Chinese search engine Sogou set to kick off US IPO process
China’s second largest mobile search provider is eyeing a US IPO to catch up with rival Baidu
Sogou, China’s second largest mobile search engine, has taken the first step towards a possible initial public offering in the United States as it doubles down on artificial intelligence as a way to catch up with current market leader Baidu in the country’s search business.
The Beijing-based company plans to submit a confidential draft registration statement to the US Securities and Exchange Commission for a possible IPO to launch as early as market conditions permit, according a statement released by the company’s parent Sohu.com on Monday.
The number and dollar amount of American depositary shares proposed to be offered and sold have not yet been determined, according to the Nasdaq-listed Sohu.com. But in an interview with Bloomberg in January, Sogou’s chief executive officer Wang Xiaochuan said the company was eyeing a US IPO this year with a valuation of as much as US$5 billion.
In an internal memo on Monday, Wang confirmed that Sogou, which is also backed by Chinese internet giant Tencent Holdings, is pushing the US IPO plan forward without giving a timetable.
“Search is a very competitive market and we have already achieved certain success in the current stage,” Wang said, adding that the company will keep investing in “artificial intelligence, big data and internet of things” to create “competitive edges and disruptive products”.
By leveraging AI technology, Sogou claims it is already able to help Chinese users search English-language content via its engine even if they cannot read or type in English. Users simply input their queries in Chinese and get English-language search results translated immediately into Chinese. The company claims the accuracy rate of translation is 90 per cent.
Wang said Sogou is the only company able to challenge and even reshape the search business landscape in China as its second quarter revenue jumped 20 per cent year on year to US$211 million, outpacing the entire industry.
Baidu is still the No 1 search engine operator in China, but its search business has been under siege by smaller players, such as Sogou, Qihoo 360 Technology and Alibaba Group-backed Shenma, especially after Baidu’s scandal over medical advertising last year.
Statistics from market research firm iiMedia showed that Baidu was still the go-to app for China’s 647 million mobile search users in the second quarter of 2017 with 41.2 per cent market share, followed by Sogou’s 20.9 per cent and Shenma’s 18.2 per cent. Alibaba owns the South China Morning Post.