Apple is going to incorporate Baidu which accounts for 78.5 percent of China's search-engine market by revenue, compared with 16.6 percent for Google, into the search function of iPhones in China. This will benefit Baidu, in its worldwide advertisement and also Apple, since China accounted for 20 percent of Apple's sales last quarter.
The deal could be unveiled at Apple's annual World Wide Developer's Conference, beginning in San Francisco on June 11.
Customers will now have the option to select Baidu as their primary search engine, though Google will remain the default setting on iOS devices. At present, users of iPhones and iPads in China can access Baidu search by downloading it separately as an application.
Baidu, under billionaire Chief Executive Officer Robin Li, has benefited from Google's decision in 2010 to no longer comply with Chinese regulations to self-censor Web content. Google's market-share dropped after it shut its Google.cn service and began redirecting Chinese users to its site in Hong Kong.
Apple tripled revenue in China last quarter, making the Asian country its biggest market outside the U.S. In February, Apple added support for Baidu's search-engine in its latest upgrade for the Mac operating system, along with other new features aimed at Chinese users.
China is the country with the largest population in the world, and that population includes a very large number of middle class with disposable income to spend. The middle class in China now has more income to spend on smartphones and is becoming a more attractive audience for advertisers. Tim Cook, Apple's CEO has said there's "a lot more opportunity" there as the company rolls out new products and adds new distributors of the iPhone.
The move to add Baidu may be yet another way Apple is looking to decrease its reliance on rival Google. Apple is also reportedly planning to ditch Google Maps, and incorporate its own 3D-mapping technology into its next-generation IOS 6 mobile OS.
Baidu rose 8.9 percent to $123 at the close in Singapore trading, the biggest percentage increase since past few months. The company's American depositary receipts climbed 2.8 percent to $122.46 at the close in New York. Apple increased 0.1 percent to $571.72. The Chinese company is working to add users who access the Internet on smartphones such as the iPhone, after dominating the search-engine market for personal computers in China.
This jump fits with a plan by Apple to gain a bigger toehold in the largest mobile-phone market. It also gives users an alternative to Google Inc., which competes with Apple in mobile software and advertising.
