Qihoo (NYSE:QIHU) already has a search engine and Alibaba already has a product search engine, so it makes sense for the two to work together. And that’s what they’re doing.

The tie-up between the two Chinese web giants effectively gives Qihoo a new shopping search option on its 360 Search site, which exploded onto the scene in China last summer. Thanks to Qihoo’s huge traffic from its established web browsers and web portal, Qihoo’s 360 Search instantly became China’s second largest search engine last year.

Basically, it looks to be just Alibaba’s existing eTao shopping search ported over to Qihoo’s site. That’s even evident in the URL 360.etao.com. So it’s not fundamentally new. But it means that Qihoo’s originally spartan search offerings (initially it had just ‘news’, ‘web’ and ‘video’) have now expanded to 11 options.

This partnership gives Qihoo access to everything on eTao, which is perhaps China’s most comprehensive product search engine. Though Alibaba itself has numerous e-commerce companies, eTao indexes content from nearly all of China’s e-stores, not just Alibaba’s own properties. It also gives Qihoo a big boost relative to its nemesis Baidu (NASDAQ:BIDU), which arrived alarmingly late to to this shopping search battle, only launching its own dedicated portal in February this year. ETao and other such sites have been running for years.

For Alibaba, this should be a big shot in the arm for eTao’s traffic and visibility.

Price comparison and shopping search sites are a big battleground in China, covering numerous startups and some other major web portal companies as well. Last year the startup site B5M raised over $7 million in series A funding to grow its own product.

(Hat-tip to Sina Tech (article in Chinese) for spotting this)

Qihoo’s new search engine emerged nearly one year ago.

China’s Qihoo (NYSE:QIHU), a software maker and web portal turned search engine, has reported its Q1 2013 financials this morning. The company hailed a record number of users across its services – a total of 457 million active users in March 2013 – but saw mixed financial numbers.

Revenues were up slightly quarter-on-quarter to $109.9 million (up 58.6 percent in the past year). Operating income fell to $6.8 million in Q1, nearly half that in the previous quarter (and down from $14.4 million a year ago). Operating expenses crept up yet again to hit $89.2 million in the first quarter, nearly double the expense of Q1 2012.

Qihoo, which launched its search engine last summer to capitalize on all the traffic from its web portal and Windows PC software, also revealed a bunch of updated numbers:

• Total monthly active users of Qihoo’s products and services reached a record 457 million in March 2013, compared to 411 million in March 2012.
• Monthly active users of Qihoo’s ‘360 Browser’ across PC and mobile reached a record 332 million in March 2013, compared to 273 million at same point last year. User penetration of these web browser apps in China hit 69.6 percent.
• Average daily unique visitors to Qihoo’s “personal start up page” (hao.360.cn) of paid links rose to 94 million. That web portal generated approximately 489 million clicks.
• Paying users of Qihoo 360’s web game platform were approximately 281,000 in Q1.

Qihoo’s report made no detailed mention of the progress of its search engine (said by CNZZ to be at 12 percent market share in China), nor made any reference to all the company’s iOS apps being banned by Apple. Those issues will surely come up in the conference call later.

Qihoo expects a stronger second quarter with revenues between $142 million and $144 million.

See the full earnings report on the Qihoo IR homepage.

That would certainly seem to be a denial. But interestingly, reporters got a somewhat vaguer text from Sogou CEO Wang Xiaochuan, who told them simply that nothing had yet been finalized. On his microblog account, Wang has denied rumors that he’s slated to join Alibaba. And Sohu CEO Zhang Chaoyang stressed earlier this week that the company has enough cash in the bank that it doesn’t need to put Sogou up for sale.

None of these statements have done much to quash the rumors, however, because it seems no one is willing to come out and directly say: “We’re not selling (or buying) Sogou, period.” Whether or not a deal is ever finalized, the lack of absolute language in all three statements suggests that there is, at the very least, some consideration of an acquisition deal going on behind the scenes. And with Qihoo hoping to pose a more serious threat to Baidu, and Baidu wanting to prevent that, it certainly makes sense that both companies would be looking at Sogou and other minor search players as potential acquisitions to bolster their search offerings.

For now, though, we’ll just have to wait and see. Perhaps someone will outright deny the rumors, or perhaps in a few weeks or months we’ll find out that there was some truth to them when Sogou announces a new investment or merger.

(Tencent Tech via TechWeb)

Sina’s report cites a “knowledgable” source in “investment circles” as saying that Sogou is looking for a buyout, and the three aforementioned internet giants have jumped at the chance. According to the source, Qihoo has offered a $140 million deal that includes cash and stock options, Baidu is offering more in cash (he doesn’t cite a specific sum), and Tencent is mostly in the mix because it wants to be sure Sogou doesn’t go to Qihoo.

Furthermore, the report suggests a difference of opinion high in Sogou’s ranks, with CEO Wang Xiaochuan wanting to take the Qihoo 360 deal while board chair Zhang Chaoyang would prefer to sell to Baidu. But as Zhang has reportedly been taking more personal time of late, Wang has been taking the front seat in the proceedings, and Sina’s source says, “it’s a bit more likely that [Qihoo] 360 will win.”

