Although the acquisition is only completed now,the cooperation between the two sides began as early as 2013.Now in the wechat search,there are also Sogou services,including Sogou encyclopedia,Sogou ask,etc.
In response to the rumor that"after the merger,most of Sogou's businesses and products will be shut down",Tencent responded that after Sogou delisting,the merger will enter a substantive stage.After the merger is completed,Sogou will become an indirect wholly-owned subsidiary of Tencent and complete delisting.
After the acquisition,Sogou will become a wholly-owned subsidiary of Tencent.Sogou's original search,AI,input method and other businesses and browser,reading and other products will be integrated with similar products of Tencent platform and content business group(PCG),and the search,input method and other businesses will maintain the brand operation of Sogou.
If the acquisition took place last year,it would be a common M&A case among large manufacturers.However,in the current anti-monopoly environment,Tencent still chose to acquire Sogou,which made the acquisition attract more attention.
"Sogou has its important place.Its input method and search business can make up for the shortcomings of Tencent in these two fields,and Sogou's integration into Tencent is more conducive to the realization of these two businesses."Zhang Yi,CEO of AI media consulting,analyzes the reasons why Tencent still chooses to acquire Sogou at present.
At present,Tencent has QQ input method and wechat also has search business,which is listed as a key business by Zhang Xiaolong.After Sogou is integrated into Tencent,there will be competition within Tencent.However,Zhang Yi believes that more importantly,Tencent's overall ability is developing in a more solid direction,which will be conducive to Tencent's external competition.
Sogou has twists and turns
According to the announcement issued by Sogou in July last year,Tencent's acquisition of Sogou was planned to be completed in the fourth quarter of last year.As a result,the acquisition was not finally completed until the end of the third quarter of this year and September 24.
The change took place in November last year.On November 10 last year,the State Administration of Market Supervision issued the anti-monopoly guide on the field of platform economy(Exposure Draft).Since then,most of the acquisitions of large Internet companies have been stopped or punished,and more than 10 acquisitions of Tencent alone have been punished.On July 10 this year,the merger of Huya company led by Tencent and Betta International Holdings Co.,Ltd.was prohibited by the State Administration of market supervision.
Whether Tencent can successfully acquire Sogou fell into uncertainty after the second half of last year.On July 13 this year,the State Administration of Market Supervision announced that it unconditionally approved Tencent Holdings Co.,Ltd.to acquire the equity of Sogou company.
Why can the acquisition of Sogou be successfully approved?Zhang Yi believes that Tencent's acceptance of Sogou does not violate the antitrust law under the antitrust framework,"The important point of the anti-monopoly law is whether it has a dominant market position.Sogou's main business is input method and search.The market share of input method is equal to Baidu,accounting for more than 40%each.Sogou's search market share is far less than Baidu.If Baidu buys Sogou,it will trigger anti-monopoly regulations.Tencent buys Sogou,it's no problem."
According to Sogou's announcement,Sohu,which owns 33.8%of Sogou,will receive$1.18 billion after the transaction is completed and will no longer retain any rights and interests of Sogou.Later,Sogou became a wholly-owned subsidiary of Tencent.
Business overlap with wechat and QQ
After Sogou was acquired by Tencent,its business was incorporated into Tencent PCG business group and incorporated by Tencent's focus information flow team.In addition to PCG business group,wechat business group also has search business and take a look.
Zhang Yi believes that Tencent's acquisition of Sogou is a cost-effective thing,which can make up for Tencent's shortcomings in the field of search and input method.Wechat's search business will not start until the end of 2019,while Sogou's search has been done for 17 years,"Sogou has its important place."
Sogou's two main businesses are input method and search.The importance of input method is that it is of great significance for mastering user behavior.Search+input method is a double insurance for mastering user behavior.
Tencent has its own QQ input method and tried Tencent search as early as 2010.Unfortunately,neither of the two businesses has a market advantage.After two years of investment,the person in charge of Tencent search left successively,and this business failed.In the field of input method,the market share of Tencent input method is also far from Baidu input method and Sogou input method.
"Search needs technical reserves,computational power and concentration.Tencent doesn't do a good job in its own search.It's better to buy ready-made Sogou to fill its own strength."In 2013,Tencent took a stake in Sogou for the first time,with a capital injection of US$448 million and a shareholding ratio of 36.5%,becoming the second largest shareholder of Sogou.By the end of 2019,Tencent increased its shareholding ratio of Sogou to 39.1%,becoming its largest shareholder.In September 2021,Tencent completed its wholly-owned acquisition of Sogou.
Now Sogou search forms an internal competitive relationship with wechat search.Zhang Yi believes that it is also normal for Tencent."The two are not a life and death relationship,but work together to compete with the outside,which is also the inevitable result of the development of the enterprise to a certain stage."
External search competition is still fierce
In the last year,in addition to wechat's efforts to search,byte beating and Ali have also laid chess pieces in the search field.
Tiktok and the tiktok search engine are of great value."In the process of user search,it is like to tell your search engine virtually what you want.If the byte bouncing is owned by Baidu,its users will love the headlines or jitter today,and the headlines and jitter will push the advertisements that users like more accurately,and the conversion rate of business will be much higher."
In June last year,Alibaba's innovative business group set up an intelligent search business unit to increase its weight in the search field.In fact,Alibaba needs to acquire Sogou more than Tencent,"which is equivalent to saving a lot of time and expenses for guessing the buyer's mind."
After integrating into Sogou,Tencent's search strength has increased.However,at present,Baidu's search Jianghu is still strong.By the end of 2020,Baidu's search market share is 69%.In contrast,Alibaba and byte beat have done search for more than a year,and there is still a gap in product quality and scale.Even if Tencent acquires Sogou,it still has a long way to go in the search field.