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Baidu Targets Brick-and-Mortar Shopping in Alibaba Challenge

Sept. 4 (Bloomberg) -- Bloomberg’s Mia Saini examines the battle for internet dominance in China and what these companies may mean to e-commerce in the United States. She speaks on “Bloomberg Surveillance.”

Baidu Inc., China’s biggest search engine, is challenging the country’s No. 1 e-commerce company, Alibaba Group Holding Ltd., by adding services that help shoppers find retail stores and retrieve product information.

Baidu agreed to invest in mapping company IndoorAtlas Ltd., which allows users to find their way through malls and office buildings, the companies said today. The search operator also unveiled a headset that can delivers product information to shoppers and a mobile service that makes it easier for consumers to find nearby businesses.

The company’s billionaire founder Robin Li is adding the functions to help sell more advertising by connecting mobile-phone users with brick-and-mortar businesses. The move comes days after Baidu formed an online shopping venture Dalian Wanda Group and Tencent Holdings Ltd., Asia’s biggest Internet company, intensifying the rivalry with Alibaba.

“The mobile Internet has given us new possibilities and opportunities,” Li said at the Baidu’s annual developers conference in Beijing today. “Mobile not only presents many opportunities for Internet companies, but also for participants in traditional industries.”

IndoorAtlas is the world’s first location service using magnetic anomalies inside buildings to pinpoint indoor locations, with results that are accurate to less than three meters, or about 10 feet, according to its website. Baidu invested $10 million in the Finnish company, valuing it at about $40 million to $50 million, a person familiar with the matter said, asking not to be identified as the details aren’t public.

Photographer: Brent Lewin/Bloomberg

Baidu Inc. is investing about $10 million in U.S. startup IndoorAtlas Ltd. to expand mapping services inside buildings and shopping centers, a person familiar with the matter said. Close

Baidu Inc. is investing about $10 million in U.S. startup IndoorAtlas Ltd. to expand... Read More

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Photographer: Brent Lewin/Bloomberg

Baidu Inc. is investing about $10 million in U.S. startup IndoorAtlas Ltd. to expand mapping services inside buildings and shopping centers, a person familiar with the matter said.

New Products

Baidu’s American depositary receipts climbed to $224.80 yesterday in New York, rallying the most since July 25, after Bloomberg News reported the investment. The Bloomberg China-US Equity Index added 0.6 percent yesterday.

Businesses such as restaurants or movie theaters stand to benefit as mobile Internet applications make it easier for consumers to discover what’s nearby, Li said.

The mobile Internet is also prompting companies to make it easier for users to input information without typing. About 10 percent of searches now are done using voice recognition technology, according to Li. Within five years voice and image recognition will account for about half, as users take advantage of simpler interfaces, he said.

Headset Shopping

BaiduEye, the company’s new headset, has a camera that wraps around the side of a users’ head and can identify products and provide information about them through an earpiece or smartphone. The hardware doesn’t include a display.

“This is like an extension of your eye, a third eye or second brain,” the system’s designer Gu Jiawei said in an interview. “For us, the shopping mall is the most attractive scenario. Consumers can see what a product is and get online comments.”

The Baidu Connect service, which started today, allows merchants and restaurants to register and set up an account that makes it easier to reach customers and offer location-based services, Li Mingyuan, Baidu’s vice president for mobile, told the conference. Once the account is created, that presence becomes integrated across Baidu’s offerings such as search and maps, so businesses can offer promotions and discounts.

IndoorAtlas was founded in 2012 as a spinoff from the University of Oulu, Finland. The company was incorporated in the U.S. with an office in Mountain View, California, last year. It also has research and development centers in Oulu and Oxford, England.

Mobile Traffic

Baidu is investing in mobile applications to capture rising Web traffic on smartphones and tablet computers. The venture with Wanda plans to target the “online-to-offline” segment, directing mobile Web users to nearby shops and restaurants, Wanda Chairman Wang Jianlin said last month.

That’s also an area where Alibaba, China’s biggest e-commerce operator, is seeking to expand. In March, Alibaba agreed to buy a stake in Intime Retail Group Co., owner of department stores and supermarkets, as the company integrates online and offline shopping.

Alibaba in July acquired AutoNavi Holdings Ltd. in a deal that valued the company at $1.5 billion to bolster its Internet mapping tools as it plans an initial public offering and listing on the New York Stock Exchange.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net; Belinda Cao in New York at lcao4@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Aaron Clark, Dave McCombs

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