Baidu's Censored Answer to Wikipedia
Baidu (BIDU) is best known as the leading Internet search engine in China, where it's far ahead of Silicon Valley's Google (GOOG). But Baidu, based in Beijing, also provides a number of other Net services, including an online Chinese-language encyclopedia that has recently become the most popular in mainland China. The story of how Baidu came to dominate the country's online encyclopedia business helps explain its success in search, raises questions about political expediency and plagiarism, and highlights the difficulties facing Western companies in China.
Baidu launched its encyclopedia service 19 months ago when it was presented with a unique opportunity. The Chinese government had cut off the country's access to the Chinese-language version of the online encyclopedia Wikipedia, which includes politically sensitive entries on topics such as Tiananmen Square and democracy. So Baidu launched its own online encyclopedia, Baidu Baike, which would not cover such sensitive issues. The new encyclopedia, which like Wikipedia is largely built by its users, quickly had many of the same (non-sensitive) entries used at Wikipedia, often repeated verbatim.
Today, Baidu Baike is the leading encyclopedia online in China, and the second-largest Net encyclopedia anywhere, after the English-language version of Wikipedia. But the company has drawn fire for its success from some critics who say it has been built on copyright violations and complicity with government censorship. Wikipedia clearly believes that Baidu has crossed an ethical line, although the American company is planning no legal action to stop what it believes is plagiarism on the part of Baidu. "We only appeal to their moral judgment about what is right," says Jimmy Wales, founder of Wikipedia, in an e-mail interview.
The Profit In Cooperation
The dispute reflects the complicated reality of China and the Internet. U.S. politicians and advocates have pushed American companies to take a stand against a Chinese government that blocks online news and discussions about controversial topics. On Nov. 6, Jerry Yang, the chief executive of Yahoo! (YHOO), testified before a Congressional panel (BusinessWeek.com, 11/6/07)) and was excoriated for Yahoo's cooperation with the Chinese government in a case that landed one journalist in jail. "Morally you are pygmies," said Tom Lantos (DCalif.). "I do not believe that America's best and brightest companies should be playing integral roles in China's notorious and brutal political repression apparatus."
But the case of Baidu Baike shows that if American companies don't work with Chinese censors, there are plenty of other companies that will. The companies that refuse to abide by local laws find themselves blocked from access by Chinese Web surfers, and those that do cooperate find themselves with less competition. Baidu, like Sina (SINA), Sohu (SOHU), and other leading Chinese Internet companies, employs teams of people who block and take down controversial statements, an extension of the government effort sometimes known in the West as the "Great Firewall of China" (BusinessWeek.com, 1/23/06).
Baidu's understanding of such local issues has contributed to its success, in search and beyond, and has helped it soar to a market cap of $12 billion since its initial public offering on Nasdaq (NDAQ) in 2005. The Chinese company has 58% of the search traffic in China, compared with 23% for Google, according to the research firm Analysys International.
Legally Controversial Searches
The company certainly has much more going for it than an understanding of the Chinese government. It also caters to the tastes and preferences of local users. It offers a number of different services in addition to search. One of its most popular is Baidu Zhidao, or Baidu Knows, where users post questions and answer them to build up a searchable knowledge base. It also lets users do things that are legally controversial, like searches for MP3 music files that can be downloaded for free. "Baidu offers some services that Google does not or cannot offer," says Peter Lu, managing partner of IntelliConsulting, a Beijing Internet market research company.
IntelliConsulting's recent "China Search Engine Survey Report" found that Google achieved a higher "satisfactory" rating among users than Baidu. But a majority of Internet users in China still select Baidu as their primary search engine because it offers a variety of features and a more stable connection than its rivals. "Search quality is not the only and not even the main concern for most Chinese Internet search engine users," says Lu.
Baidu, in a notice posted on its Web site, says that "it is Baidu's policy to attach great importance to the protection of copyright and comply with all the applicable [Chinese] laws," and that it will remove links to copyrighted music "in accordance with the applicable laws, regulations, and binding measures." Still, Baidu has been hit with lawsuits for its music links (BusinessWeek.com, 9/10/07), including one by the International Federation of the Phonographic Industry.
