A penguin and a hound

The third and the fourth players in China’s search engine market form a coalition.

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On Monday, Tencent announced that it will buy a 36.5 percent stake in Sohu’s Sogou, “search dog”, a search engine company. Sogou was founded in 2004 and released a Chinese input method editor in 2006. The input method caught on and turned out to be extremely successful. It serves as an entrance of traffic to the search engine. Now, Sogou search engine ranks third in China, following Baidu and Qihoo 360.

According to Tencent’s press release, Tencent will pay $448 million for 36.5 percent of stake in Sogou. It will merge its own search engine, Soso, and input method into Sogou’s products.

Sogou has been looking for new investors for a while. Qihoo 360 was said to be a candidate. When asked which company bid highest for Sogou, Zhang Chaoyang, founder of Sohu, said that if he sold Sogou to Qihoo 360, it would benefit Qihoo 360 only; however, Sogou now can develop independently.

Pony Ma Huateng, founder of Tencent, said that this move is not totally for striking Qihoo 360 and he values Sogou’s capacity to make money from traffic.

Wang Xiaochuan, who developed Sogou’s input method, predicted that there will be three major forces in the search engine market and Sogou will soon rise to the second place in the mobile sector.

Three years after Google’s quit from China, Baidu dominates the market with a share of more than 60 percent, according to the statistics of CNZZ. Qihoo 360 comes second with around 17 percent. Sogou and Tencent’s Soso, before this merge, account for 10 percent and 3 percent respectively.

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