Chinese Baidu top search engine reaches 500 million monthly active users

Source:TECHINASIA
Baidu (NASDAQ:BIDU), China’s top search engine, released its Q2 earnings report overnight. The financials were dull (see here; PDF), but the conference call with Baidu execs yielded some interesting user numbers and a few new milestones. With a strong focus on mobile – now that China’s mobile internet users outnumber its PC web users – Baidu CEO Robin Li hailed the fact that the company’s “mobile revenue, which is largely comprised of mobile search revenue, accounts for 30 percent of our total revenue.” (With thanks to SeekingAlpha for the call transcript). Li also revealed that Baidu’s mobile search service grew to over 500 million monthly active users (MAUs) in June, which is a new high. He partly attributed the growth to a recently redesigned mobile search homepage, as well as to new content partnerships that result in more embedded information available at a glance in search results. See: Baidu’s image-recognition software isn’t perfect, but it’s super smart 200 million MAUs on maps Here are a few more stats that Li revealed in the call: The Mobile Baidu app reached 70 million daily active users. Baidu Maps surpassed 200 million MAUs for the first time. 130 million Android app downloads per day on the Baidu App Store and its sister site, 91 Wireless. Baidu’s consumer cloud storage service grew to “nearly 200 million registered users in Q2, from 160 million registered users in Q1.” Li ended his comments by talking about Baidu’s new R&D center in Sunnyvale, California, and how it adds to the web giant’s growing expertise in big data, artificial intelligence, and ‘deep learning’. He explained the importance of deep learning to the search engine and its other products: Deep learning already touches on much of what we do, from speech recognition to image-based search, and from ad ranking to big data analytics. It will fundamentally improve our ability to understand natural language, to provide more accurate translation, and to make more intelligent recommendations. Baidu’s CEO made no mention of losing more market share to arch-rival Qihoo (NYSE:QIHU) in the newest data from CNZZ for a search engine’s share of desktop PC page-views in China. Baidu’s share is down to 59.6 percent in new numbers for June, while Qihoo is still growing and has reached 26.1 percent. However, CNZZ’s data does not cover mobile search and there’s no adequate information on the web for market share just on mobile in China. Qihoo is behind in terms of mobile search tech and has only quite recently added advanced features common on Google or Baidu for several years, such as location-aware search results. The newest available data from Enfodesk claims that Baidu’s total search share (mobile plus PC) is at 72.9 percent in Q1 2014 – a number that’s growing due to its investments in mobile.

Read more: Baidu’s search engine reaches 500 million active users on mobile http://www.techinasia.com/baidu-mobile-search-engine-hits-500-million-active-users/

JD.com and Tencent offer XBox consoles in China

         The WSJ reports,"BEIJING—Internet conglomerate Tencent Holdings Ltd.  will use its alliance with JD.com Inc.  to offer early advance sales of MicrosoftCorp.'s  Xbox One consoles in China, as the online retailer ramps up efforts to compete with electronic-commerce major Alibaba Group Holding Ltd.

Beijing-based JD.com said Monday that users of Tencent's WeChat and mobile QQ messaging software would be able to reserve the new Xbox with a deposit of 499 yuan ($81), days before the company begins taking preorders from other Chinese consumers on July 31. Microsoft has said the consoles would be delivered in September.

JD.com didn't disclose a price for the console. The new Xbox costs up to $500 in the U.S.

JD.com said it would presell the consoles to users who connect to its retail outlet through Tencent's QQ and WeChat social-media networks.

"Launching Xbox One sales in China through JD.com's Weixin and Mobile QQ entry points underscores the strength of these platforms with young and sophisticated Chinese consumers," said Shuang Du, a JD.com vice president. Weixin is the Chinese name of Tencent's WeChat mobile social-media app. The preorders will be available only through the Chinese version of the software.

JD.com's use of WeChat offers a glimpse into how Tencent can leverage its sprawling investments to cross-promote its services and pursue the country's more than 500 million smartphone users. Unlike in the U.S., where Internet companies have generally focused on no more than a few core competencies, Chinese companies have long wanted to focus on many areas.

Tencent is increasingly competing with China's Alibaba, which is by far the top e-commerce service in China in terms of market share. The latest move came less than five months after Tencent purchased a 15% stake in JD.com, China's second-largest e-commerce player. The two companies also offer a range of competing services from investments to taxi-hailing mobile apps. Alibaba declined to comment.

