Companies expand their cooperation in bid to compete with rival Alibaba Chinese search engine Baidu and eBay’s Chinese subsidiary have agreed to expand their cooperation in a bid to stave off growing competition from rival Alibaba.com.Under terms of the agreement, announced on Tuesday, Baidu will promote eBay’s PayPal payment service and will become the sole provider of text advertisements on eBay EachNet, eBay’s Chinese Web site. In addition, eBay will optimize its Chinese Web site for Baidu’s search crawlers and the two companies will offer a co-branded toolbar that users can download and install on their computers.Baidu and eBay will begin testing text ads on eBay’s Chinese site during the first quarter of 2007, with a full-scale rollout planned for the second quarter. The agreement between Baidu and eBay China roughly matches some of the services available in China from Alibaba, which earlier turned competition between its Taobao auction site and eBay into a near rout, forcing the U.S. e-commerce company to stop charging its sellers an auction fee earlier this year — an embarassing retreat that came three months after eBay announced, “‘Free’ is not a business model.”With the acquisition of Yahoo’s Chinese operations in 2005, Alibaba turned its sights on search, seeing the technology as a tool to protect its e-commerce operations — particularly its Alibaba site, which connects small and medium-sized Chinese businesses with overseas buyers. The company has also rolled out a successful escrow payment service, called AliPay.Last week, Alibaba announced an investment in Koubei.com, a Chinese Web site that specializes in classified advertisements. While the deal may help fend off competition from Alibaba, Baidu and eBay do not expect to see financial gain from the partnership announced Tuesday. The two partners said in a statement that the deal will have no material impact on their financial results. DatabasesSoftware Development