A quick nod to glass-half-full types: this development might work in Google’s favor if lots of Sina users notice a decrease in search quality and draw attention to the issue, essentially giving Google free PR.  But that scenario’s something of a long shot.

Otherwise, this just represents the loss of an important partner in China, meaning Google’s revenues in the country may take a hit.

Also, it’s possible Google will become even more of an outcast in China as a result of this change.  Google’s been on a bit of a losing streak, after all, with partners abandoning it left and right after the big censorship brouhaha and the Chinese government (allegedly) blocking Gmail again.

At this rate, it’s hard not to question whether anyone will want to do business with Google in the future, and what sort of business it’ll be allowed to conduct.

Anyway, here’s a more complete look at Google’s performance in China.  Owen Fletcher, who’s based in Beijing, noted, “Google’s share of revenue in China’s online search market extended its slide in the last three months of 2010, falling to 19.6% from 21.6% in the third quarter and from a peak of 35.6% in the last three months of 2009, according to Beijing research firm Analysys International.  Baidu’s market share rose to 75.5% from 73% in the third quarter and compared with 58.4% in the last three months of 2009, according to Analysys.”

The size of the deal is stunning, of course, given the worldwide recession; a full 47 million Sina shares will change hands.  Also impressive is that Focus Media will be left standing when the transaction’s complete, and it’s when you look at the details of what was and wasn’t sold that things get interesting.

 Sina isn’t expanding at all in the realm of online advertising.  Instead, according to a press release, it’s gone after "all of the assets of Focus Media’s digital out-of-home advertising networks, including LCD display network, poster frame network and in-store network."  Focus Media will then retain its Internet advertising division and a few other things.

So is the billion-dollar deal an "everybody out" call for online advertisers in China – or the world?  Or is it just an exercise in diversification for a giant that already dominates its home market?

Charles Chao, Sina’s president and CEO, guided onlookers towards the most comforting alternative, stating, "The transaction is intended to combine the forces of the two of the most powerful new media advertising platforms in China to provide more effective and integrated marketing solutions to our customers.  We believe that this business combination will significantly extend our media reach and influence, reinforcing our position as a partner of choice in new-media advertising in China."

“Sina.com, China’s largest portal, has deployed the TeraScale E-Series family of switch/routers to increase the performance of its leading search engine and portal,” according to a press release put out by Force10 Networks.  The upshot: this “enables Sina to seamlessly scale its portal as its more than 100 million registered subscriber base expands.”

That sounds nice for Sina.  And as you may remember, Sina has ties to Google China.  So although the development is by no means a direct victory for Google, it’s still a win in a sort of friendly-onlooker way.  (It also works in an enemy-of-my-enemy sense – Baidu stands against both Sina and Google.)

Unfortunately for Sina (and perhaps for Google), its new system will not receive the lion’s share of traffic related to the 2008 Olympics.  Gu Wen of the China Daily reports that, after a protracted battle, “Olympic organizers . . . have confirmed Sohu’s marketing rights as an Olympic sponsor, such as its eligibility to use the Olympic logo, while promising crackdowns on ‘ambush marketing,’ which occurs when a company tries to establish or imply an association with the Games without paying any royalties.”

Well, you win some, you lose some.  Or as Google’s been forced to do in this market, you sometimes sit on the sidelines.

“Under the deal Sina will carry Google’s Chinese search service and advertising, and the companies will share the revenue generated,” reports Simon Burns for vnunet.com.  But don’t look for money to start pouring in immediately.  Actually, even in the future, just keep an eye out for a trickle.  “Sina does not expect to see significant revenue from the partnership before the fourth quarter, executives say.”

That doesn’t disappoint Charles Chao, Sina’s CEO and president.  “We need to go through a two to three month testing period for AdSense,” he stated.  “[T]hey’ll be testing different pages to see the effectiveness in entirely different locations . . . .  This is a starting point that’s more like a transitional point for AdSense.  The traffic ramp up for the web search will take some time.”

It’s good of Chao to be so patient; several months ago, Google CEO Eric Schmidt displayed a similar willingness to wait for results when discussing Google China and its leader, Kai-Fu Lee.  But sooner or later, somebody’s going to expect better things of Google’s Chinese arm.