Of course, this is still just a rumor, even if these kinds of rumors do seem to be coming true a bit lately. We’ve contacted Baidu, Qihoo 360, and Tencent for comment, and will update this story if we hear back, but we don’t expect much as most companies have a general policy of not commenting on rumors. All three of them declined to comment for the Sina Tech story (although apparently none of them denied it outright, which is interesting). Sogou CEO Wang Xiaoquan has called the rumor “unreliable” on his Weibo account.

By some counts, Sogou has the third-largest market share in Chinese search, so acquiring it would be a big boost for Qihoo, which has been struggling to close in on Baidu after its initial grab of more than 10% of the market shortly following its launch. But Sogou’s real value may lie in its widely-used Chinese input method software. The company has already begun to integrate search into its input method in a way that I think is potentially very significant. New applications of that concept could be a nice — and very valuable — bonus that comes along with the boost in market share of buying Sogou.

(via Sina Tech, image deleted)

China’s Top 10 iOS Apps

1. QQ
2. WeChat
3. Sina Weibo
4. Taobao
5. UC Mobile Browser
6. Alipay
7. QQ Spaces
8. QQ Mobile Browser
9. QQ Mobile Music
10. Kingsoft Battery Doctor

China’s Top 10 Android Apps

1. QQ
2. UC Mobile Browser
3. WeChat
4. 360 Mobile Guardian
5. Sina Weibo
6. Taobao
7. Alipay
8. QQ Mobile Browser
9. 360 Mobile Helper
10. QQ Spaces

The biggest difference between the two lists is the rather conspicuous absence of Qihoo products from the iOS list. In fact, Qihoo has four products on the Android top 20 list, but not a single Qihoo product made the top 40 on iResearch’s iOS list. Apple has a history of not being particularly fond of Qihoo’s apps, and it banned them from its App Store back in early 2012. That time, they were quickly reinstated, but they were banned again in late January of this year and are apparently under special investigation and still haven’t been re-approved months later.

It’s also worth pointing out that not a single foreign-developed app is featured on either list.

Of course, a more interesting way to measure app popularity is to monitor apps’ time usage; luckily, iResearch has a list for that too (combining both Android and iOS):

Looking at all these lists, if you had to pick a winner the pretty obvious one is Tencent, given that its products (QQ IM, QQ Browser, WeChat, etc) hold the top spot — and a bunch of other spots to boot — on every list. But since most of the apps listed offer free services, we might well call Alibaba another winner, given that its Taobao and Alipay apps exist almost exclusively to help users spend money and yet still made the top ten.

(All data via iResearch)

Chinese web company Qihoo has lost its second lawsuit and legal tussle this week. This time, Qihoo (NYSE:QIHU) was up against search engine rival Baidu (NASDAQ:BIDU) in the Beijing High People’s Court, where a judge ruled in favor of Baidu’s unfair competition suit and ordered Qihoo to pay a fine and publish an apology.

Just two days earlier, another court ruled that Qihoo should pay damages to Tencent in a separate case – and say it’s very sorry.

The Baidu lawsuit against Qihoo dates back to the events of last fall, shortly after Qihoo – initially a web portal and software maker – launched its own search engine. While the Beijing court only imposed a fine of RMB 450,000 (US$72,000), smaller than the damages that must be paid to Tencent, Baidu’s legal claims were quite significant, accusing Qihoo of things like violating industry practices by circumventing Baidu’s block on Qihoo indexing Baidu’s content on sites such as Baike, which is a sort of Wikipedia clone. The court ruling today also accused Qihoo of utilizing Baidu’s search results in its own new search engine.

The leading search engine had earlier accused the newcomer of illegal seizure of Baidu’s intellectual property, and was seeking RMB 100 million ($15 million) in damages. Clearly the judges had a different idea of the value of that content.

Qihoo’s apology to Baidu must be displayed for 15 days [1] – coincidentally the same period of time as its apology to Tencent. But, as noted by Rihanna, I’m guessing that the perpetrator is not very sorry.

(Source: NBD – article in Chinese)

(Source: NBD – article in Chinese)

Earlier this week, the Guangdong Higher People’s Court ruled in favor of Tencent and against Qihoo in a lawsuit filed over the “3Q War” between the two companies that kicked off in 2010. Qihoo was ordered by the court to pay $800,000 to Tencent and to display a prominent apology to the company on its websites.

If this all sounds familiar, it’s because Qihoo has made something of a habit of losing lawsuits to Tencent, having done so previously twice before. But Qihoo’s executive team remains unbowed, and in the wake of the decision, the 21st Century Business Herald is reporting that several executives including blustery CEO Zhou Hongyi have criticized the ruling.

Their beef revolves around the court’s justification for the decision, namely that Tencent’s QQ instant messaging service isn’t a monopoly because it has strong domestic (Sina Weibo) and international (Facebook, MSN, etc.) competitors. Zhou’s argument is essentially that Sina Weibo is too different to be considered a competitor, and that the international competitors shouldn’t count because they are either too different or too unstable or inaccessible in China to count as competitors.

