In 2001, Feng Xiaogang's New Year movie "Big Names" was released, and in the baggage-packed movie, the sentence "They Are Sohu, we search for dogs... Each of them is not particularly amused in it.
But 2 years later, Sohu itself really formed another brand - "Sogou"!
In August 2004, Sohu officially launched "Sogou", which was the world's first third-generation interactive Chinese search engine at that time, and was an important milestone in the history of search technology development.
Later, with the further expansion of the business map, a series of brands such as "Sogou Input Method" and "Sogou Browser" were incubated.
After 17 years of ups and downs, Sogou, which once struggled to survive within Sohu and obtained independent operation rights, has now lost its free body again and switched to Tencent.
On September 24, Sogou officially announced that after more than a year of twists and turns, it officially completed the privatization transaction and merged with Tencent.
Sogou expects to complete its delisting in early October. After delisting, Sogou will become an indirect wholly-owned subsidiary of Tencent Holdings and be included in Tencent's PGC business segment, in line with Tencent's original products; according to a number of media reports, Sogou search and input method will continue to maintain the "Sogou" brand for operation in the future.
Sohu, on the other hand, announced that Sohu Search sold all of Sogou's Class A common shares and Class B common shares at a trading price of $9 per share. Sohu, which holds 33.8% of Sogou's shares, will receive $1.18 billion in funding after the deal closes and will no longer hold any ownership interest in Sogou.
But Wang Xiaochuan himself will not follow the team into Tencent.
Since its inception in 2014 within Sohu, Sogou has gone through a difficult journey of independence and then joined another big man.
It is foreseeable that this incident will have a huge impact on the entire search industry and even the pattern of China's Internet.
A difficult road to independence
When it comes to Sogou, no one will forget CEO Wang Xiaochuan.
The most famous rumor about Wang Xiaochuan is that Zhang Chaoyang once personally called Wang Xiaochuan for nearly an hour, in order to book in advance the talented teenager who was still in Tsinghua at the time to continue graduate school.
Speaking of Wang Xiaochuan's relationship with Zhang Chaoyang, we have to mention another website that has been almost silent in the social network war today - ChinaRen. It was founded by Wang Xiaochuan's three Tsinghua seniors, Chen Yizhou, Zhou Yunfan and Yang Ning, who had just started their own Internet journey under the call of college students to start their own businesses.
At first, they just made a website form that was still the mainstream of social networking sites at the time- BBS, but soon found that the speed could not keep up. The three young entrepreneurs suffered a blow, so Chen Yizhou found Wang Xiaochuan, a 96-level student, and pulled him into ChinaRen.
In 1999, Wang Xiaochuan, who was still in his third year, faced with a part-time monthly salary of 8,000 yuan, he could not refuse, so he began to work for ChinaRen. Under his leadership, a team of 8 people spent a month completing the first important task that Chen Yizhou gave him - to launch a news system with comments. Eight months after the launch of the new feature, ChinaRen became the fourth largest website on the Chinese Internet at that time.
Wang Xiaochuan's technical strength was recognized, but he still refused to formally join, choosing to study at tsinghua high-energy computing institute and continue to work as a senior as a part-time student. At the end of the year, Sohu officially acquired ChinaRen, and Wang Xiaochuan returned to Tsinghua to continue his studies.
It is this part-time experience and the acquisition of Sohu that makes Wang Xiaochuan enter Zhang Chaoyang's vision. Allegedly, Zhang Chaoyang personally made a part-time position to retain, and made a promise from a local tycoon: "How long can I wait for you when you go to school, and how much money you want I will give you." ”
After graduation, Wang Xiaochuan did join the company at the invitation of Zhang Chaoyang, and was promoted to vice president of Sohu and in charge of technology, only 2 years after he joined Sohu.
Zhang Chaoyang decided to launch Sogou's purpose, of course, to enhance Sohu's search function, mainly operating Sohu's search business. But the start was not smooth, when Zhang Chaoyang found Wang Xiaochuan, he only gave him a quota of 6 employees, but asked him to kill Baidu from the search.
Mastering the search is equivalent to mastering the traffic entrance, and Zhang Chaoyang, who does not want to be pinched by Baidu, took this step is also expected.
