China’s antitrust regulator is set to approve a deal for tech giant Tencent Holdings Ltd. to acquire Sogou, China’s third-largest search engine company, according to Reuters.

The Chinese government regulator, State Administration of Market Regulation (SAMR), does not oppose Tencent’s deal to buy the 60% of Sogou it does not already own for $3.5 billion, sources said, but only if Tencent is willing to set up a special mechanism to ensure data security.

Tencent will also have to pay a relatively small fine of 500,000 yuan ($76,000) for failing to properly report the deal for antitrust reviews, in line with previous penalties for similar violation cases.

The move underscores that Chinese regulators are still considering approving mergers and acquisitions in the tech sector, but now with strict conditions after several years of let-downs. The much-anticipated deal, if approved, would ease pressure on the tech sector from the authorities’ anti-monopoly moves against domestic internet giants.

The anti-monopoly move led to the shelving of fintech firm Ant Group’s $37 billion IPO plan last November. And its parent company Alibaba received a sky-high fine of $2.8 billion from the Chinese antitrust regulator on 10 April 2021.

Sogou is China’s third-largest search engine after Baidu and Qihoo 360 and the only search engine for Tencent’s all-purpose app WeChat, according to analytics firm SpeedTest. Tencent first announced this privatization plan in September last year.

Tencent and SAMR did not immediately respond to Reuters’ request for comment. Sogou was also unavailable for comment.

Source: https://www.reuters.com/article/us-china-tech-antitrust-tencent-exclusiv-idUSKBN2BW0IR