In 2000, a 31-year-old software engineer named Li Yanhong, a.k.a. Robin Li, left his job in Silicon Valley and returned home to China to start an Internet search engine. He raised $26.2 million in venture capital, including a modest investment by Google.
Ten years later, Li’s company, Baidu, has become the dominant search engine in China, a goliath with 7,000 employees and a market value of $16.2 billion on the Nasdaq Stock Market. Google, which sold its stake in 2006 when it launched its own Chinese site, has lagged far behind, capturing less than half of the market share Baidu has here.
Now investors are betting that Baidu will reap the benefits if Google ends up exiting China over its dispute with the government about alleged cyberattacks on Google sites.
Since last Tuesday, when Google announced that it would stop censoring its search engine even if that meant losing its Chinese business license, Baidu’s stock on the Nasdaq has surged 21 per cent to a new high, adding $2.8 billion to the company’s market value in just three days. Although investors are happy, China watchers are worried about the political consequences of Chinese Internet users depending on Baidu for news and information.
The company has been accused of altering search results for advertisers, by either deleting content or pushing firms’ sites higher up on the search result lists in return for payments. The charge has prompted the company to launch an overhaul of its listings.
"In Exclusive Partnership with The Washington Post"