Sohu is selling 16 per cent of Sogou to Alibaba Group, parent company of Hong Kong-listed Alibaba.com.
Meanwhile, another 16 per cent is being sold to a fund invested by Sohu chairman Charles Zhang, according to a statement released by the company. Sohu is holding the remaining 68 per cent.
Wang Xiaochuan, Sohu's chief technology officer, is stepping in as chief executive officer of Sogou.
Currently, Sogou lags far behind the two biggest players in China’s search market, Baidu and Google. The latter pulled out of the country and relocated its servers to Hong Kong but still gets huge traffic from devoted users.