In the battle for internet search domination, most people think of Google and only Google. But Chinese giant Baidu, effectively the Google of China, is incredibly large, equally profitable and has vast ambitions to move outside of China, where it enjoys a near monopoly. Google does not offer its services in China due to state censorship and human rights abuses.
While the online search market is fairly mature, the next battleground is up for grabs.
That battleground is car infotainment systems, which are becoming increasingly sophisticated and connected.
Baidu fired a major shot across Google's bow this weekend when Audi announced it will be deepening its collaboration with the Chinese internet giant. The goal of the partnership is for Audi to be able to offer more car-connected services throughout the country. There is a high demand for cars that have high levels of integration with maps and smartphones. In China, Baidu is by far the number one player in each.
While they'll 'only' be focusing on China, the country is quickly becoming the largest auto market in the world.
It's also important to remember that automakers are scared to death of Google, due to its interest in creating the tech behind both infotainment systems and self driving cars. They're scared because owning this tech would be like Google owning the Android smartphone platform, where hardware companies make little money and compete intensely while Google owns the high margin part of the business.
Carmakers desperately want to avoid becoming commoditized, as Google wishes them to be, and so are increasingly looking to foreign players like Baidu to counter the threat of Google's domination.
The two companies actually signed their agreement memorandum back in January and have only just announced the partnership because of the Consumer Electronic Show in Shanghai that is taking currently taking place.
And Audi's not the only one. We reported earlier this week that rival Mercedes Benz will also be working with Baidu, showing that carmakers are taking aggressive action to avoid relying on Google and setting up Baidu to becoming an increasingly direct competitor.