<http://schema.org/articleBody>
"The dust is settling on the latest round of competition in the Chinese Internet space, and four superpowers remain strong: Alibaba, Baidu, Tencent and Sina. While there are plenty of other players in the market, these four have distinguished themselves in each of their target markets, garnering hundreds of millions of users and near-monopoly positions along the way.\r\n\r\nWith their respective dominance, they\u2019re each looking to leverage their user base and existing technology to broaden into new areas in order to sustain the growth levels from their rises to power. As each of the four muscle their way into opportunities like mobile, the cloud, and international expansion, the Chinese Internet scene has taken on a decidely \u201CGame of Thrones\u201D air about it, albeit with less incest and murder.\r\n\r\nBefore we dive into the power struggles and uneasy alliances that these companies have been engaging in, let\u2019s take a quick look at each of the four by themselves:\r\nAlibaba\r\nCore strength: Ecommerce\r\nWestern equivalent: Ebay/Amazon\r\nQ2 2012 revenue: N/A [Alibaba Group is currently in the midst of preparing for an IPO. An SEC form from Yahoo, which has a stake in the company, revealed Q1 2012 revenue of $806 million]\r\nHeadquarters: Hangzhou\r\n\r\nAlibaba Group runs a business-to-business ecommerce site, but Taobao, its consumer-to-consumer site, is the star of the show these days. Chinese consumers initially were resistant to buying online, but they have since taken to it with gusto, largely thanks to Alibaba\u2019s work. Similar to Paypal in the US, Alipay, the online payment division of the group, has built itself up as the de facto e-payment standard in China.\r\n\r\nThe company was founded in 1999 by the charismatic Jack Ma, a former English teacher who is believed to have built the first Chinese Internet company before he went on to start Alibaba.\r\nBaidu\r\nCore strength: Search\r\nWestern equivalent: Google\r\nQ2 2012 revenue: $859 million\r\nHeadquarters: Beijing\r\n\r\nBaidu would be a formidable force with just its nearly 80 percent share of the Chinese search market, but it has reinforced its dominant position with a set of community sites. Baidu Tieba (PostBar in English) is a massive online forum based around keywords; Baike, or Baidu Encyclopedia, has grown to contain more posts than the Chinese version of Wikipedia; and question and answer service Baidu Knows has also caught on with local Internet users.\r\n\r\nCEO Robin Li established Baidu in 2000 after moving back from (and being inspired by) Silicon Valley.\r\nTencent\r\nCore strengths: Social, gaming\r\nWestern equivalent: Facebook\r\nQ2 2012 revenue: $1.7 billion\r\nHeadquarters: Shenzhen\r\n\r\nThe Chinese Internet population has been obsessed with QQ, Tencent\u2019s instant messaging platform, for years now. Tencent put the service, which has over 90 percent penetration rate among Internet users in the country, to use as the foundation for a highly-profitable gaming division. The company also operates a popular Qzone social network and its Weixin (known as WeChat internationally) group messaging app is seeing rapid adoption, recently topping 200 million users.\r\n\r\nPony Ma, Tencent\u2019s founder, remains fairly enigmatic, as he\u2019s not known for making public media appearances.\r\nSina\r\nCore strengths: Web portal, social\r\nWestern equivalent: Twitter/Yahoo\r\nQ2 2012 revenue: $132 million\r\nHeadquarters: Shanghai\r\n\r\nSina is the smallest of the four, at least in terms of revenue, but its Sina Weibo micro-blogging service is having a significant impact on Chinese culture and society. The company got its start with a Web portal, which has risen to become the largest in the country.\r\n\r\nFounded in 1999 via a merger, Sina is currently helmed by Charles Chao.\r\nStorm clouds over China\r\nThere\u2019s a storm brewing in China, and you can see it in the clouds. Cloud computing, that is. Tencent and Baidu are the main players because of their pre-existing size and the infrastructure that they\u2019ve already built up for the massive scale of their own services. Spokesmen from both companies have declared their respective clouds to be the largest in China, though it wasn\u2019t clear what metric they were using (users, computing power, etc.).