Qihoo vice-chair Qu Xiaodong added that if QQ and Sina Weibo were similar products, Tencent would not have felt compelled to release its own weibo microblogging platform. Chairmain Ji Xiangdong also shed some new light on the cause of Qihoo’s complaints for the first time, apparently telling reporters that when Tencent forced users to choose between QQ and Qihoo’s 360 Safeguard antivirus software, 20 percent of Qihoo’s users uninstalled the software in a single day. Given Qihoo’s user numbers at the time, that would mean that Qihoo lost 40 million users literally overnight. Damn.

Anyway, it’s hard to imagine what Zhou and company hope to accomplish by criticizing the court’s decision publicly, but if the past is any indication, we can look forward to both companies being embroiled in ugly legal battles for the foreseeable future.

(21st Century Business Herald via Sina Tech)

A web-based battle between two Chinese internet giants that dates back to 2010 is finally being put to rest today. Sort of. The Guangdong Higher People’s Court has this afternoon ruled partially in favor of Tencent (HKG:0700), and against Qihoo (NYSE:QIHU), in a legal wrangle over desktop antivirus software. While the judge dismissed Tencent’s claim to RMB 125 million (US$20 million) in compensation for supposed economic loss, Qihoo is now ordered to pay RMB 5 million ($800,000).

In addition, Qihoo must display a prominent apology to Tencent on one of its portal homepages for a period of 15 days. We’ve reached out to Qihoo for comment, and also to find out where the apology will be placed.

Tencent’s lawsuit alleged anti-competitive practices by Qihoo in the heat of a very ugly and public spat in late 2010 between the two companies over antivirus software. It centered around Qihoo’s ‘360 Safe’ antivirus software for Windows PCs and Tencent’s newer QQ antivirus product. The tit-for-tat battle at that time astonished Chinese web users as the rival companies used their software to launch pop-up notifications accusing the other of misdeeds such as blocking their rival app from operating on the computers of people who had rival software installed. At one point, Tencent accused Qihoo of configuring its antivirus software to prevent people from using Tencent’s QQ instant messaging app – and that was a central point of this lawsuit. China’s long-suffering netizens dubbed it the “3Q War” (as in: QQ vs Qihoo).

Back in 2010: Qihoo’s Privacy Protector app accuses the Tencent QQ free antivirus app of scanning and reading sensitive computer files.

Qihoo, for its part, maintained that it was preventing Tencent’s software from accessing excessive personal information.

Qihoo’s own lawsuit against Tencent was rejected last month by the same court, resulting in Qihoo being ordered to pay RMB 790,000 ($125,000) in legal damages. Qihoo lost another verdict in a Beijing court in 2011 over the same affair, and was fined $62,530 for “slander and unfair competition.”

We’ll update when/if we hear back from Qihoo. Perhaps the 3Q War is finally over. The biggest losers in the whole thing, however, are the Chinese software users who got screwed over by both companies.

(Source: Donews – article in Chinese)

(Photo: Associated Press)

Shortly after this weekend’s earthquake near the Chinese city of Ya’an in Sichuan province, which has so far claimed nearly 200 lives with many more still missing, a number of leading web companies rushed to help with the disaster response by setting up online ‘people finder’ message boards.

Here are the five main online resources:

Google’s Person Finder

This is a well-known site in such an emergency, with buttons for “I’m looking for someone” and “I have information about someone”. Google’s dedicated Sichuan quake boards currently have 1,100 records, though it’s not clear how many of those are made up of people looking for missing folks, or actual bits of information about a lost/found individual. The Google site is also nice enough to link to several resources from other web companies, such as the ones listed here.

Baidu Zhidao for Ya’an

Baidu’s Wikipedia-esque Zhidao site now has a dedicated messaging board for the quake-hit area. In contrast to Google’s more closed-off (privacy-oriented?) Person Finder, the Baidu boards are open to anyone to read through.

360 Search for Ya’an

Qihoo’s board emphasizes the names of missing folks in very large type, making it easy to browse through.

Sohu Public Service for Ya’an

Major web portal Sohu has a Google Person Finder-like site (pictured above) split into “want to find” and “want to help” buttons. It also features an open board with Pinterest-style notes for each person being sought. So far, over 7,600 ‘missing’ posts have been made, but many could be duplicate names.

Panguso Post-Quake People Finder

State-run search engine Panguso has had the sense to make this site mobile-friendly, as many people will be turning to their smartphones or feature phones and using 2G or 3G in an area where many buildings and internet lines have been destroyed, or where electricity has not yet been restored.

Earlier today we saw smartphone rivals Apple and Samsung both make sizable donations to post-quake relief efforts. Social sites like Sina Weibo and the messaging app WeChat (known as Weixin in China) are also playing a part as people in the affected area use lots of web and mobile resources to communicate or find information.

Follow the updates on the China Daily live blog.

The very minimal UI of the new Baidu Antivirus app for PC users in China.

After months of testing it in on users in Southeast Asia and then around the world, Chinese search engine Baidu (NASDAQ:BIDU) has now launched its antivirus PC software in China.

It’s a major challenge to arch-rival Qihoo (NYSE:QIHU), which muscled into China’s search engine market last summer but is perhaps best known for its antivirus software.

