Microsoft Bing partners with Alibaba's Taobao search engine

The partnership could help promote Microsoft's Bing search engine in China

Microsoft has found a new partner to promote it's Bing search engine technology in China by working with the country's largest online retailer to power web results for its new Etaosite.

Taobao, which is a part of e-commerce giant Alibaba Group, launched Etao as a public beta version, calling it a shopping search engine. But the site also offers a range of search categories, including general web results that are powered by Bing.

Both Microsoft and Taobao would not comment on exactly why the partnership took place. But a Microsoft spokeswoman said, "This is a small part of our long term strategy. We are focused on local innovation, local partnerships."

Microsoft already has a Chinese version of its Bing search engine, also still in its beta version. But it currently holds an extremely small share of the search engine market at less than one percent, according to Beijing-based research firm Analysys International. Baidu currently ranks as the most popular search engine in China at 70 percent, with Google a far second at 24 percent.

Microsoft has been working to steadily improve its Bing platform for China. On the advertising front, Chinese businesses can now place ads through the Bing search engine for English-speaking countries to reach potential customers overseas. For businesses wanting to market their products domestically, Microsoft has partnered with Baidu to sell ads on the Chinese version of its Bing search engine.

The company has also integrated a new dictionary feature, originally called Engkoo, into Bing, allowing users to look up words and find translations in Chinese Mandarin or English.

Bing faces a "slow march" to increase its market share in China, given that most users in the country rely on Baidu or Google for search, said Ben Cavender, an analyst with China Market Research Group. Bing's new partnership with Etao is a small development, but it may go far to raise more awareness of Microsoft's search engine among online shoppers coming for Taobao's services.

"It's a small step, but an important step," Cavender said.

But even though Etao is currently using Bing to power its general web searches, the site may choose deploy its own search engine technologies in the future, analysts say.

Alibaba Group, Taobao's parent company, has already worked to acquire search engine technology in the past. In August, the company agreed to buy a stake in a search engine operated by one of the country's major online portals, Inc.

Alibaba is also the owner of Yahoo China, which it acquired as part of deal in 2005 that gave Yahoo a 40 percent stake in the Chinese company. Alibaba took control of the site in order to gain access to the search engine technology, CEO David Wei said last month.

But since that deal was made, relations between Alibaba and Yahoo have become strained. Yahoo China has seen its market share in search plummet to less than 1 percent, even as Alibaba has made attempts to boost the popularity of the site. Yahoo has also stopped developing its search engine technology and now uses Microsoft's Bing to power its searches, a move that has left Alibaba dissatisfied with the partnership.

"Yahoo China, from a user and advertising standpoint, has done really nothing but shrink," said Mark Natkin, managing director of Beijing-based Marbridge Consulting. But rather than promote Etao through Yahoo China, Alibaba Group has instead gone to establish it as its own platform through Taobao.

"It seems to run a little counter to what would normally be intuitive. They have this search asset in Yahoo China and they are not choosing to use it to power this platform," he said."Maybe it's easier to not try and do something with a resource or a brand that you have some friction with. The user perception of Yahoo China is already diminished."

Etao is expected to be a competitor against Baidu and Google, largely in the area of online shopping searches, analysts say. But Taobao will have to spend more time and resources to develop its search engine technology before it threatens to take a sizeable market share, said Chen Shousong, an analyst with Analysys International.

Copyright © 2010 IDG Communications, Inc.

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