidu, which owes its singular success in keeping Google at bay - Baidu enjoys a 70 per cent market share - to a controversial music scheme, which The Register described a year ago, here/.

Our investigation discovered how Baidu "deep links" to unlicensed MP3 files, more than half of which are on a network of closely-related domains, which are unreachable outside Baidu. Domains are rotated, ensuring the MP3s are always available. By effectively running a Pirate Bay beside its main search engine, Baidu has managed to keep Google in a distant second place.

Google objected that its own superior search product was shunned by a rival offering free sweets. So in March, Google launched its own licensed ad-supported music service in China to compete with Baidu. Any MoC cleanup would force Baidu to compete on level terms.

But why is this bad news for Wall Street? Because not-so-canny institutional investors have piled into Baidu, on the basis that it's "China's Google". Google is gigantic, goes the logic, so a Chinese Google has the potential to be humungous.

Here's a list of top investors, at time of writing:

Baidu investors

.

The source of Baidu's popularity isn't hard to see - nor is its vulnerability. A search rival offering a similar service to Baidu was busted last year. Without the traffic generated by music, Baidu will find commercial opportunities will be much more challenging.

You do wonder how these investment geniuses could overlook something so obvious to everyone else. ®

Gartner critical capabilities for enterprise endpoint backup

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Banking apps: Handy, can grab all your money... and RIDDLED with coding flaws
Yep, that one place you'd hoped you wouldn't find 'em
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Primetime precrime? Minority Report TV series 'being developed'
I have to know. I have to find out what happened to my life
Netflix swallows yet another bitter pill, inks peering deal with TWC
Net neutrality crusader once again pays up for priority access
Judge nixes HP deal for director amnesty after $8.8bn Autonomy snafu
Lawyers will have to earn their keep the hard way, says court
Ex-IBM CEO John Akers dies at 79
An era disrupted by the advent of the PC
prev story

Whitepapers

Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Backing up distributed data
Eliminating the redundant use of bandwidth and storage capacity and application consolidation in the modern data center.
The essential guide to IT transformation
ServiceNow discusses three IT transformations that can help CIOs automate IT services to transform IT and the enterprise
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.