If Facebook Deal Is Dead Baidu Will Need To Buy A Social Strategy
- Posted by bbishop
- on July 13th, 2011
Baidu ($BIDU) has not been able to leverage its near monopoly in search into success in the social web.
Baidu’s latest social failure is Baidu Shuoba, its Weibo-like clone that the company billed as a real name social networking platform. The service never got traction, Baidu reorganized the team a few months ago, and Wednesday we learned that Mai Tian, the head of Baidu’s social efforts and the architect of Shuoba, is leaving the company at the end of July.
Baidu has an even weaker social position than does Google (though with the rate of uptake of Google+ perhaps Google will eventually figure out social.) Google has hundreds of millions of Gmail users on which to base its social efforts. Baidu has resisted launching an email service and its Geocities/Myspace-like Baidu Space has never been a leader, so it has relatively little user loyalty on which to build.
Baidu needs a social play, and given its repeated internal failures the company will likely look to buy its way into social either through a joint-venture with Facebook, an outright acquisition or a controlling investment as they did with travel search firm Qunar.
I am hearing murmurs that the long-rumored Baidu-Facebook JV is dead, and if that is the case Baidu will need to use its cash and/or stock to buy its way into a credible social strategy.
Sina and Tencent control the best social assets in China. Short of a huge, multi-billion dollar and unlikely deal for Renren (current market cap is $4B +), the probable candidates for a deal with Baidu may be:
1. Kaixin001. Kaixin001 was once the leading white-collar SNS but has seen its growth and IPO prospects severely curtailed by the rise of Sina Weibo. It is now mostly a social game platform, and any deal with Baidu could be difficult given that Sina is an investor in Kaixin001. It could be a fast way for Baidu to gain a credible social presence, and Baidu’s traffic hose might reverse Kaixin001′s decline, but the white-collar users tend to not have a positive attitude towards Baidu and even more might defect under new ownership;
2. 51.com. 51.com was once a hot SNS but has fallen into a Myspace-like trajectory. Its users likely have less dislike of Baidu and Baidu might be able to turn it around given its ability to drive so much traffic. But like a Kaixin001 deal, Baidu would be making a risky bet on its ability to revive a declining asset;
3. Douban. Douban is probably the most interesting SNS in China right now. It has innovative services, has attracted a lot of funding, is loved by elite users and is still growing. Some of those users might defect from a Baidu-owned property, but a deal could add innovation and a “cool factor” along with a valuable SNS asset.
Baidu’s $300m investment in Qunar showed a willingness to make a huge bet on a company succeeding in an area Baidu considers strategic. Given the importance of social and Baidu’s repeated failures at developing homegrown social services, it is hard to see how Baidu will not have to make a big deal to catch up.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Bill Bishop is an American living in Beijing. He is bilingual and has experience working in both US and China. In 1997 he co-founded CBS MarketWatch and stayed until the sale in 2004 to Dow Jones. He was never a journalist, and instead worked in several business roles over the years, the last as head of the MarketWatch consumer Internet business. More »
- Sinocism China Newsletter For 08.30.12
- The Sinocism China Newsletter
- Today’s China Readings July 18, 2012
- Sina Sell-Side Still Searching For Muppets
- China Daily Readings
- Sina Admits It Has Not Complied With Weibo Real Name Registration Rules
- Groupon’s China Firesale
- Apologies For The Hiatus
- Tweeting The Sina Q4 2011 Earnings Call
- Quick Thoughts Ahead Of Sina Earnings
- August 2012
- July 2012
- May 2012
- April 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- Inside Sina Weibo
- Authorities Removing Apple iPads From Chinese Store Shelves? (Updated)
- Reuters: China VIE Company Structure Under Threat
- If Sina Is Cooking Its Books I'll Eat This Blog
- China's Internet: The Invisible Birdcage
- Is Tencent The Wrong Partner For Groupon In China?
- New Report On China's Online Game Industry-$3.6B in 2009 Revenue, $9.2B By 2014
- Do You Know Where Your China Stock CFO Lives?
- CCTV Attacks Baidu, Again
- Why Did Sina Shares Plunge 15% Tuesday?
TagsAdvertising Alibaba Apple Baidu Beijing cctv Censorship china China Mobile Corruption Cyberwar DangDang eCommerce Facebook Fraud Gaming GFW Google Group Buying groupon Internet Investing IPO Media Mobile Music Netease PerfectWorld Piracy Policy Readings Regulations Search Shanda Sina SNS Social Games Tencent Twitter US-China Virtual Items Web Video Weibo WoW WVAS
- Group Buying
- Internet Security
- Listed Firms
- Online Games
- Online Memes
- Online Payments
- Online Trends
- Perfect World
- Public Relations
- Renewable Energy
- Social Gaming
- Traditional Chinese Medicine TCM
- Web Advertising
- Web Video
- World of Warcraft
StockTwits - All Updates