\r\n\r\nAlibaba is also looking to the cloud with is Aliyun (\u4E91, pronounced yun, means cloud in Chinese) mobile operating system.\r\n\r\nBaidu\u2019s Robin Li declared earlier this month at Baidu World, its annual developer conference, that China has entered the age of the cloud. The company is investing $1.6 billion in a cloud computing center in the north of China.\r\n\r\nLei Chen, Tencent\u2019s general manager for cloud computing, Open Platform and social advertising, acknowledged that competition in the Chinese cloud space is heating up, but he viewed it as a positive thing.\r\n\r\n\u201CThere's competition among the cloud players, but I think competition is a good thing, that it pushes everybody to provide higher quality services to our customers,\u201D Chen said in an interview with TNW at a software developer conference in Beijing.\r\n\r\nTo that end, Tencent recently revamped its Weiyun (literally micro-cloud) service to make sharing to its social networking services easier.\r\n\r\nHowever, Baidu\u2019s rhetoric wasn\u2019t quite as congenial during Baidu World, its own annual developer conference. Li called developers to arms during a keynote speech by outlining the \u201Cseven weapons\u201D that it is offering them to help gain users. The (free) weapons include a mobile test center, the Baidu app engine, location-based services, a ScreenX tool for multi-screen applications, personal cloud storage, a site app resource for turning websites into Web and mobile apps, and its new browser engine.\r\n\r\n\r\n\r\nPromotional material detailing the tools depicted each of them as traditional weaponry with technical twists, such as a rack of servers shooting a spear from its cabling. The images call to mind the Three Kingdoms era of Chinese history when three separate states fought for control of China. However, in this case, it\u2019s a modern war of platforms, with the developers armed as foot soldiers to apparently attack rival developers from other cloud-based ecosystems. The user is, presumably, either the captive or the prize.\r\nThe Android-meda Strain\r\nThe growing importance of cloud computing is invariably tied to the future of the mobile Internet. Baidu\u2019s Li said so himself earlier this month at Baidu World:\r\n\u201CThe cloud is very important to support the mobile internet. This is the focus for the next wave of innovation.\u201D\r\nWhen it comes to the mobile space in China, Google\u2019s Android is mopping up its competitors with as much as 80 percent market share, according to some estimates. However, domestic companies have brought instability to the platform by repeatedly forking the OS, often to Google\u2019s displeasure.\r\n\r\nThe fragmentation issue flared up in China last week when Acer canceled a joint smartphone launch with Alibaba at the last minute after Google put pressure on Acer. A subsequent statement from Google explained that Acer\u2019s membership in the Open Handset Alliance (OHA), a group of companies committed to maintaining purity in the Android platform, precluded it from shipping \u201Cnon-compatible Android devices\u201D like the Aliyun-powered CloudMobile 800 smartphone they had developed.\r\n\r\nAndroid mastermind Andy Rubin elaborated on the decision via his Google+ account, noting that Aliyun \u201Cincorporates the Android runtime and was apparently derived from Android.\u201D Alibaba VP of International Affairs John Spelich maintains that Aliyun \u201Cis not part of the Android ecosystem.\u201D\r\n\r\n\u201CIt is ironic that a company that talks freely about openness is espousing a closed ecosystem...Will someone please ask Google to define Android?\u201D he said in a statement.\r\n\r\nThe back-and-forth continued with Rubin claiming that Aliyun\u2019s alleged use of the Android runtime, framework and tools mean \u201Cthere\u2019s really no disputing that Aliyun is based on the Android platform.\u201D He also accused Alibaba of stocking \u201Cpirated Google apps\u201D in its app store.\r\n\r\nRubin also pointed to recent comments from an Alibaba executive that demonstrated the company\u2019s goal to surpass Android in China by providing a better user experience.\r\n\r\n[caption id=&amp;quot;attachment_465517&amp;quot; align=&amp;quot;aligncenter&amp;quot; width=&amp;quot;520&amp;quot;] Does Aliyun count as Android?