Sohu IT, 8/03/11
According to a source within Baidu (Nasdaq: BIDU), revenue from the Chinese internet company's Hao123 directory site is growing rapidly, and is estimated to reach RMB 1.5 bln this year. In addition, because the operating costs for Hao123 are low, the site is expected to account for over 20% of Baidu's total profits this year.
Baidu's advertising network Baidu Union ended its cooperative relationships and revenue sharing with a large number of directory sites in July 2010. During the same period, Chinese online security software developer Qihoo 360 (NYSE: QIHU) blocked a number of directory sites from automatically changing user's default browser start page or installing plugins when visited.
Numerous small and medium-sized directory site owners claim they have been negatively impacted by Baidu and Qihoo 360's moves, with many sites losing 50% or more revenue and a significant number shutting down.
Baidu has also lent additional support to Hao123, listing it on its homepage and adding it to a list of most frequently visited sites.
Editor's Note: For more information on this topic, please see "Directory Sites Confirm End of Baidu Union Partnership," MD 7/14/10 issue.