The Baidu Antivirus app is co-produced with security experts Kapersky. It’s not clear if it’s essentially the same as the earlier Windows app that was marketed overseas as “Baidu PC Faster”. But Baidu’s newest product for its home audience is labeled v1.0 beta 1, and is currently only taking on a limited number of beta testers. Currently, it can’t be downloaded from the new Baidu Antivirus Chinese homepage until it opens up to a new batch of early adopters.

Qihoo’s security credentials have been in the spotlight a lot this year, with numerous allegations of improper data collection and exploitation of users of its PC apps, like its antivirus offerings and its popular 360 Browser for Windows. Not only has a respected Chinese newspaper blasted Qihoo as a “cancer” of the internet, but Apple has banned all of Qihoo’s iOS apps with no explanation. Baidu might be privately seeing this as a good opportunity to win over users to its new app.

To fully challenge Qihoo, Baidu will surely need to create antivirus apps for Android as well.

(Sources: ZOL and Marbridge Daily)

Of course, at just an average of 4.7 Mbps, even Shanghai’s internet isn’t very fast. Still, it dwarfs the average connection speed in last-place-finisher Inner Mongolia, which clocks in at just 2.3 Mbps.

(Qihoo via China Daily)

The answer, it turns out, isn’t all that clear. As you can see in the graph from CNZZ below (we’ve translated it), Qihoo has gained a little bit of ground since last October. CNZZ has Qihoo with 14.87 percent of the search market, which certainly isn’t bad.

Of course, not everyone agrees with those numbers. Hitwise’s latest data (which comes from March) has Qihoo’s market share at only 11.97 percent, and while that still represents growth, Baidu’s market share is also up and at 78.55 percent according to Hitwise. And Guosen researcher Qiu Lin told Sina Tech that their data shows Qihoo having started with around a 10 percent share, then dropping to 8 percent before slowly climbing to its present position at around 12 percent of the market. No matter whose data you’re looking at, though, the message seems pretty clear. Qihoo is growing slowly, but Baidu may be too, and either way Baidu continues to serve the vast majority of China’s search traffic.

Interestingly though, the proportion of Baidu users to 360 Search users can vary a bit depending on what sort of thing users are searching for. Baidu users are always a strong majority of course, but even so, check out the variation in this CNZZ chart of what search engine incoming users used to access some of China’s most popular websites:

Qihoo’s stated goal for its search engine is to reach 40 percent of the market share in 2015, which seems perhaps overly optimistic given the slow growth it has seen over the past six months. Even so, 12 to 15 percent of such a huge market is nothing to sneeze at, and JG Capital reportedly estimates that search could bring in as much as $95 million for the company by the end of this year. And Qiu Lin says his most optimistic estimate for the company’s yearly search revenue for this year is more like $300 million.

Thankfully, since Qihoo is a publicly-traded company (NYSE:QIHU), at some point next year we’ll get to see the real, official numbers instead of just speculation. But there’s likely to be an awful lot of war to be waged between Baidu and Qihoo between now and then, and of course that’s not even mentioning the question of mobile search, which is a much more open market given that many of Chinese mobile users aren’t on smartphones yet and thus haven’t formed their mobile search habits.

(via Sina Tech)

Qihoo 360 is a company that doesn’t have many friends in China’s tech space, and Tencent definitely falls into the company’s ‘enemy’ category. That’s one reason why Qihoo sued Tencent in a case that went to court last year, accusing the company of monopolistic practices (Qihoo CEO Zhou Hongyi even wrote an angry memo about it). But apparently the Guangdong High Court didn’t agree, as it yesterday announced that it had found in favor of Tencent, and ordered Qihoo to pay the company 790,000 RMB ($125,000) in legal damages.

Qihoo’s lawyers have stated that the legal team will consult with the company to determine whether or not it wishes to appeal the court’s decision. If the company does appeal, the case would be elevated to China’s Supreme Court.

Adding some sting to this loss to Tencent will be the fact that Qihoo has lost to Tencent in court before. Back in 2011, a Beijing court ordered Qihoo to apologize to Tencent and to compensate it to the tune of $62,530 for “slander and unfair competition.” And amazingly, the two companies have yet another legal case still in the works, as Tencent sued Qihoo for unfair competition related to its software bundling, asking for 125 million RMB ($20 million) in damages. That case has yet to be decided.

(via Sina Tech)

Perhaps not entirely coincidentally, market leader Baidu (NASDAQ:BIDU) dropped by nearly the same amount in that period of time. Elsewhere in the new traffic pageviews numbers from CNZZ, Google continues its slide down while most of the other rivals are fairly stagnant.

To get a sense of the big impact of Qihoo’s search engine since it launched last August, let’s compare the new February numbers with ones from October last year:

Over that whole time, Baidu has gone down by almost the same as Qihoo has gone up. And don’t forgot that a chunk of Qihoo’s initial share upon arrival on the scene also came from Baidu.

Though Qihoo is currently facing serious charges over abuses of user privacy on its software apps – including the web browser that feeds so much traffic to its fledgling search service – the company posted a strong Q4 financial report earlier this week that caused its share price to hit an all-time high.

