Companies in the internet information providers industry have been focusing on a diverse range of subjects over the last little while, as they strive to capture a greater share of the growing global internet market. For China based companies such as Baidu, Inc. (NASDAQ:BIDU) and Sohu.com Inc. (NASDAQ:SOHU) growth potential remains strong as the population of internet users continues to balloon. However, regulatory changes and increasingly high levels of competition may constitute hurdles in 2013. The regulatory environment in Europe is also turbulent and companies with significant operations in the area, such as Google Inc. (NASDAQ:GOOG), face uncertainty. Meanwhile, back at home, industry players like Yahoo! Inc. (NASDAQ:YHOO) and AOL Inc. (NYSE:AOL) seem to be working hard to enhance their offerings with remodelling, content creation and partnerships. See how companies in this industry have grown over the past years and how they are expected to perform in the future.
Over the past year, China has faced challenges surrounding economic growth and inflation but the year ended on a high note and the area's outlook remains considerably more attractive than recession racked regions. To support rapid growth, the country has been investing heavily in infrastructure and its Broadband China Project is expected to drive the Chinese internet user base up to 800 million in 2015 as urban services are improved and rural services expanded. This massive online population provides huge growth potential for companies like Sohu.com and Baidu Inc., though harnessing that potential may be challenging.
Recently applied management changes at Sohu.com, including the appointment of a chief information officer at its online game subsidiary, were aimed at furthering strategic initiatives in new game markets, promoting optimal implementation and achieving successful expansion. It remains to be seen how the recent introduction of regulations that tighten government control over Internet users and require all of China's internet users to verify their identities will affect the industry, though it remains a potential concern. Elsewhere in the industry, Baidu has been working to improve its exposure in Thailand and international markets with the recent launch of "Baidu PC Faster," a new performance focused software security suite in Thai and English.
Meanwhile in Europe, a number of nations' leaders are pushing for more stringent regulations relating to users control over personal data collected by companies through online interactions such as web searches and online shopping. If the European Union chooses to tighten regulations, the reuse and sale of such information to third parties, such as advertisers might be restricted which could in turn impact internet information providers. The region's two-year antitrust investigation into Google continues and January 18th marks the end of the one month which the commission gave Google to provide detailed proposals to resolve the dispute.
On U.S. soil, brand remains key for internet information providers, and industry players are working hard to enhance their offerings, strengthen their brand and thus expand their market share. In an effort to optimize viewing across different sized devices and streamline ad sales, AOL recently announced plans to redesign all its content sites with responsive design. Meanwhile Yahoo!, which rolled out new homepage, mail and Flickr versions in December, recently announced a partnership with Sony Music Latin. The agreement will create exclusive co-produced video and digital music programming aimed at the fast growing U.S. Hispanic audience. Will those revamping efforts by Yahoo! and AOL bring back their lustre and lure investors back; our financial professionals can answer those questions for you.
Moving forward, demand for internet services worldwide look poised to grow further in 2013 as tablets and smartphones continue to proliferate and global internet penetration rates march upwards. Specific markets may prove to be more challenging than others, particularly as the macro-economy remains on shaky ground. Innovation and content creation appear to be front and centre on the domestic front while abroad those who can successfully navigate through increasingly tight regulatory environments may come out on top.
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