Xinhua: China's 8 questions to Mr Abe

by Xinhua writer Li Zhihui
BEIJING, July 28 (Xinhua) -- On the 100th anniversary of the beginning of WWI, in Europe old rivals have apologized and forgiven one another.
Asia however, is home to a defeated country with an unfathomable attitude toward history, currently trying to wriggle out of the constraints of its pacifist constitution.
Japanese Prime Minister Shinzo Abe has put China and other countries on their guard with worries about the possibility, however small, of a third world war.
We can never undo the catastrophe of 100 years ago, but we can be wise and responsible for ourselves and coming generations. For the sake of peace, Mr. Abe, you deserve the chance to clarify the following questions.
You said the definition of aggression has yet to be established by academia or the international community.
After WWI, Japan captured China's Qingdao; in 1931. Your country invaded northeast China and launched the war of aggression against China in 1937. Millions of Japanese troops were sent to China before Japan was defeated in 1945.
Question one: From which perspective do you define these wars as not being aggression?
Japan accepted the Potsdam Proclamation and surrendered unconditionally in 1945. The proclamation states that the authority and influence of those who deceived the people of Japan into embarking on world conquest must be eliminated for all time.
Question two: Is the Potsdam Proclamation, achieved only after millions of people lost their lives, still working for Japan today'?
The 1972 Japan-China joint communique reads, "The Japanese side is keenly conscious of the responsibility for the serious damage that Japan caused in the past to the Chinese people through war, and deeply reproaches itself."
As we see the Japanese government whitewashing the atrocities of their predecessors and portraying the war as a military conflict, in which Japan was forced to engage, to liberate Asia from white colonialism, a third question arises:
Can such actions be rightly called self reproach?
In 1978, convicted war criminals were enshrined at Yasukuni and no Japanese emperor has visited the shrine since. You, however, insisted on visiting the shrine and even reported your work to the war dead. You claim your visit was a prayer for peace and swear that no more war will be waged.
Question four: Would it not be better to swear before the neighbors who suffered at Japan's hand than to swear before the souls of the murderers who cause that very suffering?
The Japanese public is deeply worried about an economy driven by "Abenomics". Alongside a shaky economy, you are promoting nationalism and challenging the order of global peace.
A fifth question calls for clarification of whether and how the situation in Japan today is similar to - or how is it different from - that before WWII?
You talk about your political dream to unlock Japan from "a box created 40 or 50 years ago."
Does that mean bringing Japan back to wartime militarism?
You have been emphasizing the U.S.-Japan alliance, but the fact is, this alliance is nothing more than two sides using one another to achieve their own ends.
Question seven: How long do you think this alliance of strange bedfellows can last?
Question eight: Japan greatly benefited from WWI and started WWII. While the whole world is making efforts to avoid a third world war, what is Japan doing?
Europe's summer of 100 years ago shall not be repeated in today's Asia. China does not weigh history as a burden, but cannot forget the great suffering of the Chinese people by Japan's hand since WWI.
Acknowledging honestly the nature of the war and truly atoning for it are prerequisites for Japan in receiving the forgiveness of its neighbors.
Mr. Abe, you say you want to meet Chinese leaders and ease bilateral relations, but up till now, we have neither heard sincere words nor perceived any mollifying action. Before any meeting at the highest level can take place, Mr. Prime Minister, you have a lot of questions to answer.

Forecasts for higher prices misjudge the shale boom. By John Kemp

 “The world of energy may have changed forever,” according to Professor James Hamilton of the University of California. “Hundred dollar oil is here to stay.”

Hamilton, who is one of the most respected economists writing about oil, made his bold prediction in a paper on “The Changing Face of World Oil Markets”, published on July 20.

“Old hands in the oil patch may view recent developments as a continuation of the same old story, wondering if the high prices of the last decade will prove another transient cycle with which technological advances will eventually catch up,” he wrote. “But there have been dramatic changes over the last decade that could mark a major turning point.”

The shale revolution will turn out to be only a pause in the upward trend in prices, Hamilton argues, as growing demand from emerging economies and stagnant supplies from conventional oil fields push prices higher in the long term.

“Rather than a force pushing oil prices back to historical lows, it seems more accurate to view the emerging tight oil plays as a factor that can mitigate for a while what would otherwise be the tendency for prices to continue to rise.”


IGNORING SHALE

The problem with Hamilton’s analysis is that it largely ignores the impact of the shale revolution on the economics of oil production and understates the tremendous variability in real oil prices in response to changes in technology.

The professor devotes just 400 words out of almost 4,000 to discussing the production of crude oil and gas from shale formations.

Most of that discussion focuses on the high cost of drilling and fracturing shale wells; the rapid decline in production; the alleged unprofitability of shale wells; and question of whether the conditions that produced the shale revolution in North American can be replicated in other parts of the world.

