China's state controlled Xinhua News Agency is capitalising on Google's woes in the country by planning to launch its own search engine in a joint venture with China Mobile, the world's largest mobile service company by user base.
The news agency said in a two-line report that it has signed a framework agreement with China Mobile to set up a search and international media company.
Xinhua's report did not say whether the joint venture was for the internet or mobile phone-based search engine.
The joint venture is probably being set up for web-based search engine according to local analysts that will take on Baidu, which has a commanding position with a 70 per cent share in China's web search engine and Google with 24.2 per cent.
The joint venture will eat into Google's market share which has already declined form 30.9 per cent in first quarter 2010 to 24.2 per cent ending June after it was forced to relocate its web search engine to Hong Kong in March 2010 after it refused to comply with the Chinese government censorship laws. (See: China blocks access as Google exits to HK)
Although both Xinhua and China mobile have a huge base, both do not have the required expertise to start a web-based search engine and their JV will take a long time to really compete with rivals.