Tencent teams up with Sohu to vie for No 2 spot
Surprise deal sees HK-listed mainland internet giant paying US$448m for 36.5pc stake in rival search engine Sogou that will merge with Soso
Tencent and Sohu yesterday said that Tencent could increase the stake to 40 per cent in the near future, while Sohu would remain Sogou's controlling shareholder.
They said Sogou would continue to operate independently as a subsidiary of Sohu and that Sohu's chairman and chief executive Charles Zhang would remain Sogou's chairman.
Zhang said the partnership would "immediately" expand Sogou's market presence and "significantly" elevate its position in the personal computer and mobile search markets.
The news surprised many as the market had been expecting either Qihoo 360 Technology or the country's largest search engine company, Baidu, to buy Sogou to consolidate their market lead. In July, Qihoo said it was in talks to buy Sogou.
Sogou is the mainland's third-largest search engine in terms of users and Soso is its fourth-largest. Sogou accounted for 5.5 per cent of search-engine queries on the mainland in the first quarter of the year. Baidu had 82 per cent and Qihoo 360 followed with 9 per cent, according to data compiled by Bloomberg.
Liu Xingliang, the chairman of Hongmai Software, a Beijing-based internet data analysis firm, said the deal announced yesterday was a case of strategic co-operation for both sides, formerly rivals with search engines and input methods of their own.