NEW YORK ( TheStreet) -- For the longest time in the Chinese Internet space there have been three giants: Tencent ( TCEHY), Alibaba Group and Baidu ( BIDU).
Of the three, only Alibaba Group is private, although it is rumored to be planning a 2013 initial public offering. Yet, Tencent and Baidu have been public for several years and have enjoyed battling it out for the title of most valuable Chinese Internet company with valuations around the $50 billion level. Baidu has been the dominant force in Chinese search. The company was started by Robin Li while he was still an employee of Dow Jones. He could see what Google ( GOOG) was doing for search in America, where he was working. So he got the idea to do the same back in China with a Chinese-focused search engine. Tencent got its start as a messaging platform tailored to the Chinese market. Their popular QQ platform became the first way a majority of Chinese started texting one another once they got their first mobile phone. Tencent used this messaging platform to sell games on. A few years ago, when Sina ( SINA) began to show success with its Weibo micro-blogging platform, Tencent created its own Weibo. Also a couple of years ago, Tencent started a WhatsApp clone called WeChat. It's now up to 200 million users over that time period. Alibaba Group owns three significant e-commerce platforms in China: Taobao, Tmall and Alipay. Taobao is most similar to eBay ( EBAY), selling second-hand goods. On one day recently in November, Taobao did $3 billion in revenue. Tmall is most similar to Amazon ( AMZN). Alipay is most like PayPal. Together, these three properties cast an enormously large shadow on the online space in China. Alibaba is expected to have a higher EBIT than Amazon this year and it is expected to pass Amazon in online sales by 2015. For years, these three giants have ruled over the Chinese Internet. However, I think Baidu could be headed for problems in 2013. Baidu has had a fairly easy rise to prominence in Chinese search over the past five years. Local companies haven't made the decision to invest in search, leaving Baidu to compete with American companies like Yahoo! ( YHOO), Microsoft's ( MSFT) Bing, and Google. Only Google has been a worthy competitor.