Microsoft Partners with China’s Biggest Online Retailer, Taobao

Microsoft has teamed up with China’s largest online retailer, Taobao.com (whose parent company is Alibaba Group) to promote its Bing search engine technology in China, by powering web results for a 

new e-commerce website, Etao.com. Currently in public beta testing, etao.com returns search results for news, forums, answers, web, and shopping product image search, with Bing powering only the web search section.

 

Whilst Chinese advertisers can place ads through a Chinese version of Bing, and they will reach English speaking countries, Bing ads will not be appearing on etao.com. The revenue from web search ads will be shared between the partner companies, according to an article in the Wall St. Journal. Although, Microsoft has been steadily working to improve its Bing platform for China, it still holds an extremely small share of the search engine market at less than one percent, with China’s search giant Baidu ranking as the most popular search engine (70 %), and Google fetching up as many as 24 % of the market share. Since Bing has a beta version running in China, it lags far behind at less than 1% of search market share, Taobao handles 75% of e-commerce transactions in China (no wonder, it’s the biggest online retailer). Both Microsoft and Taobao expect to double the value of those transactions in 2010 up to 400 billion Yuan (about £38 billion).

Back in 2005, in order to gain access to the search engine technology Alibaba acquired Yahoo China, but since then this Yahoo-Alibaba partnership hasn’t grown into anything of value, especially, given the fact that Yahoo! stopped developing its search engine technology. Now having partnered with Microsoft, Alibaba Group seeks to establish an online shopping search engine as its own platform through Taobao. Analysts believe that if Taobao spends more time and resources to develop its search engine technology, it might be a competitor against Baidu and Google, largely in the area of online shopping searches.

Neither Microsoft, nor Taobao would comment on exactly why the partnership took place. “This is a small part of our long term strategy. We are focused on local innovation, local partnerships”, said a Microsoft spokeswoman.

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