Qihoo loses 'unfair competition' lawsuits to Baidu, Tencent

[UPDATE] Chinese Internet company ordered to pay damages of over US$800,000 in total for losing two lawsuits related to unfair competition through its search engine and antivirus software; it also has to publish apologies to Baidu and Tencent.
Written by Ellyne Phneah, Contributor on

Over the weekend, Qihoo 360 lost two lawsuits to Baidu and Tencent relating to unfair competition, and was ordered to pay damages and published apologies to both firms.

Qihoo 360 was ordered to pay fines and publish apologies to Baidu and Tencent.

The Beijing High People's Court on Sunday ruled in favor of Baidu's unfair competition lawsuit against Qihoo and ordered the latter to pay a fine of 450,000 yuan (US$72,000), NBD news site reported.

In addition, Qihoo 360 has to publish an apology over 15 days in a variety of technology, legal and intellecual property (IP) rights, and print journals such as Sina Tech and Legal Daily.

Baidu filed the lawsuit in late February, alleging after the Qihoo's own search engine was launched in the second half of 2012, Qihoo had stolen Web site content and infringed on Internet service protocols. The search had asked for 100 million yuan (US$16 million) in damages from Qihoo 360's infringement.

This comes after Qihoo lost another lawsuit to Tencent on Friday, when the Guangdong Higher People's Court ruled partially in favor of Tencent against Qihoo, a separate report by DoNews noted.

Tencent had sued Qihoo 360 in September 2012, alleging Qihoo 360's "KouKou Bodyguard" security software had modified Tencent's chat platform QQ, caused damage to the product and stopped QQ from running on computers installed with Qihoo 360 software. Tencent had demanded 125 million yuan (US$19.7 million) in damages from Qihoo 360.

While the judge had dismissed Tencent's claim for US$19.7 million in compensation for the alleged losses, it ruled that Qihoo must pay 5 million yuan (US$800,000), and also display a prominent apology to Tencent on one of its portal homepages for a period of 15 days.

Qihoo to file appeal for Tencent

In response to the Tencent case, Qihoo said in a statement: "While we respect any court's opinion, we disagree with the Guangdong court’s ruling. We believe the current ruling reflects heavy influence of regional protectionism, [since] Tencent is located in Guangdong, and is based on weak legal merit.

"We will file an appeal to the Supreme People's Court of the People's Republic of China to pursue a fair court proceeding and objective judgment. We believe that an ultimate fair ruling in this case has significant implication to the healthy development of Chinese Internet industry and the protection of Chinese consumers."

Qihoo pointed out efforts to "protect" a business model through legal proceedings may set a very dangerous precedence to suffocate innovations and creativities. "That's why we intend to bring this case as well as the groundbreaking antitrust case against Tencent to the highest people’s court in China," it added in the statement.

In response to the Baidu case, Qihoo's CEO Zhou Hong Yi said in a microblog post on Sunday, "To some people, Qihoo 360 is a thorn in their eyes, but I would like to tell you this is not true. Qihoo 360 will not do such things because we would lose the trust of our users and ultimately, our business."

Updated April 30, 2013: added statement from Qihoo

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