I have to comment more about the whole Google event. Mainly I want to succinctly lay out why Baidu is a bad company that doesn't deserve the money they are getting off Google's withdrawal from China.
I've published two separate stories on Baidu's screw-ups. First, in January 2009, I published a story on Baidu's attempt to recover from a series of scandals in 2008 (The linked story is a compilation, my piece is under the headline "Robin Li" Baidu's CEO). Among said scandals were:
1. Allegations that they were censoring news related to the poison milk scandal, in order to protect one of the companies.
2. An expose about their advertising practice which doesn't differentiate paid search results from real search results, which had the unseen consequences of promoting doctors that weren't real doctors, and other scam artists.
Both were especially damaging because a search engine is essentially about presenting users with authoritative content. Google had been rapidly eating away at Baidu's market share, and would continue throughout 2009 (Google's market share jumped from 22% to 30% between January and December).
In December 2009, I suggested investors sell the stock based on the fact that:
1. Google was rapidly eating away their market share.
2. Investment was obviously more speculative than fundamental at that point
3. Their new advertising system was still being tested
If I had known that google would do what it did I would have of course not published said story, but since then I have become less confident in their business plan and management.
They are also venturing into content areas where it is nearly impossible to make a profit in China (video), or where their competitors have proved more competent (games). Their expansion over the past 2 years has proved breakneck and pointless. Baidu's attempt to expand in Japan is also proving to be a complete failure, dismantling their argument that they are better with Asian language search results.
I don't doubt that Baidu will benefit of Google's departure, nor do I doubt that they could prove to make their shareholders very very rich for a very long time. I just think its a bad company, that deserves to fail.
Update: This post has been picked up by the twittersphere, which is quite lovely, though its gotten a lot of comments a long the lines that its "short on argument." I wanted to clarify that I'm not arguing that Baidu deserves to fail because its running a poor service, which I think is what it sounds like from the tone (I had slept 4 hrs when I wrote it). You can argue that from the 2008 scandals, though overall I'd say the company's core service is at least on the level of Bing. I'm more trying to make the point that its poorly managed, and was in the process of imploding, when Google, to everyone's surprise, hit the self-destruct button. Baidu is going to plug on for decades now, but I'm fully convinced that if Google hadn't left it would have been the dominant browser by 2013.