[/caption]\r\n\r\nThese recent developments are particularly noteworthy because they represent a new effort on Google\u2019s part to enforce the terms of the OHA. The incident is still fresh, but how this plays out in coming weeks could set a precedent for Chinese Internet companies looking to stand on the shoulders of the Android giant. If tempers flare, this could escalate to an \u201Cus versus them\u201D dispute that might see other Chinese and western companies involved as well.\r\n\r\nOf course, not all Chinese companies are at odds with Google over Android. For instance, Baidu Cloud is compatible with Android and cooperates with OHA members. Baidu, a direct competitor to Google, does not consider the product to be an operating system, instead marketing it as a platform that sits atop Android.\r\nSocial motion\r\nGoing social is a trend in the worldwide Internet market, and it\u2019s caused plenty of friction in China lately. The past couple years have seen a high-stakes race between local competitors in the microblog market. Sina and Tencent emerged as the two leaders, with Sohu and Netease as the underdogs. Sina boasted 368 million registered accounts last quarter.\r\n\r\nBaidu tried its hand at microblogging, but eventually gave up in 2011. It\u2019s worth noting that Baidu tried to launch its service with an unpopular real-name system, something that the government would go on to mandate for surviving services earlier this year.\r\n\r\nDuring an earnings call last month, Sohu also admitted defeat, acknowledging that it had lost the \u201Cbattle of the micro-blog\u201D over the past two years. CEO Charles Zhang did say that he\u2019s optimistic his company can make a comeback, but it\u2019s hard to tell whether he said that just to keep from being eaten alive by investors.\r\n\r\nBaidu is building social components into many of its products, but it is also not above partnering up with others who have established themselves in the sector. In July, it announced an agreement with Sina that will see the Weibo app pre-installed on Baidu Cloud and bring Baidu search to Sina\u2019s mobile portal. Renren, a Chinese social network that, like Facebook, got its start catering to students, has also teamed up with Baidu.\r\nQihoo: China\u2019s competitive catalyst\r\nWhile the big four have been maneuvering around each other, there\u2019s one scrappy upstart that has been a thorn in the side for these giants. Qihoo 360 has developed a reputation in the Chinese Internet industry for picking fights with others.\r\n\r\nIn 2010, Tencent and Qihoo got into a bitter feud that quickly escalated out of control. Qihoo\u2019s anti-virus software began blocking Tencent\u2019s QQ messenger on allegations that it was spying on users. The move was most likely an effort to keep QQ\u2019s own security software from competing with Qihoo. Tencent fought back by blocking logins from computers with Qihoo\u2019s software installed. The spat went on for a couple months before the Chinese Ministry of Industry and Information Technology stepped in and ordered a reconciliation in late November of that year. Sufficiently chastised, Tencent issued an apologetic statement, excerpted below:\r\n\u201CWe extend our sincere apologies to all our affected users! To the\u00A0Ministry of Industry and Information Technology and other government departments, we humbly accept your reprimand and will earnestly implement the relevant requirements in accordance with the follow-up. In this process, through all our comments and criticisms, we will carefully listen and learn.\u201D (machine translation)\r\nEarlier this month, Qihoo CEO Zhou Hongyi reiterated the relucant truce that his company had reached with Tencent by publicly vowing at a goverment-backed Internet conference to never enter the instant messaging sector. The issue isn\u2019t fully resolved, however, as hearings for a lawsuit between the two began on September 18, with Tencent seeking RMB 125 million in damages.\r\n\r\nTencent\u2019s Lei Chen says the 2010 incident actually served as a catalyst that motivated the company to accelerate a move toward its Open Platform application ecosystem.\r\n\r\n\u201CThe company recognized it as an opportunity to push along on the direction of openness faster...so we started to build all the infrastructure and all the tools necessary for us to open up since December 2010,\u201D he said.