[Update, 7/7: Here’s our Merc story today (free registration), where you’ll find an additional audio file where we discuss Google/China/Baidu. Also, SEW’s Danny Sullivan has some of the best insights in this industry. We talked with him about something we couldn’t get into much for this Merc story: What Baidu has done in China that Google hasn’t — in terms of winning users? We tried to list some things below, but much of that is recent, and so doesn’t explain how Baidu came to an early leadership position. And winning advertisers, where Baidu has obviously been more active on the ground in China, doesn’t really help win search users. So answer is, we just don’t know. And something Danny has also been asking: Could the supposed Baidu lead have something to do with bias/meddling by China’s government? Anyone in China know?]

marriage.jpgInteresting story here, which says the Baidu, the Chinese search engine company that is on the verge of filing for its IPO, “appears to be drawing a close look from Google.”

As we noted, Google CEO Eric Schmidt was in Beijing last week meeting with Baidu officials, and we’ve mentioned the difficulties Google has had with China.

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In fact, we first figured something might be up last week when we bumped into an private investor in Baidu. The conversation was on background. We told him that we’d been trying for sometime to talk with Baidu about its track record in China and why it has reportedly done so well against Google, but that CEO Robin Li hadn’t responded to our requests, even though Baidu wasn’t in a quiet period. The investor said Li was “dealing with a lot of stuff right now.” Then we emailed Baidu investor Draper Fisher Jurvetson, and a spokesperson at first told us Baidu was in a quiet period. Huh? That is strange, we responded, because the IPO registration hadn’t been filed yet. We got silence. Could the spokesperson have slipped, and mistakenly alerted us to the fact that Baidu was in a quiet period while negotiating with Google? (Update 7/6: Perhaps we’re reading too much into this. We just got off the phone with a banker involved in Baidu’s IPO underwriting process, who says the company may not have filed its IPO registration yet, but is so far underway that it might have crossed into the quiet period anyway. He did not know, he said, whether Google is negotiating a deal or not.)

There was a question earlier in the comments here about what exactly Baidu has done in China that Google has not. First, it has apparently done some deals within China, specific to the local market — while Google has only just started. For example, Baidu said in April that they were going to partner with China Telecom to provide an online yellowpage service, according to the China Internet Journal. At the time, the service was reportedly at the last stage of internal testing and it was scheduled for release in May. That way, Baidu can exploit China Telecom�s business listing database to produce a better local search.

Baidu focused on China in other ways too: “Baidu assists Chinese websites with the enhancement of delivery times through the enablement of both their content caching and intelligent routing,” according to RuggedElegantLiving.com in a piece written last year. “Baidu’s caching software guarantees rapid, secure delivery of Web content to both PCs and wireless devices…The company has also developed China’s leading pay-for-placement service, whereby introductions are made between the users of Baidu’s affiliate partners’ sites and businesses that pay for priority placement in search results.”