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  • Updated: 10:44pm
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Baidu feels the heat in search rivalry

Market leader on the mainland, battling to keep mobile users, is contending with aggressive foes in Qihoo 360 and a Tencent-Sogou alliance

PUBLISHED : Monday, 11 November, 2013, 5:17am
UPDATED : Monday, 11 November, 2013, 6:45am

Growing competition among the top three search engines in the mainland's buoyant internet market could prove to become a clash of the titans.

For the moment, Baidu remains the top player, claiming more than 80 per cent of web-page searches on the mainland in September. But it is already feeling the pinch from challengers, struggling in particular to keep mobile users.

Meanwhile, online security software developer Qihoo 360, which launched its search engine www.so.com in August last year, is winning users from Baidu, and this week claimed it commanded a 20 per cent market share of web-page searches last month and targeted a 25 per cent share by the end of the year.

In September, internet giant Tencent teamed up with Sogou, a subsidiary of the country's major internet portal Sohu, to bolster its presence in the search market. Tencent invested US$448 million for a 36.5 per cent stake in Sogou, and merged its Soso search engine and QQ Chinese input with Sogou. The tie-up between the two will pit them in a pitched battle with the top two providers Baidu and Qihoo 360.

"The competition can now be expected to become even more intense," said Lucy Zhang, an analyst with internet consultancy iResearch.

In the fast-evolving internet industry, search engine business is an important battlefield because search services are mature products with a stable business model, according to Zhang. "Growth in search advertising exceeded that of traditional display advertising in the past couple of years."

Nasdaq-listed Baidu, whose core business is selling advertisements online, posted a year-on-year rise in revenue of 42.3 per cent to 8.9 billion yuan (HK$11.3 billion) in the third quarter of this year.

As the market leader, it commanded 63 per cent of market share in September, according to data from internet data provider CNZZ.

Next in line were Qihoo 360 with 19 per cent, and Sogou with 10.4 per cent. Tencent's Soso was ranked fourth with a 4 per cent market share.

Zhang said the trend emerging in the market indicated that challengers were consolidating their positions and were threatening to take a growing share of Baidu's market.

The biggest threat, Zhang said, would come from Qihoo 360 because it was the most aggressive. "Qihoo has targeted the industry's No1 as their rival," she said.

By joining forces, Sogou and Soso had consolidated their foothold and created the potential for growth, she said, but it was not yet clear how the two will co-operate to make the best use of their combined resources.

"My expectation is that they will keep two search engines to cater for different groups of customers," Zhang said.

She doubted how much help WeChat - a popular mobile messaging application owned by Tencent - would be to the firm's search engine business. "So far, Soso hasn't been able to benefit from the large user pool of WeChat," she said.

Tencent has been trying to popularise Soso among its QQ users in the past years with no remarkable success, she said.

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