(Source: CNZZ data, via Marbridge Daily)

Typing on the keyboard is probably the most fundamental way we interact with any computer, or for that matter almost any digital device. Voice recognition and dictation software might replace it someday, but as any Siri user knows, we’re definitely not there yet. And for Chinese users, input method software is simply a part of the typing process. Because Chinese is written in characters but keyboards tend to use the Latin alphabet, to type anything in Chinese you need software that interprets the phonetic sounds the user types (for example: baidu) into Chinese characters. But of course, many phoentic sounds have multiple possible interpretations, which means that input method software needs to include a graphical user interface (GUI) so that users can choose which baidu they meant (For example, 百度, 拜读, 摆渡, 白都, 败毒 and more would all be typed as baidu).

What that means is that Chinese users are used to clicking things from a GUI as they type. These days, many input methods have incredible predictive text algorithms that make it possible to type long sentences and have the correct characters filled in automatically, but no algorithm is perfect (or knows every proper noun) so some user intervention is always necessary. This is just a part of everyday computing for Chinese users on a more fundamental level than even, say, using a web browser.

How Sogou’s search input method works

So why is Sogou’s implantation of search results into its input method system so significant?

It moves the search war closer to users. Until now, Baidu, Qihoo, and Sogou have been battling for search supremacy mostly within the confines of the web browser. Now, Sogou has brought the war to users’ desktops, their word processors, and even competitors’ websites. If you allow it to, Sogou’s input method search will display the search results you’re looking for even when you’re typing in Baidu.com’s search bar. And since users are already in the habit of interacting with and clicking things in the input method software’s GUI, getting them to click on relevant search results isn’t that much of a stretch. If Sogou’s input method search catches on, Baidu and Qihoo may be forced to produce similar offerings. But neither company has nearly as strong a user base for their input method software as Sogou (in fact, Qihoo doesn’t have any input method product at all). By redefining the battlefield, Sogou has put itself in a strong position — at least, if it gets its users to adopt the new “smart” version of its software.

It feels like a natural extension of language input. When I read about this new feature, I’ll be honest — I was expecting it to be awful. The prospect of having search results pop up as I typed just seemed intrusive and annoying, and if it wasn’t my job, I probably wouldn’t even have bothered to download the software and try it out. But when I did try it, I was very pleasantly surprised. Because it gives you a great deal of leeway in defining where and how the search results pop up, it is simultaneously unobtrusive and convenient, and I could easily see it becoming a regular part of users’ computing experience. After all, why bother booting up a browser when you can just type the search term and see the results you want immediately, no matter what program you’re using?

Search is just the beginning. Sogou’s current implementation of input method search is limited to specific kinds of searches, but it doesn’t have to stay that way. In fact, it doesn’t have to stay search-oriented at all. Imagine simply typing the name of a brand’s product and then purchase that product directly from the desktop in the input method GUI. Or typing the name of a friend from inside any program to bring up a video chat with them, or even share your screen with them. The possibilites are virtually endless, and in moving into input method search, Sogou may have taken us one step closer to a world where users interact much more quickly with the web by not using a browser at all.

Of course, Sogou’s new search input method could just as easily lead to nothing at all. As it’s not a mandatory update to Sogou’s input method software — at least, not yet — many of Sogou’s users may not even know about it, and plenty who do know about it may choose not to download it because it sounds intrusive and pointless. And to be clear, while this product is cool, it isn’t going to change the world by itself. But is it the first step down a new path towards a new way of interacting with the internet? Call me a dreamer, but I think it could be.

Qihoo’s new search engine emerged in mid-2012.

Despite every single one of its iOS apps being banned by Apple right now, and a lot of negative media coverage of how its desktop apps threaten user privacy, Chinese web company Qihoo (NYSE:QIHU) has reported some stellar numbers in its Q4 and full-year 2012 financial report. Markets reacted positively to the news from the software maker and fledgling search engine, pushing Qihoo’s stock price up 6.3 percent in Tuesday trading to hit an all-time high of $34.82 per share.

Before looking at the financial side, Qihoo also rolled out some user numbers. The report states that total monthly active users of Qihoo 360′s products and services reached a record 456 million in December 2012, up from 402 million at the end of 2011. As for its web browser – which is an important traffic driver for its relatively new search engine – the company reported that “monthly active users of Qihoo 360′s browsers reached a record 310 million in December 2012,” up from 255 million the year before. Antivirus apps are another strong area for Qihoo, and it saw mobile users of 360 Mobile Safe rocket from just 53 million in 2011 to 207 million at the end of last year.

Qihoo sailed past its revenue guidance with $103 million in revenues in Q4 (up 64 percent from previous year) to reach $329 million for full-year 2012, almost double that of 2011. Out of all that, $46.8 million was net income.

Chairman and CEO Zhou Hongyi hailed an eventful year in which Qihoo burst into the search segment to take on compatriot rival Baidu. President Qi Xiangdong explained their investment focus:

In 2012, we made proactive investments in product and technology development to further our leadership position and expand our footprint, particularly in mobile internet and search technology where we see tremendous opportunity for future expansion.

