Chinese Internet Search Leader Baidu’s First-Qtr Earnings Soared by 123%

Chinese search-engine Baidu has seen its earnings double in the first quarter of 2011. From Forbes:

China’s Internet wave continues to roll on. Benefitting from growth in China’s Internet use and search-related advertising, search engine Baidu said this morning that net profit in the first three months of 2011 rose by 123% from a year earlier to $163.5 million.

Baidu said first-quarter revenue soared  by 88.3% to $372 million.

With a majority of Chinese still not yet among the country’s population of Internet users, Baidu has “plenty of room” to continue to grow, Li said on an earnings call this morning.

Baidu’s shares were down 0.8% ahead of the report, but have gained more than 140% in the past year. The company has benefitted from what critics say have been missteps in China by Google.

And what exactly were Google’s missteps in China? All stemmed from tension between Google and the Chinese government over how it could operate in the heavy censorship of Chinese webosphere. The last straw was when Chinese hackers , believed to be backed by the government, stole sensitive information from Google Accounts. A detailed account of Google’s last five years in China, from CNN:

Google had hoped that its decision to create a search engine in the .cn domain — one that followed government rules of censorship — would lead to a level playing field. But even as Google rolled out its .cn web address, there were indications that its compromise would not satisfy the Chinese government.

For all the progress, some Google executives were beginning to think that its great China compromise wasn’t working. A turning point came in 2008, the year China hosted the Olympics. In the run-up to its turn in the international spotlight, China apparently decided to increase its restrictions. It demanded that in addition to censoring the .cn results, Google purge objectionable links from the Chinese-language version of That, of course, was unacceptable to Google — it would mean that it was acting as an agent of repression for Chinese-speaking people all over the world, including in the U.S. Other search engines, including Microsoft’s, agreed to such demands. But Google stalled, hoping that after the Olympics the Chinese would back off. They did not. The demands for censorship became broader and more frequent.

Just before Christmas 2009, Google’s information security manager Heather Adkins learned that she would fall short on her annual “don’t get hacked” internal goal. Google’s monitoring system had detected a break-in of Google’s computer system, and some of the company’s most precious intellectual property had been stolen. The hack was geographically tied to China — and both the sophistication of the attack and the nature of its targets pointed to the government itself as an instigator of or a party to the attack.

Brin took the incident personally. Insiders observed he was much less perturbed by the theft of Google’s intellectual property than the fact that his company had unwittingly been a tool used to identify and silence critics of a repressive government. Brin wanted the incident to be the catalyst to the action that he and others had been urging since 2008: Google should stop censoring. He was passionate in his insistence.

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