\r\n\r\nOpen Platform was slowly made available to partners throughout early 2011 before going official in June. The platform has grown quickly to encompass more than 500,000 registered developers\u00A0and 200,000 applications. By way of reference, Baidu has attracted roughly 60,000 developers to its platform.\r\n\r\nTensions between Qihoo and Tencent may have cooled some, but Qihoo is now stirring up trouble with its recent entrance into the search business. The company\u2019s search engine made a splash when it went live last month, largely due to referral traffic from Qihoo\u2019s portal and browser products. However, some observers were quick to point out suspicious similarities between the results of the two search engines. Baidu then moved to block some of Qihoo\u2019s inbound links, and Qihoo responded by removing links to Baidu from its web portal and other services.\r\n\r\nIt\u2019s too early to tell whether Qihoo will have the same catalytic effect on Baidu as it did on Tencent, but several industry players that I spoke to seemed optimistic. Some have argued that Baidu could use a new challenger to its near-monopoly on search in order to spur competition and innovation.\r\nEyes abroad\r\nCompared to other countries around the world, China is a largely homogeneous market. Each of the country\u2019s four Internet superpowers is set up for continued growth as more of the population comes online, but they all have ambitions that extend beyond China\u2019s borders.\r\n\r\nThe international commerce side of the Alibaba Group\u2019s main site has already given it opportunities overseas, and a recent restructuring of the company was, in part, designed to better capitalize on the English-language division. Meanwhile, it has begun taking baby steps abroad with its Taobao site, launching first in Hong Kong and Taiwan.\r\n\r\nAt the least, Alibaba is ready to compete on the international stage on pure numbers, as it expects to surpass Amazon and eBay in transactions this year.\r\n\r\nBaidu is actively building up its foreign language capabilities in hopes of tackling search and social information services in foreign markets. A new research lab in Singapore will focus on Southeast Asian languages, as well as Arabic and Portuguese. The company has launched its Tieba forums in Vietnam, albeit to some opposition. It has also powered up its Hao123 link-list directory site in Brazil.\r\n\r\nTencent has seen success with its products in areas with large Chinese diaspora populations, such as Southeast Asia. It has begun putting feelers out for a push into the US, and early uptake of WeChat in America could act as a vanguard.\r\n\r\nThough the company's Open Platform hasn't yet been fully marketed overseas, it has attracted foreign developers, including Zynga (Cityville), EA (Sim Social) and Popcap. In the future, Tencent could make a push to bring Open Platform ecosystem to other countries, but it will be following the lead of its social services.\r\n\r\n\u201COpen Platform is going to go wherever [Tencent's] social networks go,\u201D Chen said.\r\n\r\nSina has already branched out its new portal with an English-language US version, but it has yet to make a sizable impact. Its Weibo service has also remained largely a Chinese affair. During the recent London Olympics opening ceremony, approximately 96 percent of related tweets came out of China.\r\n\r\nConsidering how dramatic competition already is in the Chinese Internet space, the eventual emergence of these four superpowers as competition for their western counterparts should prove even more exciting. So far, Chinese companies have had it easy, since foreign rivals like Facebook, Google and Youtube, Twitter and others have been absent from the Chinese market in recent years, but their \u201CGame of Thrones\u201D-style maneuvers could turn into a full-on \u201CClash of the Titans\u201D when they begin competing overseas.\r\n\r\nFurther reading: The Startup Guide to China\r\n\r\nImages via: Flickr / scoobyfoo, Bloomberg,\u00A0TNW, Flickr / faykwong, MomoBKK,\u00A0HBSTR, 21CBH"^^<http://www.w3.org/2001/XMLSchema#string>
<http://thenextweb.com/asia/2012/09/23/the-politics-power-struggles-chinese-internet-superpowers/?fromcat=all>