Vultures circle over Google's lost market share

10:11, August 10, 2010      

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Sohu.com Inc, operator of China's fourth most-visited Web portal, said on Monday it will link up with Alibaba Group in an effort to grab market share lost by Google Inc.

Sohu said Alibaba Group and Yunfeng Fund, a private fund, would take a 16 percent stake in its search engine subsidiary Sogou.com.

The company did not reveal the amount of the new investment.

This is a major move among smaller search engine providers since Google rerouted its online search service from mainland to Hong Kong earlier this year.

In early July, mainland authorities renewed the license of Google's domestic website, securing its presence in the world's biggest Internet market. "Google left huge market opportunities in China," said Charles Zhang, chairman of Sohu.com.

He said the company hopes to overtake Google to be China's second largest search engine operator.

Sogou will also intensify its partnership with Alibaba and Taobao after the deal, Zhang added.

In addition to Alibaba's funding, Sohu's Zhang will hold 16 percent of Sogou, the remaining 68 percent is still occupied by Sohu.com Inc, according to the company.

Wang Xiaochuan, who helped launch Sogou Search in 2004 and now acts as the chief technology officer of Sohu.com, will be the chief executive officer of Sogou after it finishes reorganization.

Given the close relationship between Alibaba Group and Yahoo, Zhang on Monday admitted that Sogou might introduce search engine technology from Yahoo.

Yahoo announced in 2005 that it would purchase a 40 percent stake in Alibaba for $1 billion plus Yahoo's Chinese assets. Alibaba Group then took charge of China Yahoo and was authorized to use Yahoo's search technology.

With Baidu working overtime to soak up Google's lost market share, the new alliance may not be good news for the portal.

"I think the partnership between Sogou and Alibaba will have a huge impact on Baidu Inc," said Li Zhi, researcher at Analysys International.

She also said because Alibaba and Baidu are two major competitors in China's online advertising market, the partnership will inevitably draw many advertisers away from Baidu.

Google Inc has seen its market share decline after it was involved in a spat with the Chinese government since January. Figures from domestic research firm Analysys International showed that its market share dropped to 24.2 percent in the three months to June, from 30.9 percent in the first quarter.

Sogou accounted for 0.8 percent of China's online search market in the second quarter, the research firm said.

Source:China Daily

(Editor:黄蓓蓓)

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