Google starts advertising with China Telecom

Google Inc. (NASDAQ: GOOG) continues its partnership onslaught, as the web search giant has inked a deal with China Telecom (ADS) (NYSE: CHA). The Chinese firm has given Google the right to offer advertising on its web of over 400 Internet sites, according to a report released this morning. Baidu.com Inc. (ADS) (NYSE: BIDU), China's leading search engine with 58% market share, may lose some sleep tonight as a result.

To Google, this is a huge deal. The Internet company has been trying feverishly to compete more directly with Baidu.com. Holding only a 17% market share for web search, Google has thus far been unable to crack Baidu's lead in the Chinese web search market. But this new partnership with China Telecom may change that in a big way very soon.

Google's partnership with China Telecom spans national and local portals operated by the Chinese firm, which is the country's biggest provider of fixed-line telephone and Internet services. In other words, Google just upped the ante big time in its effort to unseat Baidu.com as the country's most popular web search engine. How is this, you say? Expect Google to use this partnership to move beyond advertising and more into providing web search services for China Telecom customers in the future.