China Telecom to use Microsoft's search service
(Bloomberg News)
Updated: 2006-09-20 10:34

Shanghai - Microsoft will provide China Telecom, the nation's biggest Internet service provider, with a Web search service to try to raise the carrier's share of the Chinese Web market, the companies said Tuesday.

Microsoft will provide its Live Search service to China Telecom's 25 million broadband customers and more than 80 million Internet users, the two companies said at a briefing in Beijing. China Telecom will use Microsoft technology to expand the voice search service it currently provides customers through its Best Tone business.

The agreement will allow Microsoft to tap into "China Telecom's strong broadband subscription base," said Jenny Szeto, an analyst at Daiwa Institute of Research. Szeto has an "outperform" rating on China Telecom's stock.

Microsoft is working with China Telecom to raise its share of the Internet market in China, whose users are expected to double in five years, according to the market researcher IResearch. The world's biggest software maker has invested hundreds of millions of dollars on its search engine to lure customers away from Google. Microsoft trails Baidu.com, Google and Yahoo! in China.

Microsoft's Windows Live technology will be used to power China Telecom's 114 Web search network, the companies said.

"The implementation of the 114-based Internet service will enable voice, Internet, IPTV and mobile searches," said Yang Keke, general manager of China Telecom's Internet unit. "Through this cooperation, China Telecom will further build its expertise in the delivery of popular Internet search services."

Baidu, based in Beijing, had a 50.3 percent share of the Chinese Internet search market in the second quarter of this year, up from 43.9 percent in the first, according to the researcher Analysys International. Google, owner of the world's most-used search site, had a 16.2 percent share, up from 13.2 percent and Yahoo had 15.7 percent, down from 21.3 percent, Analysys said.

Microsoft was included in the "others" category, which had a combined 3.7 percent share, according to Analysys.

"The agreement significantly extends the reach of Live Search and will open up new opportunities for Microsoft's online advertising customers in China," said Luo Chuan, managing director of Microsoft's Windows Live unit.