Chinese Web Giants Throwdown: Baidu Takes a Shot at Shanda

by: Emerging Money

The bickering between Chinese web giants might have just gotten nasty, as Baidu (NASDAQ:BIDU) has planted a flag squarely in Shanda’s (NASDAQ:SNDA) home turf.

Baidu and Shanda have been arguing a nuisance-level copyright infringement case for months now. Shanda claims that Baidu pirated its property when it linked to sites that hosted bootleg manuals for Shanda’s online games. In all, the damages are trivial — maybe $85,000 — but the implications for Baidu’s core proposition as the search engine of choice in China could be profound.

After all, Google (NASDAQ:GOOG) would be in trouble if U.S. copyright holders all held it liable for every pirate on the web -- and that is exactly what is at stake here.

Baidu opened another front in the fight by teaming up with Japanese mobile carrier NTT DoCoMo (NYSE:DCM) to import games, comic books, cartoons and other content into China. The joint venture is ramping up with roughly $120 million in capital, and will diversify Baidu’s revenue stream beyond ad-supported search.

And more importantly, it just happens to challenge game developer Shanda right where it lives: The burgeoning Chinese mobile gaming space. Shanda is already in bed with social network sites such as Sina (SINA) and Tencent (OTCPK:TCEHY) — not to mention leading carrier China Mobile (NYSE:CHL) — to bring games to Chinese phones.

Competition here could take the spat between the companies all the way to “mutual threat” level.