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Can Sohu and Qihoo 360 Beat Up Baidu?

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Taking down a giant is never easy, but it helps to have friends along the way.

Time Weekly -- as retold by the Tech in Asia blog -- is reporting that a rumored meeting between the CEOs of Qihoo 360 (UNKNOWN: QIHU.DL  ) and's (NASDAQ: SOHU  ) Sogou took place. The plan, one would imagine, would be to create an alliance to help China's second- and third-largest players in search take on market leader Baidu (NASDAQ: BIDU  ) .

The blueprints look familiar. It's the same strategy that Microsoft (NASDAQ: MSFT  ) used in populating the Web with Bing search boxes to take on Google (NASDAQ: GOOGL  ) . However, it remains to be seen what a potential alliance between China's smaller search engines would accomplish. Baidu's market share in China is much larger than Google's stateside dominance, and that also means that the silver and bronze medalists have a lot less traffic.

Pride will be another stumbling block. Microsoft was willing to pay billions to take over a larger rival's search real estate. It's hard to fathom Qihoo 360 or Sohu yielding control.

Qihoo 360's engine has exploded on the scene since its summertime launch, and Sogou is also on fire. Sohu reported last week that Sogou's revenue soared 78% in its latest quarter. Will either company be open to working together while they're both on the rise? Microsoft was able to take advantage of this country's second-largest player sliding to arrange for the Bing takeover. It won't be that easy in China.

It will also be that much harder to take down Baidu.

Baidu accounted for nearly 72% of China's search page views in December, according to traffic tracker CNZZ. Qihoo and Sogou accounted for just 18% of the market.

Bing's alliance didn't really make a dent in Google's dominance, and it started with more than 18% of the market between its two combined search partners.

This will still be an interesting battle to watch. The Chinese market is lucrative and large enough to support a few search providers, but investors only prefer to side with a leader when it isn't losing momentum.

Regardless of your short-term view on the Chinese economy, there may be opportunity in Baidu (aka the "Chinese Google"). Our brand new premium report breaks down the dominant Chinese search provider's strengths and weaknesses. Just click here to access it now.

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9/28/2016 4:00 PM
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