But this part of the paper is also the weakest, and it highlights the fundamental limitations with Hamilton’s entire argument about the increasing difficulty and costs of producing crude oil.


PEAKING OIL

Since 2008, the dramatic increase in oil and gas production from shale formations in North America, and the abundance of shale resources around the world, has discredited theories about peaking oil production.

The simple theory that supplies will run out has been reframed as a more sophisticated one about rising prices.

Peak oil supporters now point to the increasing cost of oil production, diminishing energy return on investment and the diminishing energy return on energy invested to claim that it is becoming harder and more expensive to sustain, let alone increase, crude output.

Prices must continue to rise in real terms, they say, to reflect the increasing cost of producing crude and to restrain demand. Price increases will prove to be just as disruptive as physically running out of the stuff.

Hamilton’s paper lends influential support to this view. He notes that oil demand is now being driven by rising incomes in emerging markets, even as high prices restrain consumption in the advanced economies.

He also claims that much of the growth in oil production since 2005 has come in the form of he calls “lower quality” natural gas liquids, which have a much lower energy content and energy density than conventional crude.

Production of conventional crude oil has stagnated, despite surging prices and unprecedented spending on exploration and production activity.

“Depletion of older reservoirs and the high cost of developing new resources” explain why conventional oil output has not responded to climbing prices, Hamilton concludes.


SHALE SCEPTIC

The paper is sceptical about whether shale oil can alter the supply outlook fundamentally because of its high production costs and the difficulty of replicating the boom outside the United States. But this is the least convincing part of Hamilton's argument.

The paper confuses the struggling economics of dry gas wells with the much more attractive economics of wet gas and oil plays.

If oil wells were not extremely profitable, North Dakota and Texas would not be experiencing a drilling boom, with demand for both rigs and petroleum engineers at the highest level for three decades.

In focusing on decline rates, Hamilton ignores the ultimate amount of oil and gas recovered from shale wells, which in many cases is higher than from conventional wells.

The second section of the paper suggests that much of the increase in oil output since 2005 has in fact been “low quality” natural gas liquids rather than true crude, but then the fifth section acknowledges production from shale has increased U.S. crude output by a net 2.3 million barrels per day.

In fact, statistics from the U.S. Energy Information Administration show the shale boom has produced a dramatic increase in both natural gas liquids and true crudes. It is simply not true to imply that the oil industry is finding only

“low quality” hydrocarbons.

One of the biggest problems of the paper is that it confuses the period between 2005 and 2008, when output was struggling to meet demand, with the more recent period from 2009 through 2014, when output from shale has grown quite quickly and global oil demand growth has slowed.


PRICE FORECAST

Even if shale continues to boost overall U.S. oil production, “it is abundantly clear that it would not return real oil prices to their values of a decade ago”, Hamilton argues.

According to the BP Statistical Review of World Energy, the real price of crude oil, adjusting for inflation, has ranged from as much as $120 per barrel to as little as $10 since 1861.

(http://link.reuters.com/myj52w)

The price is currently close to the top of its historical range, while in the 1990s and early 2000s it was near the bottom.

So oil prices could retreat from their current highs by $20, $30 or even $40 per barrel and still remain quite high in historical terms.

By comparing current exceptionally high prices with the very low ones that prevailed “a decade ago”, Hamilton risks using a misleading baseline.

North American shale is currently the marginal source of supply in the world oil market, and most producers claim they can break even at $70 or even $60 per barrel.


TECHNOLOGY

Prices have varied enormously over the 155-year history of the oil industry, mostly in response to large discoveries and changes in technology.

The collapse in oil prices during the late 1920s and 1930s was largely due to the discovery and development of massive new fields in East Texas.

Low prices from the 1940s through the 1960s owed much to the massive discoveries in the Middle East around the Persian Gulf and in North Africa.

Massive new fields in Siberia and Alaska, as well as the development of deep offshore drilling in the North Sea, eventually contributed to price declines in the late 1980s and through the 1990s.

But the history of oil prices is as much about the history of technology as field discoveries.

In a very basic sense, production costs have been rising since the industry was born. As in all extractive industries, the easiest oil was developed first, and more expensive oil has been developed later. Hamilton’s argument that costs are increasing could have been made at every stage in the oil industry’s history.

The first wells in Pennsylvania tapped oil buried less than 100 feet below the surface. By the mid years of the 20th century, wells were being bored thousands of feet below ground. Then in the 1970s the industry turned to offshore drilling, which was even more tricky and expensive. Now it is mastering the art of drilling horizontally rather than vertically.

