Google losing ground in China

updated 11:44 a.m. ET Aug. 30, 2005

SHANGHAI, China - A survey by a Chinese Internet research group has found that Google is losing market share to its biggest Chinese rival, Web search engine Baidu.com.

The survey, conducted by the Beijing-based China Internet Network Information Center, reported that Baidu.com Inc. boosted its market share in Beijing by 10.8 percentage points to 52 percent.

Google Inc.'s share was at 33 percent, as the American Internet search engine kept its customer base steady while the overall market grew, said the survey, seen Tuesday on CNNIC's Web site.

China's Internet population hit 103 million by June, second only to the United States, according to CNNIC.

Google public relations officials in China had no immediate comment on the report.

The survey found that combined, Google and Baidu held 80 percent of the market in Beijing and Shanghai, and 75 percent in Guangzhou.  The three cities account for most of Chinese Internet use, it said.

Six months ago, Google held the largest market share in the three cities covered by the survey, which was conducted earlier in August, the report said, without giving specific figures.

CNNIC's survey found Baidu has a 43.9 percent market share in Shanghai compared to 38.2 percent for Google.  In Guangzhou, Google's market share was 28.7 percent while Baidu's was 48 percent.

Meanwhile, U.S. Internet giant Yahoo! held only a 3.7 percent market share overall, with smaller Chinese rivals Sohu.com and Sina Corp. claiming a 4.6 percent and 4 percent share, respectively.

Google has long been popular with Chinese Web surfers, but has suffered from a lack of brand recognition.  The Mountain View, Calif.-based company only recently set up an office in Shanghai in preparation for a belated expansion in China and obtained a Web address under the country's China domain.

Google bought 2.6 percent of Baidu.com last year in a move outsiders thought might lead to the American giant taking over the tiny Chinese startup.  But Baidu.com has stayed independent, striving to become Google's Chinese-language equivalent.

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