(Updates with U.S. trading in fourth paragraph.)
Sept. 2 (Bloomberg) -- Baidu Inc. said new features on its website may erode search-engine traffic, the main revenue source for China’s biggest Internet company by market value.
“Baidu relies on search traffic volume to make money,” Chief Executive Officer Robin Li said today. “The new homepage may have a negative impact on search traffic volume, but it is OK because it is good for users, and will in the long-term benefit Baidu.”
Li is moving Baidu away from a style that resembled U.S. rival Google Inc.’s search site by adding a section that promotes applications developed by external partners and links to other websites. The revamp comes as Baidu develops services such as online commerce and video to challenge rivals including Tencent Holdings Ltd., China’s biggest online-games company.
Baidu’s American depositary receipts fell 2.7 percent to $140.45 at 4 p.m. New York time in Nasdaq Stock Market trading, valuing the company at about $49 billion. The stock had gained 49 percent this year before today, after more than doubling in 2010, outperforming the Hong Kong-traded shares of Tencent, and Alibaba.com Ltd., the business-to-business unit of Alibaba Group, the country’s biggest e-commerce company.
Baidu has been diverging from Google’s strategy to make its service more suited to the Chinese market, Li said at a conference in Beijing today. The two companies’ paths diverged years ago, when Baidu started its Tieba information-sharing service, he said.
Li, ranked China’s richest man by Forbes magazine, didn’t comment on how the new website design may affect revenue.
Baidu accounted for 75.9 percent of China’s search-engine market by revenue in the second-quarter and 75.8 percent in the previous three months, according to research company Analysys International. Google’s share dropped to 18.9 percent from 19.2 percent, the researcher said.
Google has been losing ground in China’s search-engine market since January 2010, when the Mountain View, California- based company said it was no longer willing to comply with Chinese regulations to self-censor Web content. Two months later, the U.S. company shut its Google.cn service and redirected Chinese users to its site in Hong Kong.
--Mark Lee, Editors: Nicholas Wadhams, Dave McCombs
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