Posted December 1, 2008 1:57 pm by with 6 comments

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By Taylor Pratt

China’s largest search engine, Baidu, is facing serious legal challenges over its business model. The first complaint against Baidu was filed by Li Changqing under the new anti-monopoly laws in China. Li claims to have more than 50 companies in line to sue Baidu, but would not file the mass complaint until 100 businesses were willing to do so. Other legal counts include alleged brand infringement, alleged fraud and alleged unfair competition.

The Chinese government has long favored Baidu over foreign rivals, and as a result, Baidu’s search engine market share is up to 70%. Baidu holds a commanding lead in the Chinese search industry over Google, which currently only holds 26% of the market share there (excuse me while I grab my violin…).

Baidu’s primary source of revenue comes from auctioning off search keywords, and ranking results accordingly. This business model came under fire in November when state television attacked Baidu for giving top rankings to unlicensed medical websites and blocking websites that refused to pay for listings. Baidu, of course, denies allegations that websites are blocked if they do not engage in bidding.

Normally, I would just advise people to choose one of the other search engines out there, if you were not pleased with the results you were seeing, but that would be too easy.

Baidu says that in response to these allegations, it has removed all unlicensed websites from its search results and is working on a new program to separate sponsored and non-sponsored results more clearly.

We’ll keep you posed as this story develops.

via Financial Times

Taylor Pratt is a Search Marketing Specialist at nFusion, a results focused marketing agency.