Technology November 13, 2007, 7:07AM EST

Baidu's Censored Answer to Wikipedia

The Chinese search engine's Baike online encyclopedia blocks politically sensitive entries; some say it condones plagiarism and copyright abuse

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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.

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