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Reports are emerging that Baidu (NASDAQ:BIDU), China’s most-used search engine, tried – but failed – to acquire its smaller rival, Sogou, earlier this year. The opportunity is said to have come and gone, and would’ve marked an all too rare acquisition in the country’s fierce but fragmented web scene. Contacted this afternoon by TiA, a Baidu representative could not be drawn to comment.
Though Sogou’s search engine – a subsidiary of web portal Sohu (NASDAQ:SOHU) – is a fairly minor player in China, it has been growing rapidly, and by some metrics it was seen to surpass Google late last year to become local netizen’s second-favourite search tool. Its financials are strong too, with the search engine and affiliated Sogou products bringing in US$23 million in 2012 Q1. Sogou was spun-off from Sohu nearly two years ago, and has seen constant growth in its earnings thereafter.
Baidu snapping up Sogou would’ve made sense in other respects as well: Sohu’s search product is perhaps more of a threat to Baidu’s market share than Google is in China; Sogou and Baidu have lots of overlapping and directly competing services and apps, such as online maps and Chinese-language input method editor (IME) apps; and, as a corollary of that last point, such an acquisition would have brought in a lot of relevant talent that could quickly make the leap to Baidu’s products. Furthermore, Sogou has been pretty innovative, and is currently working on what’s thought to be a voice search system quite similar to Apple’s Siri.
But Baidu seems to have nailed voice search all by itself, as it showed last week with the launch of its budget smartphone with Changhong. In many other ways, it’s also way ahead of it’s smaller rival in making the critical leap to mobile.
So, unless Baidu is sitting on a piece of news, the report suggests that the moment has passed, and no consolidation in the search sector is about to happen. Business as usual, then.
[Source: Time Weekly; via Donews - article in Chinese]
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