Hat tip to SearchEngineWatch.

“Google, SINA Partner On Search”

Under the partnership, Google’s Web page search service will be embedded in SINA’s search box, enabling users to switch between online content and Web page search.

Advertisers on SINA will be able to take advantage of the sites large volume of traffic and Google’s advertising system. SINA hopes the relationship with Google will increase its influence among Chinese portal users, while Google aims to continue building its brand, products and services in China.

Google and SINA plan to expand their partnership into other content areas as well. Financial terms of the deal were not disclosed.

"SINA is the most influential portal in China and a household brand in China’s Internet industry," said Dr. Kai-Fu Lee, Vice President of Google and President of Google Greater China.

"Google’s mission is to organize the world’s information and make it universally accessible and useful. Google focuses on meeting local user needs in China and is committed to providing Chinese users with the best products and services."

“Wow.. lots of reactions to this post and I’m actually surprised at how much this has blown up,” he wrote. “The post above was merely an indication of surprise whereas people seem to think we’re feeling mortally wounded by it. We’ve moved on to a new UI (although we still use the pushpin icon for various things) so we were more bemused by what Sina was doing.”

This came in response to comments along the lines of “didn’t Microsoft do the same thing with Mac interface particularly the trashcan. I believe the MS answer was to consider it flattering to be copied.” The person who wrote that chose not to leave their name behind, in case you were wondering.

Wiseman explained that his post “was mainly intended to raise the issue of cross-border copyright infrigments [sic] and signal that it’s not acceptable. I wasn’t expecting much sympathy (the usual MS bashing / irony comments were expected), but at least some more discussion about ensuring that people signal that it’s not OK for people to lift graphics from your site because next time you may find it’s your product that has been leveraged’ for design in a different country.”

Tag:

Add to Del.icio.us | Digg | Yahoo! My Web | Furl

Bookmark WebProNews:

Doug is a staff writer for WebProNews. Visit WebProNews for the latest eBusiness news.

With its online ad business projected to grow 30% to 35% annually for the next three years, Sina is a “very attractive target” for Google, says Jane Hsieh of investment firm Clay Finlay…Google wants to gain a larger foothold in China, she says, and is “considering Sina as a buyout.”

Sina offers services such as news, entertainment, and other content targeting people of Chinese descent.

DiggThis

Technorati:

Andy Beal is an internet marketing consultant and considered one of the world’s most respected and interactive search engine marketing experts. Andy has worked with many Fortune 1000 companies such as Motorola, CitiFinancial, Lowes, Alaska Air, DeWALT, NBC and Experian.

You can read his internet marketing blog at Marketing Pilgrim and reach him at andy.beal@gmail.com.

In accordance with U.S. securities laws, Shanda has filed with the U.S. Securities and Exchange Commission (the SEC) a statement of beneficial ownership on Schedule 13D reporting the transaction and disclosing certain other matters required to be reported on the Schedule 13D.

According to a MarketWatch article,

“In after hours trading, Sina shares rose 6.4 percent to $27.24. The shares closed the regular session up 10 percent to $25.60 ahead of the filing with the Securities and Exchange Commission.”

“Shares of Shanda Interactive fell 1 percent to $29.68 in after-hours trading. The shares closed the regular session at $30.01, up 1.6 percent.”

WebProNews | Breaking eBusiness News
Your source for investigative ebusiness reporting and breaking news.

Taobao.com, according to Xinhuanet.com, said in an announcement that, “starting from April 9, many of its users found Website access slower than before. In the following days, a lot of pages could not be opened.”

Taobao investigated the problem and found that their website had been visited numerous times from a fixed IP address. The investigation also found a spyware program designed to steal customer and merchandise information running.

The trace of the IP address discovered that the domain name was w5.personals.cnb.yahoo.com, an address that belonging to Yahoo China. Taobao said that they had sent a letter from their lawyers to Yahoo Holdings Ltd Beijing office Monday, but has not received a reply as of yet.

Currently, Taobao has around 600,000 registered members.

Zhang Xing, a spokeswoman with the Yahoo-Sina joint venture, said the company has no comment available at this time.

WebProNews | Breaking eBusiness News
Your source for investigative ebusiness reporting and breaking news.