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Qihoo 360 (UNKNOWN: QIHU.DL ) may be taking a page out of the Bing playbook.
Reports late last week claim that the new Chinese dot-com darling is in talks to acquire Sohu.com's (NASDAQ: SOHU ) Sogou search engine.
Qihoo 360 wasn't even in the search market until it booted Google (NASDAQ: GOOGL ) as the provider of default searches on its popular Web browser last summer. Taking advantage of the traffic from its industry-leading browser and suite of online security software, Qihoo 360 has gone on to claim 15% of the search market in its first year.
Nice work, rookie.
Qihoo 360's arrival has been bad news for Baidu (NASDAQ: BIDU ) , even though China's top dog in search continues to command more than two-thirds of the market.
With the low-lying fruit now out of the way, Qihoo 360 will be pressed to take more substantial bites out of Baidu's stronghold. It's a similar scene that played out closer to home a couple of years ago when Microsoft (NASDAQ: MSFT ) introduced Bing. After a hot initial start, organic growth began to stall so Mr. Softy cut a big check to outsource Yahoo.com's search business. Combining the silver and bronze medalists would give Microsoft more clout with advertisers.
Baidu wouldn't mind if things played out that way. Despite Bing broadening its presence, Google itself hasn't suffered as a result of the alliance. Google continues to cling to a dominant share of the stateside search market, and the shares hit an all-time high last week.
The only thing to watch here is if Baidu makes a play for Sogou.
Sogou is a distant third in this market with just 9% of the market, but it may be in Baidu's best interest to keep Qihoo 360 from growing to nearly a quarter of the market if the deal goes through. Then again, Bing hasn't been able to do much with that kind of stake. It actually probably even helped Google commit to future acquisitions by not making it seem like a monopoly.
Baidu can let Qihoo 360 buy Sogou and still come out ahead.
The only guaranteed winner here will probably be Sohu. Analysts feel that Sogou can fetch between $1 billion and $1.4 billion in an asset sale. This is a small part of Sohu's overall business, yet its enterprise value is currently just $2 billion.
The search for growth never ends.
There's an even bigger tech battle brewing closer to home
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