Qihoo Takes over Youdao Search, Another Step Closer to Baidu

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Youdao, a sub-brand under Netease, announced today that it has outsourced its search service to Qihoo 360. Then it will focus on its mobile services, Youdao Note (a cloud-based note taking app), Youdao Dictionary (online dictionary) and Huihui (a shopping search and price comparison service).

Youdao started out as a search business several years ago. Its peers back then included Sohu’s Sogou and Tencent’s Soso. As Baidu has dominated search market in China, all the smaller players’ combined market share has been minor. Youdao search’s share was 0.25% as of June 2013, according to CNZZ. Sogou was the only one that gradually grew bigger, having taken 9% of search market share.

The market was suddenly disrupted by Qihoo who launched its own search service So.cn in last August and has gained a 16% market share.  The company made it clear that their target was Baidu. Qihoo confirmed earlier that it was in talks with Sogou on acquisition for an estimated $1.2 billion to $1.4 billion. The combination of the two will represent about a quarter of the search market in China.