A recent partnership between Chinese internet giants Alibaba and Tencent has pointed to an effort to squeeze the third largest player, Baidu, out of the market.

Recent evidence of this can be seen in the group buying market, though dwindling in the west this model is booming in China. Groupon-type platforms have been growing and according to research firm Analysys International, bargain hunters spent 77 billion yuan (US$12.1bill) in sales through group buying sites in the first half of this year.

Now a merging of Alibaba supported Meituan and Tencent backed Dianping means a single player will have around 80% of the market (Meituan is estimate at about half, Dianping at around 30%). The combined business could be worth US$15 billion.


The new merged entity would squash rival group-buying site Nuomi, fully owned by Baidu. This deal seems to signify an escalation in movement to push Baidu out of the market. Alibaba and Tencent also merged their taxi-hailing business to form Didi Kuaidi, the largest local taxi sharing app, while Baidu gives financial backing to US brand Uber.

These two recent partnerships of rivals who still compete head-to-head in entertainment, e-commerce and even banking will provide a united front in some of the fastest growing segments. But will this be enough to push Baidu completely out of the picture?

See Bloomberg’s thoughts on the topic here.