Baidu’s E-Commerce Dreams Shattered

In the latest business failure outside its core search business, Baidu (NASDAQ:BIDU) has called it quits on its e-commerce initiative, Lekutian, which was launched less than two years ago in partnership with Japanese e-commerce leader Rakuten.

Unable to compete in the hugely crowded Chinese e-commerce space, Rakuten has decided to shutter Lekutian. The e-commerce site was launched by Baidu and Rakuten in 2010, and its closure means Baidu could take a charge, perhaps in the millions of dollars, in its next quarter, ending in July.

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The series of failed businesses outside Baidu’s near-monopoly Chinese search business have raised questions about its ability to execute business plans in areas outside its core search competency.

However, an unlikely benefit has arisen from all this – Baidu can’t be accused of using its search muscle to stifle competition in the new business areas it sets eyes on. In fact, this is the situation in which Tencent, owner of instant messaging darling QQ, finds itself after being sued by software specialist Qihoo 360. Qihoo has alleged that Tencent used its monopoly in instant messaging to dominate areas such as online gaming.

Baidu’s non-search failures also render it answerable to anti-competition regulators, who have a jaundiced opinion of the company’s dominance in search.