The Big Three in China’s Internet Market

Tencent, Baidu and Alibaba are the big three in China’s Internet market, according to the market share each company owns.

Tencent is China’s largest instant messaging provider, occupying 76 percent of market share. Baidu won Google to capture 72 percent in the search market. The Chinese search engine earned more than $1 billion in revenue last year. Alibaba Holdings, the e-commerce behemoth, held more than 50 percent in the e-commerce field. Alibaba’s Taobao.com, an online retail site, currently has more than 370 million users.

A report by China Lab labeled the big three as holding “stable oligopoly” positions.

“The Internet market in China has entered the monopolistic competition stage,” Fang Xingdong, the board chairman of China Lab told People Daily.

Despite leading in their respective domains, Tencent and Baidu are aggressively expanding their business portfolio. Tencent, for example, partnered with U.S based Groupon to establish Groupon China. However, the partnership started off badly and may even collapse if both parties fail to reach an agreement on strategic directions. Last year, Tencent launched Pengyou.com, a social networking site to keep itself in pace with Renren. Baidu was also reported to be expanding into the social space.

Fang said that it is essential for the Chinese government to formulate rules to prevent large corporations from abusing their dominant position. If such rules exist, I wonder how they would shape the future of China’s Internet market.