At that time, Wang Xiaochuan, who had just joined Sohu and was still young, gladly accepted the order, but later found that Sohu's programmers could not even write C language, he returned to Tsinghua to find 12 students, and Zhang Chaoyang explained that he only used 6 people's money to feed 12 people.
It was this group of people who took 11 months to launch Sogou in August 2004.
Subsequently, under the leadership of Wang Xiaochuan, Sohu acquired Graphics World and introduced its rich map data and application experience into Sogou, launched the Sogou input method in 2006, and once launched, it became popular on the Internet.
However, although Sogou Search is alive, it is still far from killing Baidu.
Wang Xiaochuan believes that in order to seize the traffic entrance, it is necessary to seize the user's desktop entrance first. If you want to do a good search, you can do the browser first.
However, Zhang Chaoyang does not share this view: "Microsoft's IE market share is so large, it has not made Bing (Microsoft search engine products), why can the browser be made into Sogou search?" In Zhang Chaoyang's view, the browser is not very helpful to Sohu's overall strategy.
A fierce conflict broke out between the two, and Wang Xiaochuan was directly removed from the search business. But he didn't go, still bent on being a browser. By 2008, he had actually made it.
In 2008, Sohu became the official news website of the Beijing Olympic Games, and with this wave of dividends, Sogou browser quickly jumped to the top three in China. Wang Xiaochuan returned to the position of CEO of Sogou.
But the idea of independence may have arisen at this point.
In 2009, Baidu once wanted to poach Wang Xiaochuan, but Wang Xiaochuan could not give up Sogou and finally failed.
In 2010, Google announced its official withdrawal from the Chinese market, seeing this gap, and the "red-clad sect leader" of 360 also thought about Sogou and wanted to buy the ownership of Sogou.
But Wang Xiaochuan had another idea, and went to Ali himself to see Ma Yun. Under the impetus of Ali, Sogou completed the spin-off in August of that year, with Ali accounting for 10% of the shares, but as an important strategic shareholder, it has voting rights on the board of directors.
This time, Sogou is finally independent.
In the end, Tencent was chosen
In 2013, Baidu, which had been in a bad relationship, reached a settlement with Ali. Sogou's weight in Alibaba's business map was reduced, so Sohu spent $25.8 million to buy back 10% of Sogou's equity.
The "Red Sect Leader" appeared again; of course, Baidu also appeared, this time agreeing to take the entire Sogou away.
But Wang Xiaochuan, faced with Ali's withdrawal, business homogenization of Baidu and 360, which has very different values, thought of a fourth way - Tencent.
In September 2013, Tencent strategically invested 448 million US dollars in Sogou, becoming the largest shareholder of Sogou. Along with this injection into Sogou, Tencent's original search business and QQ input method were incorporated, and the WeChat search function killer was launched exclusively in Sogou.
Source: WeChat
Sogou's latest earnings report shows that Tencent holds 39.10%, Sohu holds 32.82%, Zhang Chaoyang holds 6.37%, and Wang Xiaochuan holds about 5.55%.
However, this cooperation with Tencent completely angered Zhou Hongyi, according to the report of the technology media 8 years ago, Zhou Hongyi raised the matter and indignantly proposed:
I talked to him (Zhang Chaoyang) that after the merger, Lao Zhang became a shareholder of the new company, so Lao Zhang was very willing to do this. Later, we talked about feeling that this company is not surnamed Zhang, it is surnamed Wang.
In September 2017, Sogou was listed on the New York Stock Exchange, and the market value of Sogou exceeded US$5 billion on the day of listing at the issue price.
For Tencent, some analysts mentioned:
"Sogou has its important places, its input method, search business, can make up for the shortcomings of Tencent's two areas, and after Sogou integrates into Tencent, it is more conducive to the realization of these two businesses."
The delisting plan first occurred last year, but it wasn't until September 24 that the acquisition finally came to an end.
At this time, it has been exactly 8 years since Tencent entered the shares, and it has been exactly 4 years since Sogou was listed.
The road ahead for Sogou, Sohu and Tencent
Although according to previous articles on Wall Street, due to two major reasons, before the merger, Sogou had about 500 employees who chose to leave.
