Alibaba vs Baidu: Can e-commerce trump search?

Battle between Alibaba and Baidu intensifies and paints vivid picture of the fierce competition in China's lucrative Internet market.

BEIJING--China's largest e-commerce company Alibaba Group appears to be taking aim at archrival, Baidu.

Alibaba held its annual conference Alifest in September to hand out its Top 10 Global Netrepreneur awards and an hour-long speech by CEO Jack Ma revolved around two words: Bartz and Baidu.

The first one was an obvious one given that Yahoo fired Carol Bartz--a partner and sometimes adversary of Ma. "A few days ago, Yahoo's CEO was fired, but I have nothing to do with it," quipped Ma, who refrained from more comment.

There has been much speculation in China that Ma played a role in Bartz's firing. Suspicions arose after Ma was questioned about his relationship with Bartz at the Wall Street Journal's D9 conference.

With Bartz talk out of the way, Ma opened fire on Baidu:

"In the beginning of this year, I was asked why Alibaba started its own search engine service. My answer is that we want to cause sleepless nights for Baidu. If Baidu could fall asleep, then the Chinese netizens would be forced to stay awake."

Ma was referring to the launch of Alibaba's search engine,, on Jun. 16. The vertical search engine provides online consumers with price-comparison service for numerous items from (C2C and B2C), Taobao mall, and its other online shops (B2C platforms). "What Alibaba is going to do is to challenge the flagship of the industry and trigger benign competition," he said.

Baidu is China's largest search engine, accounting for nearly 80 percent of the Chinese search market. Meanwhile, Alibaba is China's biggest e-commerce company, and its subsidiary accounts for 90 percent of B2C e-commerce market share in China.

Competition, however, is not the only goal. Alibaba was driven into the search market to meet the demand of expanding businesses.

"Online shopping is developing rapidly, many traditional companies and retailers have been stepping into e-commerce," said Etao spokesperson, Hao Wu. "Consumers need a platform to obtain product information, and Taobao has accumulated some experience in this area. So we split Etao from Taobao to do vertical e-commerce search."

Hao  also noted that Alibaba will not deviate from its course as an e-commerce company, adding that the Etao search engine will only focus on e-commerce-related businesses. Etao will focus on e-commerce search, which an Alibaba report noted, accounts for nearly 40 percent of Baidu's overall search service. That explains Ma's "sleepless nights" comments about Baidu.

The two parties have been battling for years. In 2008, Taobao declared war against Baidu when the latter's e-commerce platform, "Youa", was about to go online.

China-based Internet market observer, Hong Bo, said Taobao's move was a necessary step because Baidu would ultimately favor its own e-commerce service.

On Mar. 31, the Taobao-Baidu war ended when Baidu said it would shut down Youa. Ma, however, has no plans to stand down.

The battle between Alibaba and Baidu reflects the fierce competition currently playing out in China's Internet industry.

via ZDNet China's blog channel.