Volunteers Must Register
Baidu Baike was quietly launched last May, about six months after access to the Chinese and English versions of Wikipedia was blocked in China. The name Baike, which literally means one hundred subjects, is Chinese for encyclopedia. The service was immediately popular. It hit 100,000 entries during its first month, quickly surpassing the Chinese-language Wikipedia. Now, according to the company, Baidu Baike has nearly 1 million entries, making it far and away the largest Chinese online encyclopedia.
Baidu's offering is different from Wikipedia's in several important ways. While both are built with user contributions, Baidu requires people to register if they want to edit any entries. In addition, Baidu has site moderators that review all content that goes into the encyclopedia. This allows the site to excise any topics that are considered controversial.
While Baidu Baike administrators have kept the site clear of politically sensitive content, they have not cleaned out some articles that include material nearly identical to the blocked Chinese Wikipedia. For example, sections of the entries on computer science and the French painter Toulouse-Lautrec are almost identical to that on Wikipedia, although no credit is given to Wikipedia for the material.
Baike Users Don't Credit Wikipedia
Wikipedia does allow a wide range of its content to be used by others, as long as proper attribution is provided. Other examples of nearly identical entries include those on manifest destiny, medieval cuisine, and the Japanese cartoon character Aria. "They do not respect the license at all," said Florence Nibart-Devouard, chair of the board of trustees at Wikimedia Foundation, the not-for-profit organization behind Wikipedia, during a conference in August.
Baidu takes issue with the criticism. The company points out that it is users, not the company, who have built up the encyclopedia through their contributions. Baidu Baike "is a platform for user-generated content," says the company's public relations firm in response to questions from BusinessWeek, adding that "the platform has attracted a high level of user participation and traffic."
Baidu declined to discuss in detail what kinds of content are blocked from the site.
In an e-mail statement, the company cited the principles that it posts on the encyclopedia Web site, which state that Baidu will block pornographic or violent content, advertising, "politically reactionary" content, personal attacks, unethical content, and malicious or meaningless content.
Google Censors Search Results in China
The rise of Baidu Baike raises an important question: Is a censored Internet service better than no service at all? The answer is relevant not just for encyclopedias but for search engines, blog services, e-mail providers, and more. Even Google has decided to censor its search results in China, arguing that Chinese Web surfers benefit from some access to outside information, even if the information is somewhat limited.
The Chinese are divided over Baidu's decision to take advantage of a rival's political misfortune. In one online discussion board on a popular Chinese social-networking site, DouBan, several people argued that letting Chinese people have access to a huge pool of knowledge is more important than a few exclusions. "Many Internet users are not interested in politics, and they want to use the reference site simply to learn more knowledge, not to become some fighter," wrote one participant.
Another group disagreed. One person argued that blocking content violated the entire spirit of a volunteer site, where participants are essential to creating something of value. "What makes Wikipedia a huge reference site is its ability to mobilize volunteers," this person wrote.
Still, Baidu is doing just fine financially at this point. On Oct. 25, the company announced that revenues in the third quarter more than doubled, to $66.3 million, while net income also more than doubled, to $24.2 million. Baidu's stock surged the next day, rising 6% to $353.39 a share. "This quarter, we continued our focus on working hard to know our users and staying ahead of the trends," said Robin Li, the company's chief executive, during the most recent quarterly earnings call. "This is why Baidu Search continues to be the market leader by a wide margin." (Baidu's stock has since fallen, to about $300 a share, along with many other Chinese stocks.)
Baidu is launching a number of new initiatives. It recently started a voice-based search service, using human operators rather than voice-recognition technology, and a search site for kids. It also plans to launch its first e-commerce site next year, with a consumer-to-consumer auction service similar to eBay's (EBAY). "We will keep working to innovate and understand user needs," said Li. "I'm confident that this is the right strategy to keep us growing and well ahead of the competition."