Years ago, Tencent had already become the largest shareholder of Sogou. As of the first quarter of 2020, the former held 39.2% of the latter's shares. In terms of financial investment, the return is almost negligible for Tencent, a company known for its investment acumen. However, against the backdrop of new iterations and upgrades in search engine technology, the strategic significance is not to be underestimated.
The Great Opportunity in Search
In the current landscape of search competition, the rivalry between ByteDance and Baidu is intensifying. The former has not only poached several key search executives from Baidu but is also experimenting with launching search advertisements, directly targeting the core revenue source of Baidu.
Against this backdrop, Tencent signed a privatization agreement with Sogou, adding a new variable to the search competition.
Going back to 2013, Tencent bundled its non-core search business into Sogou and invested $448 million to strategically acquire a 36.5% stake in the company.
“Tencent’s mindset is more open than before. We don’t need to own 100% of every business we operate. It can be done through cooperation or joint ventures,” said Ma Huateng, CEO of Tencent, when announcing the investment in Sogou.
Now, Tencent is spending $3.5 billion to fully acquire Sogou, primarily triggered by the enormous opportunity in the search engine sector.
ByteDance, Huawei, and Alibaba have all accelerated their efforts, launching Toutiao Search, Huawei Search, and Quark Search respectively. Among them, ByteDance, which has gained an early advantage in short videos and information services, is particularly aggressive. Of course, WeChat, with its 1 billion users, is no ordinary player either, having been making moves in this space for quite some time.
More importantly, the search function that once required significant effort but failed to yield satisfactory results...