Google faces tougher competition in China as Baidu gets news licence

Baidu.com Inc. (NASDAQ:BIDU), often dubbed China's Google, won approval of the China's State Council Information Office (SCIO) to become a news portal. That means Baidu would evolve from currently providing news search results to providing its own written, reported content.

In China's environment of state regulated news, this is a clear advantage. Right now, content is still developing and everybody agrees that with increasing content there will be more room for higher revenue from ad placements.

According to Reuters, Baidu is already preparing a news department and changed the logo and name of its "Information" channel to "News" channel early last week. With the Beijing Olympics coming in 2008, no doubt Baidu will see its news channel picking up and with it its revenue of course.

While its true that China is relaxing its controls on its media and journalists in the run-up to the 2008 Beijing Olympics, it is still doubtful the government would grant foreign companies such licenses. This is definitely going to affect Google Inc. (NASDAQ:GOOG) and Yahoo! Inc.'s (NASDAQ:YHOO) attempts to increase market share in China and give Baidu a clear advantage.

For now, it's hard to see Baidu being stopped. Baidu is the leading Internet search provider in China with revenues and profits surging at incredible growth rates. As China's economy itself is growing at a faster rate than that of the U.S., Baidu only stands to gain, especially when news and search are the two most popular Internet hobbies in the second largest Internet country in the world.

And Google? Google's got its work cut out for it in China.