Qihoo Seeks Potent Partner in Google 奇虎或牵手谷歌 瞄准中国市场
The Year of the Snake could well go down as the time when Baidu (Nasdaq: BIDU) finally lost its dominance over China’s lucrative online search market, following the rapid rise of a new challenger from up-and-comer Qihoo 360 (NYSE: QIHU) that may soon tie-up with global search titan Google (Nasdaq: GOOG). Such an alliance would mark the latest assault in Qihoo’s campaign that has seen its so.com site soar past other more established players to become China’s second largest search engine in just half a year.
Such a tie-up would provide a major boost to Qihoo, helping it to quickly monetize so.com by instantly giving it access to Google’s sophisticated and far-reaching advertising networks and search technology. Such a move also would provide a welcome dose of competition for China’s search market, which has been dominated by Baidu for much of the last decade.
Longer term, such a tie-up could also eventually lead to Google’s purchase of a strategic stake in Qihoo, marking the US search giant’s return to the China market through a Chinese-controlled partnership that would be more to Beijing’s liking. Google was the controlling stakeholder in its previous China search business, which led to frequent clashes with Beijing over China’s strict self-censorship rules and Google’s high-profile withdrawal from the market in 2010.
Qihoo has made steady headlines since last summer following the launch of so.com, which includes a number of innovative features such as integrated searching that allows users to query several major engines with just a single search. It also formed a number of tie-ups with other Chinese content providers, before news emerged last week of a potential Google alliance that would be its biggest partnership to date. (English article)
Qihoo wouldn’t confirm the talks, but the tie-up would most likely initially involve a partnership that would give Qihoo access to Google’s technology and advertising resources. That would allow both Qihoo and Google to quickly ramp up so.com, benefiting both companies through a revenue-sharing agreement.
Data released last week show that Qihoo’s share of the China search market officially crossed into double-digits in December, reaching about 10.4 percent. (English article) That share was still well behind Baidu’s 72 percent share; but it was also solidly ahead of the third biggest player, Sohu’s (Nasdaq: SOHU) Sogou, which had about 8 percent of the market after nearly a decade in operation.
Google was China’s fourth on the list with about 5 percent share, but that number is down sharply over the last 3 years since it withdrew from China and moved its China-focused search business to Hong Kong. A new tie-up between Google and Qihoo would instantly create a solid number-two player with a combined 15 percent share of the market.
While that’s still just a small fraction of Baidu’s share, there’s no indication that Qihoo’s momentum will slow at all in 2013. If anything, Qihoo’s could even see its share gains pick up speed up if it finalizes a new partnership with Google, giving it a powerful new allay in its assault on the Chinese search market.
Bottom line: A potential new alliance between Qihoo and Google could help the latter’s market share gains accelerate in 2013, taking its share as high as 30 percent by year end.
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