Aside from Qihoo’s tussle with Apple over its iOS apps ban – which might seriously impede its mobile strategy in 2013 if it remains unresolved – rival search giant Baidu has instigated a lawsuit over Qihoo’s search mechanisms.

See the full Qihoo financials here.

The Baidu Antivirus app is free and supports everything from XP right up to Windows 8. A Baidu representative could not be drawn to comment on this new release.

In fact, Baidu Antivirus is not entirely new, as the search company launched it under the ‘Baidu PC Faster’ name in Thailand last year, where it was offered for download on a different homepage in both English and Thai. But this new site is the first time that it’s being marketed solely in English to a potential global usership.

Baidu’s biggest export so far seems to be its mobile browser app, which is being particularly aimed at the Middle East and North Africa.

While Baidu’s new app is a challenge to other free antivirus companies around the world, it’s what the app doesn’t do yet that’s more significant. This app is not available in Chinese right now, but it surely will be at some stage. Perhaps this overseas launch is a testing ground before releasing it in Baidu’s home market. When it is made available, Baidu Antivirus will mark a new front in the increasingly intense battle between Baidu and local rival Qihoo (NYSE:QIHU).

That rivalry escalated last summer when Qihoo – which made its name with antivirus apps – launched a search engine that quickly garnered 10 percent market share. Baidu has even started a $15 million lawsuit over some of Qihoo’s search tactics. Qihoo is also under fire from authorities and some security experts over the behavior of its antivirus and desktop browser apps, which are claimed to be doing too many things without seeking the computer owner’s permission.

It’s not clear if Windows users will be too keen on a Chinese-made security app at a time of huge anxiety over hack attacks originating from China. The Baidu Antivirus app is badged as being made by “Baidu (Hong Kong) Limited” on its homepage, despite the firm being based in Beijing.

China’s Qihoo 360 has a lot of enemies. I’m not just talking about Baidu, either; lots of net users dislike the company for its dirty tactics and China’s State Administration for Industry and Commerce (SAIC) has printed publicly that the company has engaged in behaviors most people would call fraudulent. But a recent expose conducted by an independent investigator and printed in the National Business Daily– supposedly the result of months of investigation — suggests that Qihoo is doing an awful lot more than most of its users are even aware of.

The National Business Daily (hereafter: NBD) report presents a laundry list of accusations about Qihoo software, backing many of them up with illustrated screenshots demonstrating what’s going on behind the scenes. Among the many allegations: that Qihoo’s 360 Safe Browser contains a massive security flaw that messes with users Windows DLL files, that it can expose users’ passwords, that it tells users sketchy online payment sites are safe, and that it is making connections the user isn’t aware of even when it’s just loading a blank page. The report also contains more familiar charges like Qihoo products masquerading as official Microsoft patches, forcibly deleting competitor products as “unsafe”, etc.

Qihoo 360 has categorically denied all of the allegations contained in the report in a post on its official BBS forums. From Qihoo’s official translation of its response, provided to Tech in Asia by a Qihoo representative:

The article appears to be an “aggregation” of most of the past false allegations and claims made by our competitors and our foes. It takes those claims from sources such as an “anonymous individual”, a person who lost a lawsuit against us, and a former malware/virus creator, without any basic fact checking. It also completely ignores all the clarification and statements Qihoo 360 has made regarding these false claims, and even ignore [sic] high-profile court rulings in the past, in order to portrait [sic] a totally biased story against Qihoo 360. We are not surprised that someone hates us so much that it [sic] keeps record of all those [sic] garbage and is willing to recycle it in the public domain over and over again. It is not difficult to conclude that there has to be huge economic interest of our foes behind such [an] outrageous attack. We take it very seriously!

In its statement, Qihoo also says that it has filed a complaint against NBD with GAPP (a government organ that regulates the press) and that it plans to sue NBD in court, and will additionally sue “anyone who intentionally spreads such rumor for defamation.”

When asked to respond directly to specific allegations contained in the report, a representative from Qihoo refused, saying that previously published statements should serve as a sufficient response to any questions the report raises. Later, however, the company did publish a number of clarifications that directly address some of the report’s specific allegations.

It is clear that Qihoo’s management considers this report and other “attacks” to be related to its competitors. In a public statement yesterday, Qihoo CEO Zhou Hongyi told reporters that the report and others like it were related to Qihoo’s decision to enter the search engine field. Zhou said that the NBD report was an attempt to “smear” Qihoo. “I think that the essence of this is that 360 decided to take on the big players in China,” he said, “as long as we keep doing search, these kind of smear attacks will continue.”

Qihoo representatives declined to produce any evidence backing up the implication that its competitors are somehow behind the NBD report. A Qihoo representative did link me to this article, which suggests that several of the sources in the NBD report are being paid by Tencent to publish attacks about Qihoo. However, the article contains no evidence to support these claims, and its author is an anonymous Tianya user identified only as shengsheng72011.

After an extended exchange of emails with Tech in Asia, a Qihoo representative implied that Qihoo does have evidence its competitors are behind the NBD piece, but declined to share any, writing: “Sorry mister, the evidences are for the court proceedings.”

