China Mobile, Xinhua form search company Guoso.cn and Guoso.com.cn; Eye Baidu, Google etc.

Xinhua reported: Xinhua News Agency Thursday signed a framework agreement with China Mobile Communications Corp., the world’s biggest mobile operator by subscribers, to set up a new internet search engine company.The company is called Search Engine New Media International Communications Co. According to Zhou Xisheng, vice president of Xinhua, the venture is part of China’s “broader efforts to safeguard its information security and push forward the robust, healthy and orderly development of China’s new media industry.

”The new state-endorsed search engine is an interesting twist in China’s online development. The showdown between China and Google over privacy is well publicized. Given the Google flap—the threat to leave, the clunky diplomacy, the workaround, the content licensing and detente—it was widely assumed that Baidu, the No. 1 search player in China, was the home team. Now that China Mobile and the state-run news agency have formed a search company Baidu’s status is in question.

China Mobile has 554 million subscribers and can lend some serious distribution to the new search engine player.

Also reported in http://business.globaltimes.cn/industries/2010-08/564575.html 

Xinhua purchases new domain name to compete for search engine market

The Xinhua News Agency has purchased the domain names Guoso.cn and Guoso.com.cn with the intent of launching its own search engine to enter the search engine market by the end of this year, according to media reports Tuesday, citing sources close to the deal.

Xinhua has long been striving for the search business. As early as 2008, it launched the search.news.cn, but did not have a very shining performance. Last week, it signed an agreement with China Mobile (CM), the world's largest mobile phone operator, to set up a mobile search engine to compete for the market share in the internet market.

Xinhua purchased the two domain names after its counterpart, People's Daily launched the search engine goso.cn in June this year. Media reports said that State-owned companies have stepped up efforts to enter various fields of the internet. Li Zhi, analyst from Analysys International, said that the strategic significance of State-owned firms is larger than the business prospects.

He also said that compared with the internet search market, the mobile search market can provide new comers with more opportunities since it started not long ago and has not been monopolized by a certain company.

Also, as Stated-owned firms power into the search engine market, the country's search engine giant Baidu will face more challenges. Sohu.com Inc., China's second-largest internet portal and Alibaba Group, China's biggest e-commerce firm, announced to cooperate on the building of China's second largest search engine, which also poses challenges to Baidu.