Baidu Inc (ADR) (NASDAQ:BIDU) has slowly been losing its web search market share to Qihoo 360 Technology Co Ltd (NYSE:QIHU). In just two years of foraying into the web search business, Qihoo has gained 25% market share. That prompted Baidu to expand its services into other categories and strengthen its presence on mobile. While the Yanhong Li-led company is tasting success in many new businesses, it is facing competition on other fronts. Now Britain’s Skyscanner and Chinese e-commerce heavyweight Alibaba have become the two latest rivals for Baidu.
Skyscanner challenges Baidu’s travel search tool Qunar
The Edinburgh-based flight search company Skyscanner yesterday announced the acquisition of Chinese travel price comparison firm Youbibi. Skyscanner already has the presence in Beijing, but its current team consists primarily of sales and marketing employees. Youbibi’s product development and engineering workforce will help the company improve its offerings for the Chinese domestic tourism market. With this deal, Skyscanner will compete directly with Baidu Inc (ADR) (NASDAQ:BIDU)’s domestic travel search tool Qunar.
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But Alibaba Group Holdings Ltd could be even bigger threat to Baidu Inc (ADR) (NASDAQ:BIDU). Earlier this month, the Chinese e-commerce juggernaut announced that it is buying the remaining 33% of UCWeb, of which it already owns 2/3rd. After the transaction closes, UCWeb will be integrated into Alibaba as the company’s mobile business group.
UCWeb may ruin Baidu’s mobile ambitions
UCWeb operates China’s most popular mobile search engine and mobile browser. It also has an app store and gaming platform. UCWeb’s mobile browser has 65% market share in Chinese mobile browsing market. Its recently launched mobile search engine Shenma has already captured 20% mobile search market share, processing more than 6 billion mobile search queries every month.
This acquisition is a real threat to Baidu Inc (ADR) (NASDAQ:BIDU). Baidu has been aggressively expanding its business in the mobile space to boost its market share and improve monetization. The Chinese search engine giant expects mobile search traffic to exceed PC traffic by the end of this year. Now that UCWeb has access to Alibaba’s $6 billion cash reserve, things may not go very well for Baidu in the mobile market.