Alibaba vs Baidu: Can e-commerce trump search?

China’s largest e-commerce company Alibaba Group appears to be aiming at Baidu.

Alibaba held its annual conference Alifest in September to hand out its Top 10 Global Netrepreneur awards and an hour-long speech by CEO Jack Ma revolved around two words: Bartz and Baidu.

The first one was an obvious one given that Yahoo fired Carol Bartz—an partner and sometimes adversary of Ma. “A few days ago, Yahoo’s CEO was fired, but I have nothing to do with it,” quipped Ma, who refrained from more comment. In China, there’s a lot of speculation that Ma played a role in Bartz’s firing. Suspicions arose after Ma was questioned about his relationship with Bartz at the Wall Street Journal’s D9 conference.

With Bartz talk out of the way, Ma opened fire on Alibaba. Ma’s comments were bold:

“In the beginning of this year, I was asked why Alibaba started its own search engine service. My answer is that we want to cause sleepless nights for Baidu. If Baidu could fall asleep, then the Chinese netizens would be forced to stay awake.”

Ma was referring to the launch of Alibaba’s search engine Etao.com on June 16. The vertical search engine provides online consumers with price-comparison service for numerous items from Taobao.com (C2C and B2C), Taobao mall, and its other online shops (B2C platforms). “What Alibaba is going to do is to challenge the flagship of the industry and trigger benign competition,” said Ma.

Baidu is the largest Chinese search engine, accounting for nearly 80 percent of the search market in China. Meanwhile, Alibaba is China’s biggest e-commerce company, and its subsidiary Taobao.com accounts for 90% of b2c e-commerce market share in China. Competition, however, isn’t the only goal. Alibaba was driven into search market to meet the demand of expanding businesses.

“Online shopping is developing rapidly, many traditional companies and retailers have been stepping into e-commerce. Consumers need a platform to obtain product information, and Taobao has accumulated some experience in this area. So we split Etao from Taobao to do vertical e-commerce search,” Wu Hao, an Etao spokesman.

Hao also said Alibaba will not deviate from its course as an e-commerce company. Etao search will only focus on e-commerce-related businesses. Etao will focus on e-commerce search, a business Alibaba’s report says accounts for nearly 40% of Baidu’s overall search service. And that explains Ma’s “sleepless nights” comments about Baidu.

The two parties have been battling for years:

In 2008, Taobao declared a war against Baidu by shielding its spiders and crawlers when Baidu ’s e-commerce platform “Youa” was about to go online.China Internet observer Hong Bo said Taobao’s move was a necessary step, because Baidu would ultimately favor its own e-commerce service.On March 31, the Taobao-Baidu war ended. Baidu said it would shut down Youa.

Today, it appears that Baidu is backing off. Ma, however, has no plans to stand down.

The battle between Alibaba and Baidu projects a vivid picture of the fierce competition in China’s internet industry.