SOHU Inc is making efforts to boost its search business through an alliance with e-commerce giant Alibaba Group, hoping to tap the growing number of online shoppers in the country.

Sohu will spin off the unit for its Sogou online search business and has signed a framework agreement to have Alibaba Group as its strategic investor in the new entity, the company said in a statement late on Monday.

The preliminary agreement will allow Alibaba Group and Yunfeng Fund LP, a private-equity fund backed my Alibaba Chairman Jack Ma, to have 16 percent stake in the new company.

Charles Zhang, chairman and chief executive officer of Sohu, will also take 16 percent stake in the new company by buying preferred shares.

"Sogou aims to become the second-largest search engine in the country," said Zhang.

Sohu will remain the controlling shareholder of the new firm with the remaining 68 percent stake.

The two sides will deepen cooperation on search business and e-commerce, which may pose a threat to China's biggest search engine Baidu.

Sogou will include products from Taobao in its search results as it tries to lure new users since e-commerce is not a part of Sohu's operations, which cover portal service, online video and games.

"Increasing demand for online shopping cannot be neglected and the Internet industry needs more cooperation between big players like this one," said Liu Xingliang, an industry observer.

Baidu's market share in the domestic search market exceeded 70 percent for the first time, hitting 70.8 percent, in the second quarter, according to a latest report by Internet consultancy iResearch Inc.

Google recorded a 27.3 percent market share, down from the 29.5 percent in the previous quarter. Sogou ranks third with 0.8 percent market share, lower from 1 percent in the first quarter.