Sohu Exec on CNNIC's Internet Search Survey Results (SOHU)

by: Ezra Marbach

Last week Beijing-based China Internet Network Information Center (CNNIC) released survey results showing Google (ticker: GOOG) losing market share to Baidu (ticker: BIDU) in China. The survey also showed Sohu (ticker: SOHU) owning a mere 4.6% of China's Internet search market -- this despite CEO Zhang's great expectations for Sohu search engine and seemingly daily statements about its growth and success. Here is an e-mail response I received from an executive at Sohu discussing CNNIC's survey results:

....We do not believe the CNNIC report provide an objective view on the actual market situation of our sponsored search business. There are other more independent and objective research results available such as Alexa.

For our sponsored search business, we have been continuing to see the growth in this segment. We have been launching new products (such as music search, map search) to internet users so as to further increase the traffic. We believe continuous enhancement of users' experience is the most important strategy for a one-year old search engines like Sogou. On the other hand, we have also started to monetize our Sogou since May 2005. But we intend to carry out our monetization plan in a controlled manner so that the user experience will not be materially affected.

SOHU chart.