China's First Peer Anti-monopoly Investigation: Hudong Against Baidu

BEIJING, Feb. 23, 2011 /PRNewswire-Asia/ -- The world's largest Chinese encyclopedia website, Hudong.com today announced it has successfully submitted an application to the State Administration for Industry and Commerce of the People's Republic of China on February 18, 2011. The claim requests for an anti-monopoly investigation against Baidu (Nasdaq: BIDU). Hudong.com proposed the following three requests in its application file:

1. It asks the Administration to register a case for the anti-monopoly investigation against Baidu based on laws it believes are being broken;
2. It asks the Administration to prohibit Baidu from the perceived abuse of using its dominant position in the market to block and degrade articles in the online encyclopedia Hudong.com, and to disorder without reason the normal search results; and
3. It asks the Administration to impose a fine of RMB790 million ($120.3 million) on Baidu as a result of the alleged wrongdoing.

Hudong.com, officially founded in 2005, is called "China's Wikipedia". The website now has more than 5 million articles that have been created by over 3 million users. Baidu launched its online encyclopedia product in 2006 after becoming China's top search engine. Hudong claims that as a result of its competition with Baidu, Baidu has negatively influenced search results related to articles posted on Hudong.com by utilizing its position as China's number 1 search engine. In China, a large majority of internet users access other websites via Baidu. Hudong.com, as a result of the alleged actions of Baidu, has seen its natural development heavily restricted.

In the fourth quarter of 2010, Baidu dominated the Chinese search engine market with a market share of 83.6 percent in terms of search requests, according to the latest data released by well-known research firm iResearch Consulting.

"We believe that Baidu has used its dominant position to bully and block competitors," claimed Pan Haidong, chairman and chief executive officer of Hudong.com.

Commenting on the application, Dasheng Xu, the lawyer representing Hudong.com, said, "Hudong firmly believes that the actions of Baidu are in violation of article 6 of the Anti-Monopoly Law of the People's Republic of China. In our opinion, Baidu is using its dominant position in China's search engine market to negatively impact search results related to its competitors, like Hudong.com.

"The application is of great significance in the history of anti-monopoly laws in the Chinese Internet market and will be China's first anti-monopoly investigation into peer competition," Xu concluded.

SOURCE Hudong.com