Under the pact, China's Baidu will use Bing search to power English language queries on its various sites.
Baidu currently owns about 75% to 85% of the Chinese search market, according to various analysts' estimates. Microsoft, by contrast, is a miniscule player. But although it isn't likely to earn significant revenue from the deal, as Baidu will retain control of paid search listings and advertising, Microsoft and its Bing technology could get significant exposure to millions of Chinese Internet users as a result of the partnership.
Microsoft worked previously in China with business-to-business search provider Alibaba Group, but that deal expired earlier this year. Baidu's Bing-powered English service is expected to go live later this year. Baidu said its sites handle about 10 million English queries per day.
In partnering with Baidu, Microsoft likely had to agree to have its search results censored. Chinese authorities have been known to block queries related to topics, such as democracy and human rights, they deem politically sensitive.
Google pulled back its official search presence in China last year after a dispute with authorities over Web censorship. Still, it's estimated that Google accounts for as much as 20% of Chinese searches as many Internet users in the People's Republic continue to access Google through proxy servers and other means.
The deal with Baidu is the latest example of how Microsoft isn't so much hoping to beat Google head-to-head as it is looking to surround itself with partnerships that will help Bing increase its market share incrementally. In 2009, Microsoft struck an alliance with Yahoo that saw the portal effectively outsource search listings and search advertising on its pages to Bing. The deal gives Microsoft a cut of Yahoo's search-related revenue.
Microsoft officials did not immediately respond to a request for more details about the Baidu deal.
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