World newspapers joined to call for the U.S. Justice Department to reject the Yahoo-Google deal yesterday, which is odd not only because the deal won't reach beyond the U.S., but also because Google isn't always the dominant search engine outside its home country. A story in today's Financial Times reminded us of this, pointing out that in China, Russia, Japan, South Korea and the Czech Republic, Google comes in second to the five companies below.
Preeminent among the magazine world's kingmaking power lists is Vanity Fair's New Establishment, which appears in the October issue — on newsstands in L.A. and New York today, but not in the Bay Area for another six days. Silicon Valley gets similar short shrift: The names who make it there are predictable bigs like Steve Jobs and Larry Ellison, or Hollywood-crossover types like Jeff Skoll, eBay's first employee turned movie producer. Walt Mossberg, now employed by New Establishment perennial Rupert Murdoch, also squeaked in. The consolation prize Vanity Fair offers: Its "Next Establishment" list, reserved for the likes of Twitter's Ev Williams. It's a marvelous piece of New York media trickery — flatter the geeks by making them feel included, but corral them into a side room so the real power brokers aren't offended by comparison. True, the "Next Establishment" suggests that these are people who might matter in the future. But in saying that, Vanity Fair's editors are also sending the message that right here, right now, its "Next" nominees are nobodies. On this year's list:
Google announced today a search service, available only in China, to find and download MP3s from popular artists through partner Top100.cn, a Chinese music site funded by basketball star Yao Ming. Baidu, the search company which emerged from China's homegrown bubble and producers of crazy ads, has had MP3 search available since 2005, and many attribute its lead in its home market to that feature. [News.com]
Citing a more challenging consumer environment, greater customer-acquisition costs and investor reluctance to pay above-market prices for shares, Goldman Sachs today cut price targets for Internet stocks including Google, eBay, and Amazon by 10 percent. For more reasons why Wall Street is suddenly less impressed with your tech stock portfolio, see Goldman's entire report, embedded here:
All Hong Kong actor Edison Chen wanted was to get his MacBook repaired. Instead, he's on the front page of all the papers, apologizing for a celebrity sex scandal. See, Chen used his MacBook to store intimate photos of himself and Hong Kong starlets. In the clip above, CNN has footage of the offending MacBook. When Chen took it in for repairs, store workers uploaded the photos to the Internet. And now they're so ubiquitous China has censured popular search engine Baidu because certain keyword searches "have become the platform for displaying and spreading these filthy pictures."
When Eric Schmidt looks at Baidu, he doesn't see a China-grown website that accounts for 61 percent of search traffic because of its ease of use and mastery of the native tongue, as Baidu founder Robin Li claims. Instead, Schmidt sees a search engine beating the poo out of Google China because of its ease of use in downloading MP3s. (Nearly 100 percent of digital music downloads in China are unlicensed.) Schmidt's response?
According to Google Translate 泡沫 is Chinese for "bubble". Chinese search engine Baidu is up another 3.5 percent today to $378.35 — with a market cap just shy of Facebook's notional value at $12.8 billion. The FT Tech Blog notes that Baidu has a forward P/E ratio of 94 — that is, a comparison of its price to next year's earnings — trouncing Google's P/E of 54. Another Chinese search engine, Sohu, reported strong earnings today and anticipated future growth across the Chinese market because of advertisers' interest in the 2008 Beijing Olympics. A chart of Baidu and Google's stocks year-to-date is above.
Chinese search engine Baidu more than doubled its third-quarter profits over last year, bringing them to 181.7 million yuan or $23 million. Baidu is still dominating the market over there, seeing 60.5 percent of China's searches. Google is a distant second with 23.7 percent. [International Herald Tribune]
Is this the best Kai-Fu Lee can come up with? Google went to considerable trouble to hire Lee away from MIcrosoft, sparking a messy dispute over his noncompete agreement. Now, Lee is overseeing noncompete agreements of his own. "If you can't beat them, join them" seems to be the essence of its new advertising partnership with Sina, one of China's most successful Internet portals. Sounds good, until you remember that Google tried this before: In 2004, it took a minority stake in Baidu, a search engine that's now beating Google soundly in the China market.
Google finally realized that enemies don't make the best bedfellows, and owning a stake in Chinese search leader Baidu might not jibe with reality. After all, Baidu's marketing strategy is to made a Google caricature bleed on TV. Its favorite competitive tactic is to print Google results and report them to the government — which, according to rumor, is why China blocked Google in 2002.
Baidu, the leading Chinese search engine, last told Google in an ad, "I know you don't know. I know you don't know I know. YOU DON'T KNOW." Translation proved that ad was pretty clever. So what the hell does this one mean? Free comment account to anyone who sends a translation to email@example.com.
Guge, the Chinese-branded Google service, recently released a pansy-ass watercolor ad. Shanghai blog China Snippets posts a translation (here's the SWF with sound). The ad copy includes wannabe koans like "One piece of information is like one blade of grass. Together they build up a big, green, endless lawn."
This weekend in the New York Times Magazine, Clive Thompson deeply analyzes (for 10 pages! that's 100 pages in Internet time) Google's China entanglement. But some of the crooked stories feel like scenes from Inside Man — it's really fun to cheer for the bad guys. Maybe it's just leftover love from this old commercial, but Google rival Baidu seems crazy — crazy like a fox.