There are two main reasons behind this, and the change in one of its grades. Tencent's PGC business group has a "point of view" department, and there are 18 centers under the point of view, Sogou will exist as a center under the point of view, so most of the original Sogou employees will face the dilemma of reduced rank.
The second is the change of business form. Sogou's original organizational structure was partial to business, but after transferring to Tencent, Sogou may exist in the form of a technical middle office.
For many employees, this change may not be a good thing, but for Sogou, Sohu and Sogou itself, it is most likely a good thing.
Sogou itself is losing money; Sohu's business focus direction does not need Sogou's technology; and Sogou's technology is a key role for Tencent.
1. Tencent
For Tencent, its biggest advantage is that it has a super large content platform and the largest social user base, while Sogou brings more technology increments.
From the perspective of content recommendation technology, Sogou AI technology can improve the accuracy of content recommendation in Tencent's ecology.
In terms of language interaction, you can improve the user experience. Previously, Zhang Xiaolong once mentioned:
WeChat originally did not want to do the input method, but received many complaints from users, saying that their chat history was stolen by the input method, because what they entered would see the corresponding advertisement.
Sogou's input methods, voice recognition, etc. will greatly improve the user experience of Tencent's products.
And search is more than an indispensable part of all super content platforms. Creating another "Baidu" within WeChat is a better ending.
Sogou's search technology has been verified in the cooperation case with Zhihu.
When Zhihu was first launched, the search function was a weakness, and in 2015, the two companies cooperated on the search business, Knowing Hu opened up data to Sogou, and Sogou provided Zhihu search for Zhihu. This cooperation has greatly improved the efficiency of Zhihu, although Zhihu itself is not a search engine, but for many deep content users, Zhihu has become another form of search engine.
Although Tencent already has a team within itself doing search, input method and voice-related work, the technical energy brought by Sogou is also significant, and its long-term accumulation of data and language AI technology will also play an important role.
2. Sohu
For Sohu, this time it is light.
On the one hand, Sohu's 33.82% stake will bring in a solid $1.18 billion; that's a lot of money for Sohu.
Before selling Sogou, Sogou lost money and would bring losses to Sohu. Summing up Sohu in 2020, Zhang Chaoyang said, "In the context of a weak macro economy, Sohu has made a profit this year. If you don't count Sogou, the three sections of Sohu (media, video, and games) add up to a profit. ”
In addition, Sohu's own business growth is also under pressure. From 2016 to 2020, Sohu was in a continuous loss.
$1.18 billion, or about $7.6 billion, is a lot of money for Sohu to make up for years of losses.
Source: Wind, Sohu Annual Report
On the other hand, Sohu also needs to focus further on its new business.
For Sohu, the current main business is Sohu Video, Sohu News and Fox Friends, which are respectively benchmarked against Aiyouteng B, Today's Headlines and Weibo, that is, videos, media, and games, which all need to burn money and focus on it.
Once Sohu was a portal that required input methods, browsers, and searches to grab traffic, but today's Sohu has changed.
Sohu's future focus is to expand revenue, reduce costs and reduce losses, and the sale of Sogou is a steady profit for Sohu, which intends to focus on its main business.
3. Sogou
For Sogou itself and Wang Xiaochuan himself, it has always relied on the support of giants to obtain living space.
Starting from Sohu, introducing Ali, and choosing Tencent, each step is the way that the "small giant" who focuses on the characteristic business has to go. Because all of Sogou's technologies, in the final analysis, need specific business forms to achieve landing; each scene can achieve an APP, but without a scene, it is impossible.
Companies that make a profit by input methods, browsers, or search alone are almost non-existent today.
The advertising revenue brought by search traffic is falling lower and lower in Baidu's revenue; UC browsers are being marginalized; and input methods are almost non-existent and profitable.
Of course, there is nothing wrong with Wang Xiaochuan's pursuit of independence, but as a technology-based company, if Sogou does not explore the monetization model from the perspective of business logic, then it is wise to seek to bind large traffic users to achieve technical realization.
After the mobile Internet started, Sohu has lost the ability to give Sogou more traffic, and the mutual benefit of the two sides is weakening.