Although it obviously doesn’t contain any evidence of a connection to Qihoo competitors, the NBD report does admit that the independent investigator making these claims is biased — he told the NBD he is openly opposed to Qihoo 360, which he considers a “cancer” that should be “cut out” from the internet. His fundamental beef with the company comes from what he interprets to be its frequent violation of the principle of least privilege. Least privilege is a widely accepted computer programming concept that says that any given program should only be automatically given access to what it needs to access to function. Qihoo, the investigator says, breaks this principle frequently.

(You can think about “least privilege” sort of like a repair man: if he shows up to your house and you aren’t home to let him in, he’ll generally just come back later instead of breaking in on his own. Software that ignores the principle of least privilege is more like a repair man who just walks into your house and starts making repairs whether you’re home and aware of his visit or not. The investigator who spoke with the NBD put it even more bluntly: Qihoo is like a residential manager who, when he gets reports of a dog barking, just breaks into the house and shoots the dog. In other words, the investigator is saying Qihoo’s software does way too much in the background without making it clear what is happening and asking the users’ permission.)

Of course, the principle of least privilege is not a law, and even if Qihoo’s software is violating it, there isn’t necessarily anything illegal about that. It does, however, raise privacy concerns for some users. Qihoo representatives refused to respond to a direct query about whether or not the company’s software violates the principle of least privilege.

As with most things relating to Qihoo these days, the NBD report has spiraled into a pretty ugly he-said she-said mess. We’re a bit tired of that story here at Tech in Asia, so in the coming weeks, we’ll be conducting our own investigation into Qihoo’s applications to try to assess what, if anything, they are doing wrong.

If you have expertise in web security and would like to assist in our investigation, please get it touch with us: editors(at)techinasia(dot)com.

According to my imagination, this is what Qihoo’s web-crawling bots look like.

It’s no secret that Baidu and Qihoo 360 aren’t friends. So it likely shouldn’t come as a surprise that Baidu’s $15 million lawsuit against Qihoo couldn’t be settled out of court between the two parties and is now headed into the court system for legal proceedings.

The dispute revolves around Baidu’s robots.txt files. Nearly all websites have robots.txt files that serve as a notification of what “spiders” — the web-crawling bots that search engines and other web services use to index websites — are allowed to crawl the site. This function exists to allow people to control where their sites are listed, and to protect their servers from being overrun by web-crawling spiders that have gone amok. Generally, if a spider sees in a website’s robots.txt file that it has been disallowed from indexing the site, it simply moves on to the next website without indexing the site in question.

But when Baidu added Qihoo’s spiders to robots.txt files on its services like Baike to stop Qihoo from making use of Baidu’s content, Qihoo apparently reprogrammed its spiders to ignore the robots.txt file and crawl Baidu’s site anyway. Baidu’s lawsuit contends that this constitutes a violation of industry practices and amounts to an illegal seizure of Baidu’s intellectual property, and the company is seeking 100 million RMB ($15 million) in damages.

Speaking with the China Business News, a Qihoo representative characterized the robots.txt file as a good-faith request, not a hard-and-fast requirement. Qihoo also stated that content from Baidu Images, its Baike wikipedia service, Baidu Music, Baidu Knows, and more should not be considered Baidu’s intellectual property under copyright law because much of their content was submitted by users. (Not coincidentally, these are the same services Baidu is accusing Qihoo of using its web spiders to copy from).

It’s not clear what will happen with the lawsuit in court. The robots.txt file is not explicitly addressed in the law, but Baidu may be hoping to take Qihoo down with one of China’s commerce laws that, in rather vague language, suggests that companies must compete fairly and respect publicly-known industry standards. But it’s also possible that this lawsuit — not the first public spat in China’s web industry over a robots.txt file — could spur the government to clear things up once and for all by passing legislation that addresses the robots.txt file directly.

Baidu declined to comment on this story but did confirm to Tech in Asia the basic details of it were correct and that the case will indeed be heard by the court.

UPDATE 10:00: In a statement to Tech in Asia, a Qihoo representative said:

We don’t believe Baidu has any merit in this case. We will vigorously present our case to the court.

Regarding our view on robots.txt [...] we will follow robots.txt as along [sic] as robots.txt is not being abused by competitor[s] to unfairly block our access.

(China Business News via Sina Tech, image source)

To say that Qihoo and Baidu don’t like each other would be an understatement. The two CEOs (Zhou Hongyi and Robin Li respectively) have a personal feud that goes back years and that has clearly bled into Qihoo’s strategic planning. Recently, the blustery Zhou has been unusually quiet in the press, and has resolved several disagreements with other tech CEOs. The prevailing theory in the industry seems to be that he has decided to focus on his “true” enemy: Baidu’s Robin Li.

To that end, Time Weekly is reporting that it has obtained information suggesting that Zhou recently met with Sogou CEO Wang Xiaochuan in secret. Although they have sparred in the press before, supposedly at this secret meeting the men discussed a possible partnership between their companies in the search arena. Does that mean that Sogou and 360 Search are going to come together and try to take down Baidu as one unified search engine? Who knows. The meeting and whatever plans the men may have made remain purely a rumor, although both men declined to comment when asked by reporters from Time Weekly whether the meeting had occurred.