But productivity has also increased as companies have learned to target the highest yielding formations and drill faster and more accurately. Hamilton’s paper is silent on all these matters, and that is ultimately what makes it unconvincing.

The paper is also silent about climate change, policies to restrict the consumption of fossil fuels, and the growing challenge to oil-based fuels from natural gas even in the transport market, all of which could depress real prices in the medium to long run.

So while Hamilton concludes that $100 oil is here to stay, in real terms, the outlook is far less certain. In fact, a betting man, looking at the price history, might conclude prices are currently abnormally high and due for a fall.

The BRICS Development Bank. Why should the y adopt a Pro-Poor Agenda

This paper was written by Lysa John.
© Oxfam International July 2014.

SUMMARY:

In July 2014, a new multilateral and Southern-led development bank was launched by the leaders of Brazil, Russia, India, China and South Africa—better known as the BRICS. The BRICS Development Bank will provide a fresh source of finance for developing and emerging economies to meet their development needs. Little has been made public regarding the proposed Bank's core mandate or activities but while governments negotiate the technicalities of the Bank, it is critical that they also provide a solid vision of the principles, priorities and objectives on which the Bank's activities and operations will be premised. This policy brief recommends that these include commitments to: ending extreme poverty and inequality, with a special focus on gender equity and women's rights; aligning with environmental and social safeguards and establishing mechanisms for information sharing, accountability and redress; leadership on the sustainable development agenda; the creation of mechanisms for public consultation and debate; and the adoption a truly democratic governance structure.

BACKGROUND: 

The association of five major emerging national economies, Brazil, Russia, India, China and South Africa (BRICS) has a special responsibility towards helping the world achieve its goal of ending extreme poverty, reducing inequality and achieving sustainable development, as they collectively represent some of the world's greatest challenges and achievements. Despite remarkable strides made in reducing poverty within India and China, BRICS countries still house nearly half of the world's poor and—with the exception of Brazil—have experienced a rise in inequality in recent years. The creation of a BRICS Bank, and with it the promise of reforming the global development architecture, offers a real and concrete opportunity for governments of these countries to ensure development financing is sensitive to the needs of those who are poorest and most marginalized. In a press release issued during the 2013 Durban BRICS Summit, Oxfam said: 'BRICS leaders are blazing a trail in reforming the global financial architecture. But the devil is in the detail. If the BRICS Bank fights poverty and inequality it could be a big success. But if it focuses only on big-ticket schemes that fail to directly benefit poor people it could do more harm than good.'¹

There are currently very few documents within the public domain that clearly articulate a mandate and framework for the proposed BRICS Bank, particularly from a pro-poor and pro-equity perspective. Furthermore, civil society engagement with BRICS-related processes has been relatively low, although there is interest to engage much more substantively. This policy brief aims to move beyond the BRICS governments' current focus on technicalities around capital contribution and governance, and instead provide a solid vision for the principles, priorities and objectives on which the Bank's activities and operations should be premised. It seeks to demonstrate how the BRICS Bank could be used as an instrument to promote pro-poor development and reduce inequalities, both within the BRICS countries and in other partner countries where projects will be implemented

Hague court orders Russia to pay over $50 bln in Yukos case. Russia's stocks plummet.

 The Hague's arbitration court ruled on Monday that Russia must pay a group of shareholders in oil giant Yukos $51.6 billion for expropriating its assets, a big hit for a country teetering on the brink of recession.

The arbitration panel in the Netherlands said it had awarded shareholders in the GML group just under half of their $114 billion claim, going some way to covering the money they lost when the Kremlin seized Yukos, once controlled by Mikhail Khodorkovsky, a decade ago.

"The award is a slam dunk. It is for $50 billion, and that cannot be disputed," said Tim Osborne, director of GML. "It's now a question of enforcing it."

Russia's Finance Ministry called the ruling "flawed",

"one-sided" and "politically biased" and said it would appeal the decision. It comes as Russia and the West are in their biggest stand-off since the Cold War over Moscow's actions in Ukraine. 
Russia argued that the court ignored tax violations by Yukos and said it was senseless and speculative to value Yukos so long after the events. Lawyers, however, said there were only limited grounds on which to appeal.

The panel of judges, which has been reviewing the case since 2005, concluded that officials under President Vladimir Putin had manipulated the legal system to bankrupt Yukos. 
"Yukos was the object of a series of politically motivated attacks by the Russian authorities that eventually led to its destruction," the court said. "The primary objective of the Russian Federation was not to collect taxes but rather to bankrupt Yukos and appropriate its valuable assets."


