SHANGHAI Baidu and MSN China are preparing a deal involving the exchange of services that could see the two major internet search competitors join forces in China.
According to a note from investment bank Piper Jaffray and Co, Baidu is also looking to offer its search facilities to local companies China Netcom and China Telecom.
Safa Rashtchy, the author, estimates that these deals would increase the number of Baidu searches by around 50 million a day and consequently increase advertising revenues by between US$10 million and $20 million by 2007.
In response to the Jaffray report, James Lee of WR Hambrecht has pointed out that talk of this sort of deal may be premature after the recent resignation of two senior managers at MSN China: "Even if the agreement includes such provision (for an exchange of search facilities), we feel that the new Microsoft China management team may not be on board with the plan."
Baidu has made bids to expand its reach and services, especially through partnerships with Chinese and foreign companies. This year, Baidu has sealed deals with MTV, Intel, eBay and HP among others.
On their part, foreign companies see Baidu as an effective partner in reaching the 123 million-strong Chinese online community. The company is also set to enter the Japanese market.
MSN is also understood to be revamping its local portals in Asia-Pacific as part of a move to boost its appeal to local advertisers. Singapore and Thailand are the focus of the initiative, say sources. The move is believed to be a push to bring Microsoft's Asia portals closer in line with MSN in the US, in terms of quality content provision and ease of use for advertisers.
MSN denied any change to its portal strategy. "We are always looking to broaden our channels and content partnerships where it makes sense to do so," said Grant Watts, GM, MSN & Windows Live Southeast Asia.
See Opinion 1, page 32