Chinese Taobao Launches Web Search Engine

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SHANGHAI (Reuters) – A unit of Alibaba Group, China’s largest e-commerce company, has launched a search engine, targeting a lucrative market now dominated by Wall Street darling Baidu Inc.

Taobao, China’s largest and most popular online e-commerce site focused on consumers, launched its public beta test of the research site, called Etao, on Saturday, a spokeswoman said on Tuesday.

“Etao is a shopping search engine launched by Taobao,” she said in a statement, referring to the name of the site.

Etao not only provides search options for e-commerce but also a comprehensive search engine powered by Microsoft’s Bing search engine.

The move is a direct challenge for Chinese search leader Baidu, which dominates more than 60% of the Chinese search market in terms of advertising revenue.

“Advertising to people who have already come to buy something is a very attractive proposition,” said Mark Natkin, director of the consultancy firm Marbridge Consulting, of Etao.

“He (Etao) has the potential to intentionally attract a very valuable segment of Baidu users,” Natkin said.

The Alibaba Group is roughly 40% owned by Yahoo Inc.

The Chinese internet search market is currently controlled by Baidu and Google, which collectively hold around 90% of the market.

But Google’s share has declined since its high-profile threat to leave China earlier this year, which subsequently led to the shutdown of its google.cn website. Chinese internet companies are scrambling to nibble on Google’s share and compete with Baidu.

In August, Sohu, China’s second-largest internet portal, announced that it would sell 32% of its search engine Sogou to investors including the Alibaba group.

“There is still a potential threat to Baidu, but they (Taobao) are still in the early stages,” said an analyst at an investment bank who is not authorized to speak with media.

“It may take them at least another three to four years to develop their technology.”

Microsoft has aggressively pushed Bing into China. The company told the Wall Street Journal in September that it was looking for a partner to help it play a major role in China’s internet search market, the world’s largest with more than 400 million users.

Additional reporting by Doug Young in Hong Kong; Editing by Jacqueline Wong


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