Chinese web giant Tencent boosts its search engine, takes stake in rival for $448 million

China’s top web companies are on an acquisition blitz this year. The latest big stake grab comes in the realm of search engines, with Chinese web giant Tencent (HKG:0700) confirming today that it has bought a 36.5 percent slice of search engine rival Sogou.

Sogou is the search engine and software subsidiary of Chinese web portal Sohu (NASDAQ:SOHU). It has been the subject of buy-out rumors for months, with China’s second biggest search engine, Qihoo, thought to be the buyer. But apparently not.

Tencent’s own search engine is at Soso.com, which has just over three percent of China’s search engine market; Baidu dominates the sector. Sogou is doing better, with nine percent share. The two sites remain separate, but there will be some integration; that will also happen with Sogou’s popular apps, such as its Windows web browser (a great source of search engine traffic) and its Chinese text input/keyboard apps for PC and Android.

Indeed, today’s announcement teases that Sogou’s Chinese keyboard app could be integrated into Tencent’s QQ and WeChat apps.

Today’s announcement says the 36.5 percent stake in Sogou could rise to 40 percent “in the near future.” Tencent’s president and COO take two seats on Sogou’s board. Wang Xiaochuan remains Sogou SEO.

Tencent founder and CEO Pony Ma says today:

We believe Sogou is the ideal partner for Tencent to further develop search opportunities within China. This reinforces our “open, win-win” philosophy of working with leading teams to create innovative products for users, and build a healthy, diversified ecosystem for the industry.

We have high regard for Sogou’s strong innovation capabilities and successful execution track record. We are confident that Sogou, after combination with Soso, will deliver superior search experiences to users on our social, browser and content platforms, especially on the mobile front.

(Editing by Paul Bischoff)