While for more than two decades, Google (GOOG) has held the top spot in the online search industry without facing a serious threat to its supremacy from any of its competitors there is one frontier it is yet to conquer- China. The Asian giant has banned access to many websites like Google, Facebook depriving them a large population of young and tech-savvy users, leaving the companies to look for alternative routes to capitalize on the market. Google announced that it participated in a $120 million investment round in Chinese live-stream mobile game platform Chushou. That is the company's second investment in the country in recent times after it took a stake in artificial intelligence company Mobvoi in 2015.

Google has barely had any stiff competition in its quest for dominance of the search engine market across the globe. When it launched its signature search engine in 1998, complete with its trademark bare-bone design and easy-to-use interface, it rapidly overtook AltaVista, Lycos and Yahoo (YHOO) as the search engine of choice for most Web users. Google's initial three competitors quickly faded to the background. 

While several challengers have emerged between 1998 and 2015, none have been strong enough to muscle their way into the foreground. Even the most promising challenger, Bing, a Microsoft (MSFT) creation launched in 2009, has failed as of yet even to register on Google's radar. While Bing's ad revenue market share has grown throughout the 2010s, as of 2016, it remains at only 8%. In comparison, Google commands over 75.8% of the market. Some industry analysts openly ruminate on whether a search engine will ever offer a serious threat to Google's dominance.

Baidu's Dominance in China

As of 2017, Baidu (BIDU) has quietly accumulated 76% market share in the country, capitalizing largely on China's policy of blocking most of its billion-plus residents from Google. Headquartered in Beijing, Baidu launched at the turn of the millennium on Jan. 1, 2000. The majority of its end users, as well as its advertisers, are located in China. As China's population continues to grow, and its number of Web users increases at an even faster rate, Baidu is well-positioned to lead that market in daily users and, more importantly, in search ad revenues. As of 2015, China already accounts for over 32% of the world's expenditures on search engine advertising; the United States leads the way at 56%. Of the two countries, China has much more room for growth; only 46% of its residents are online as of 2015, compared with 86% for the United States. Even with China's gargantuan population, along with its continued growth and Internet proliferation, Baidu faces major hurdles if it wants to compete seriously with Google.

Google's Wide Moat

First, Google dominates not only in the United States, the leader in Internet use and ad share spending as of 2016, but also in virtually every other market where the search engine is not forcibly banned by a government body. China makes up over one-sixth of the world's population, but that leaves over 80% of the world living someplace else; most of those people reside in nations that are free to use Google. Additionally, while China's percentage of Internet users is growing even faster than its population, there are many other developing countries where technology is proliferating even faster, and restrictions on Google and other American sites are nonexistent in many of these places. Few Web users in the world thus far have shown a preference for Baidu over Google when they are free to choose the latter.

Although everyday Chinese citizens face great difficulty conducting searches via Google, which forces them instead to use Baidu, many Chinese companies still favor Google's AdWords program over Tuiguang, Baidu's counterpart. Increased business globalization has often made it more profitable for companies in places like China to target prospects in more lucrative parts of the world, such as Western Europe and North America, as opposed to their neighbors in Asia.

The Bottom Line

One of the biggest reasons for Google's enduring success is that the company recruits the brightest minds from around the world to keep the company's vision moving forward. Google is the company where more graduates of top-tier universities, such as Stanford, MIT and the Ivies, want to work than any other. As long as Google maintains a leadership team composed of such extraordinary visionaries, it stands to reason that the company can continue to fend off challenges, even from the most eager and capable of competitors. Whether this ploy of making investments in China works to its benefit remains to be seen.

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