China OK's Baidu online news portal

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Chinese Internet search leader Baidu won approval to become an online news portal, government and industry sources said Tuesday, heating up a rivalry in the world's second-largest Web market.

China's State Council Information Office (SCIO), granted Baidu an Internet news content service license last week, a government source said, allowing Baidu.com--often referred to as "China's Google"--to do its own reporting rather than simply show news search results at present.

This will give Baidu a clear edge in terms of content over competitors who lack the permit, industry analysts said.

"This is definitely competition for Google," said Doug Crets, a Hong Kong-based researcher at Media Partners Asia.

"In most of these online sites, we're going to see an increasing amount of content, and content is going to drive revenue, or consumership of those sites," he added.

The SCIO is the cabinet spokesman's office, which is responsible for the government news release and jointly regulates Internet content with the culture and information ministries.

Baidu had already started preparing its news department and had been ready to hire news-related staff, said the government source who is familiar with the situation. The company also changed the logo and name of its "Information" channel to "News" channel in Chinese characters on baidu.com early last week.

An industry source close to the Chinese company confirmed Baidu obtained the license but declined to elaborate. A Baidu spokesperson declined to comment.

China is relaxing its controls on its media and journalists in the run-up to the 2008 Beijing Olympics, but it still routinely censors news it deems politically sensitive for fear that it could incite social unrest.

China's largest Internet portal, Sina.com, obtained a news service permit a few years ago and carries its own reports. Still, Baidu is the first online search engine in China to win such a license.

"A news license is a rare resource to Internet companies in China. So far only very few Web sites are allowed to report news legally in the country," said the government source.

"Obviously, applying for the license also shows that Baidu has ambitions as a content service provider rather than merely being a search tool," said the source, adding that Baidu had won the "news war" against its chief rival, Google, in China, by securing the news service license.

News and search are the two most popular Internet hobbies among over 120 million Chinese Web users, according to a government research report.

Industry watchers say Baidu's news ambition can help it sell more online advertising as more users are expected to see Baidu as a portal similar to Sina.com.

Google, the world's top search engine, drew criticism a year ago for bowing to Chinese government pressure to block politically sensitive terms on its new Chinese site, in return for access to the world's No. 2 Internet market.

Homegrown players such as Sohu.com, which received a news distribution license in 2000, Baidu, and China sites operated by Yahoo and Microsoft all routinely block searches on politically sensitive terms such as the Falun Gong movement and Taiwan independence.

From January 1, China will temporarily lift most restrictions on where foreign reporters may go in China and whom they can talk to in the run-up to the 2008 Beijing Olympics, although military zones and Tibet are out of bounds.
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