Trust in Baidu? No One Likes a Net Hog

Interesting reports out there saying a company called Hudong is seeking anti-trust action against Chinese search gorilla Baidu (Nasdaq: BIDU) and seeking 790 million yuan in damages. The damages figure is really beside the point. What’s interesting here is that Baidu, by virtue of its phenomenal success at cornering China’s online search market, has become a lightning rod for unhappy would-be competitors appealing to China’s increasingly assertive anti-trust regulators to intervene and create a more level playing field. Investors may have cheered Google’s (Nasdaq: GOOG) retreat from China a year ago, but the departure of the only serious competitor to Baidu has just provided more fuel for the anti-trust complainers. The growing potential for government intervention, coupled with Baidu’s sky-high stock valuation, are making this one look increasingly like a hot potato at least until the regulator takes a stand on this issue. Others that could also be at risk for similar reasons include Internet juggernaut Tencent (HKEx: 700), which is also the frequent target of complaints by many China web firms, Alibaba Group’s Taobao and potentially even well-connected giants like Lenovo (HKEx: 992).