However, switching to Tencent can get more mobile traffic entrances, including Tencent News, QQ browser, etc. In the future, whether on the mobile side or the PC side, Sogou will get more exploration space and bring more benefits to Tencent itself as a technical support department.
Sogou's prospectus revealed that search traffic from Tencent accounted for 38.2%, much higher than the 21.8% of Sogou's own products, almost the same as traffic from mobile phone pre-installation and other channels.
In short, Tencent has given Sogou a bigger stage, a home that is a bit regrettable for founders and employees, but "perfect" at the company level.
The Bureau of Search
From Tencent's point of view, the acquisition of Sogou almost demonstrates its determination to compete with Baidu in traffic and search.
From the current situation, Baidu's status is still unshakable.
According to data given by Statcounter, a U.S. website traffic monitoring agency, in August this year, Baidu rode to the dust with a share of 76.91%, and it continued to strengthen the control of traffic entrance through the promotion of Baidu APP.
As of December 2020, Baidu ranked first with 66.87% of China's search engine market share, and Sogou search ranked second with a market share of 24.54%.
But Baidu and Tencent face a different situation: Baidu is difficult to follow up in the era of mobile Internet, and its C-end is not only difficult to grow, but even has a risk of decline; and Tencent is about to see the culmination of mobile Internet traffic, but the growth rate is no longer high.
Compared with Baidu's software, Tencent's product matrix and content richness are better, and they are not inferior at the overall level.
With The gradual shift of Baidu's focus to "AI ecosystem companies", B-end cloud services and hardware services are replacing the business architecture that once relied on C-end traffic for a living, and its voice and profitability on the C-side are gradually weakening.
Tencent, on the other hand, is taking the C-end mobile Internet + industrial Internet model. According to the Q2 financial report, Tencent achieved revenue of 138.259 billion yuan and net profit attributable to the company's shareholders of 42.587 billion yuan. Among them, Tencent's online game revenue was 43 billion yuan, accounting for about 31% of the total revenue; social network revenue was 29 billion yuan, accounting for 21%; online advertising revenue was 22.8 billion yuan, accounting for 17%; and financial technology and enterprise service revenue was 41.9 billion yuan, accounting for 30%.
Therefore, even after Tencent acquires Sogou, it still does not have the core barriers to face Baidu in the short term; but in the long run, for Tencent, search will still be one of the core strategic sectors, both the consideration of internal content distribution mechanism and the requirement of improving the research and development capabilities of artificial intelligence technology.
In the search space, two other giants that are still making efforts online are also eager to move: Ali and ByteDance.
In June this year, Alibaba Innovation Business Group established the Intelligent Search Business Department, and the Quark APP originating from UC became the core of the layout, and on the search terms of Quark, "young people" and "intelligence" became the main search themes. In May, when Quark launched version 5.0, the official introduced that its active users increased by 5 times in the past year, the search volume increased by 6 times, and users under the age of 25 accounted for more than half.
ByteDance's layout is more far-reaching, in February 2020, "headline search" launched an independent APP, in February this year, Douyin officially announced that the monthly active users of video search have exceeded 550 million.
This further shows that for Internet giants, whether first or later, as long as the business layout is still focused on online and standardized business, search is a traffic cake that cannot be put down; from the technical and product level, the search engine is the cornerstone of all recommendation engines.
It may not be an exaggeration to use "the world has been suffering for a long time" to describe the battle for search engines, and everyone is waiting for a new change.
Tencent's acquisition of Sogou may not be the moment to lead the war situation to meet great changes, but it may sound a new horn from then on.
End
Wang Xiaochuan once said:
Sogou is injected into assets (Tencent Search, input method business), and today, Sogou is injected into Tencent as an asset.
He led Sogou to witness the entire history of China's Internet, and as a "small giant" to survive under the shade of giants, he experienced a whole cycle.
At this moment, whether he himself is ready for the next battle after leaving Sogou, Sogou will continue to bravely write a new chapter in the search battlefield.
Once derived from the brand name of the movie, now it is really necessary to respond to the line: "Each searches for each other".
This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, opinions or conclusions in this article are appropriate for their particular situation. The market is risky, investment needs to be cautious, please judge and make decisions independently.