Some 637 Chinese e-marketing agencies indicated that they will file a class action lawsuit against major search engines like Baidu, Google, Yahoo, and others, claiming breach of contract, according to People's Daily Online.
The online Chinese new source also predicted that, if successful, the suit may force those search engines "out of business" in China. It is unclear if the writer of the article was referring to Google and company or the 637 marketing agencies.
Headed by deputy director of BookSir.com, Fu Dekun, the complaint alleges that the major search engines have "stepped in to snatch away clients directly," which violates their contractual obligation to act as marketing intermediaries.
According to the report, marketing agencies in China operate in a "profit sharing" arrangement and that 60 percent of their profits come from working as a go-between. But only 10 percent of the profits remain after costs of operation are deducted. If the search engines bypass the marketing agencies, those small and mid-sized agencies stand to pull in even less.
"Ninety-five percent of agencies are in the red," said Fu Dekun.
Together, Baidu and Google control nearly 90 percent of the Chinese search market.
Jason L. Miller is a staff writer for WebProNews covering technology and business.
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