ECONOMIC IMPACT

The ruling hits Russia at a time when it faces international sanctions about its role in Ukraine and anger over the downing of a Malaysian airliner over eastern Ukraine, where Moscow-backed rebels are fighting a separatist campaign. The country is also grappling with slowing economic growth.

"This decision affects the assessment of the long-term financial stability of Russia and could become the basis for arguments for revising Russia's ratings by international rating agencies," said Credit Suisse economist Aleksei Pogorelov.

The $50 billion represents about 2.5 pct of Russia's total GDP worth, or 57 pct of Russia's Reserve Fund, which is earmarked to cover budget holes.

The ruling hit Russian stocks. The RTS index <.IRTS> of Russian shares was down 3.1 percent by 1400 GMT. 
The European Court of Human Rights (ECHR) in Strasbourg is expected on Thursday to announce a separate decision on Yukos's multi-billion-dollar claim against Russia, ruling on 'just satisfaction' or compensation, a Yukos spokeswoman said.

Yukos's application in the ECHR, which is on behalf of all Yukos shareholders, argued that Yukos was unlawfully deprived of its possessions by the imposition of bogus taxes and a sham auction of its main asset. 

RECLAIMING ASSETS

GML may now face a battle to claim the money from Russia.

"The question is whether Russia will pay that award, which I very much doubt," said Jan Kleinheisterkamp, an Associate Professor of Law at the London School of Economics. "This means that ultimately the shareholders will start to chase Russian assets abroad, which is a very tedious and usually not very fruitful business."

Antonios Tzanakopoulos, a law professor at Oxford University, said if assets were to be seized, they would have to be purely commercial in nature to be expropriatable, meaning it would not be possible to get an order that an embassy building or a docked Russian warship should be handed over.

Russia must pay the compensation to subsidiaries of Gibraltar-based Group Menatep, a company through which Khodorkovsky, once Russia's richest man, controlled Yukos.

Group Menatep now exists as holding company GML, and Khodorkovsky is no longer a shareholder in GML or Yukos.

"We didn’t go into this for a pyrrhic victory to make a point ... We still believe that we will ultimately collect on this award," said Osborne.

Former Russian presidential advisor Andrei Illarionov said if Russia avoided payment it could face asset arrests around the world.

Chris Weafer, senior partner at Macro-Advisory consultancy in Moscow, said GML may try and target revenues from Russia's energy exports.

The ruling leaves Russia with few options to fight back, experts said. The arbitration court's rules call decisions on awards “final and binding”.

"The Kremlin's lawyers will be looking at any way to appeal this," said Weafer.

Tzanakopoulos said any appeal would effectively amount to a new arbitration procedure, which both parties would have to agree to. Russia could, and would be likely to, challenge enforcement claims in the many national courts around the world where such proceedings would be launched, he said.

Experts said fighting the decision could be a lengthy and uphill process.

"Appeals are difficult - it is a private arbitration," said one Moscow-based lawyer who declined to be named, adding that any counter-action would likely be a "long shot".


NO CASH FOR KHODORKOVSKY

Any funds claimed will be shared among the shareholders. The biggest ultimate beneficial owner is Russian-born Leonid Nevzlin, a business partner who had fled to Israel to avoid prosecution. He has a stake of around 70 percent.

Khodorkovsky ceded his controlling interest in Menatep, which owned 60 to 70 percent of Yukos, to Nevzlin, after he was jailed. Khodorkovsky, who is not a party to the legal action, was arrested at gunpoint in 2003 and convicted of theft and tax evasion in 2005.

"It is fantastic that the company shareholders are being given a chance to recover their damages," Khodorkovsky said in a statement, adding he would not seek to benefit financially from the outcome.

Khodorkovsky's company, once worth $40 billion, was broken up and nationalised, with most assets handed to Rosneft , a company run by Igor Sechin, a Putin ally.

Putin pardoned Khodorkovsky in December after he had spent 10 years in jail. He now lives in Switzerland.

"I am very pleased the international tribunal in the Hague decided that Russia violated international laws and illegally nationalised Yukos," said Nevzlin.
The other four ultimate beneficial owners, each of whom owns an equal stake, are Platon Lebedev, Mikhail Brudno, Vladimir Dubov and Vasilly Shaknovski.

Rosneft, which is not a defendant in the case, said it expected no claims to be made against the company and that the ruling would not have a negative impact on its "commercial activity and assets".

Rosneft bought the bulk of Yukos assets through auctions after the company was declared bankrupt. Its shares were down 2 percent.