In-Feed Ads: The Real Reason for The Baidu-Toutiao Open Feud

Toutiao claims it has sued Baidu for unfair competition.

Photo by Eddie Garcia on Unsplash. Modified by KrASIA.

China’s most popular news aggregator Toutiao claimed it has sued Baidu, the dominant search service in China, for unfair competition amid an intense battle for the lucrative mobile feed ads business the duo both heavily bet on.

Toutiao alleged that Baidu has used its monopoly advantage to mislead users. When searching for “Toutiao” on Baidu’s search engine, the first result is an article published in mid-December 2017 speaking ill of Toutiao. The second indeed links to Toutiao’s website but was labeled as “this page may be unavailable due to unstable service”, which was a faux claim.

Image credit to Toutiao WeChat official account.

In response to Toutiao’s accusation, Baidu rebutted that its search result is based on a sophisticated algorithm driven by users’ needs, relevance, and popularity. Adding fuel to the fight, the Nasdaq-listed company claimed that the allegation only reflects Toutiao’s anxiety over its own challenge in growth.

It’s not the first time two tech moguls jumped into accusations against each other. Toutiao has suggested earlier this month in a WeChat post that Baidu’s PR team was spreading rumors against Toutiao on the internet while Baidu reportedly has set up a team dedicated to fighting against its biggest competitor Toutiao in the field of in-feed ads.

According to a report by consulting company iResearch, China’s mobile feed ads market might reach RMB 55.7 billion in 2017 (approx. USD 8.8 billion) and is projected to grow by 50% yoy in the next 3 years. Toutiao, the biggest winner of the booming market, is targeting RMB 30-50 billion (approx. USD4.7 to 7.9 billion) in mobile feed ads revenue in 2018.

Toutiao’s ambition and quick rise in mobile feed ads soured its relationship with Baidu. The revenue contribution from in-feeds ads provides a solid base for Baidu, allowing the company to splash money on AI and autonomous driving which are not likely to pay off in the near term.

The open feud between the duo escalates since last August. Rumour has it that Baidu once attempted to take a stake in or even acquire Toutiao, but Zhang Yiming, the founder of Toutiao, rejected the idea. According to Toutiao’s PR, Toutiao is more likely to be the one to acquire Baidu.