Even if a secret alliance — how dramatic sounding! — was formed, though, it will be a long road to the top. 360 Search and Sogou are the second- and third-biggest search engines in China by traffic, but there is still a vast gulf between them and the number one spot. In December, for example, their collective percentage of search engine pageviews in China adds up to just over 18 percent. While that’s certainly nothing to scoff at, it’s still a far cry from Baidu’s dominant 71 percent.

Still, the fact that Zhou has apparently squashed his beef with Wang and Sogou is indication enough that Zhou is dead serious when it comes to taking down Baidu. And of course, Baidu has been making a few moves that seem aimed at taking Qihoo down a peg, too. Although conflicts have been flaring between the companies over the past half-year, it seems possible that this is only the beginning. The first battles have been fought, but a much bigger Baidu-Qihoo war appears to be on the horizon.

(Time Weekly via Sina Tech)

Still banned by Apple: the 360 Browser HD for iPad.

At the start of last week, all the 20+ iOS apps made by Chinese software company and search engine Qihoo (NYSE:QIHU) vanished from Apple’s App Store – and they still haven’t been restored. According to multiple sources in one Chinese media report, Qihoo is in big trouble with Apple (NASDAQ:AAPL) for systematic abuses of its iOS ecosystem. This is not just about manipulating App Store rankings – which Qihoo was allegedly caught doing last year – but also, it is claimed, for encouraging the jailbreaking of iPhones by the way that Qihoo often makes its apps available as single file downloads that can be loaded by users with jailbroken Apple devices.

Qihoo has not commented publicly on the whole matter, and we’ve reached out to its Beijing HQ about these new allegations.

In addition, the QQ Tech source suggests that the removal of Qihoo’s iOS apps was done manually by Apple – not caused by a mere automatically triggered takedown – and therefore amounts to a special investigation into the apps by the Cupertino company. Whereas an automatic takedown can be resolved within a few days, as happened to Qihoo last February, a manual removal by Apple can take longer to sort out, and there’s apparently no timescale for this process. The article claims that Qihoo’s CFO has even dashed to the US to help speed up the restoration of the apps to the App Store.

Banned apps

In the meantime, Qihoo’s iOS apps are, perhaps ironically, only available to users of jailbroken iPhones and iPads. Its Android apps are unaffected. The Qihoo apps missing from the App Store range from its 360 Mobile Assistant to its 360 Browser. This ban will be good news for rival Chinese browser makers, such as market-leading UC Browser or Tencent’s QQ Browser [1].

One possible alternative is that Apple is clamping down on apps that it deems are of little value, and that would affect Qihoo creations such as the afore-mentioned 360 Mobile Assistant, plus its 360 Battery Guard and lots of other ‘utility’ apps of that nature.

Aside from the suggestion that Qihoo’s apps damaged Apple’s ecosystem, it is thought that Qihoo’s iOS software also made use of banned APIs, and were engaged in repeated attempts to rig App Store rankings. Qihoo’s desktop applications are also under the spotlight in China where the State Administration for Industry and Commerce (SAIC) has handed Qihoo an official warning for unfair competition involving collusion and dirty tricks in its Windows-based anti-virus and web browser offerings.

If Qihoo’s self-publishing of its iOS apps is part of the reason for being in trouble, then it would be a worrying precedent for many Chinese web companies and startups. Quite a number of them give users the requisite ‘.ipa’ file as a download so that jailbroken users can load the app outside of Apple’s App Store. It’s a common phenomenon in China with Android apps, but Google’s less draconian ecosystem does allow third-party app stores.

As we saw when Qihoo launched a search engine in China last summer, its large suite of apps is crucial to its massive traffic. So, while Android is used more widely in China, Qihoo will be hurting from being largely invisible to China’s iPhone and iPad users while this ban persists.

(Source: QQ Tech – article in Chinese)

Qihoo has been using creepy trickery to get people to install its software for years. More than a year ago, New York-based Digital Due Diligence released details on 9 sketchy tactics Qihoo made use of to force users to install its software. A year later, has anything changed? No.

The warning statement the SAIC released yesterday details some of the tactics used by Qihoo to try to trick or force people into installing Qihoo’s software, and then keep it there once it’s installed. Here are some examples of things Qihoo has done, all from the SAIC warning statement:

• Making uninstalling the anti-virus software difficult.
• [Faking] incompatibility to prevent the installation of competitors’ software.
• Giving users of non-Qihoo browsers security warnings suggesting their browsers are unsafe.
• Using default settings to trick users into installing the 360 Browser along with Qihoo’s security software.
• Using forced upgrades to change users’ browser and homepage preferences.
• Tricking users into thinking the 360 Browser download is an official patch from Microsoft.

That last one is a particularly nasty trick Qihoo pulled this past August. Through its “360 Defender” security software, it send users what claimed to be a Microsoft Internet Explorer update patch titled KB360018 that professed to fix “an extremely dangerous security leak.” Users who accepted the patch were then forced to install Qihoo’s 360 Browser.

I suppose a warning from the government is better than nothing, but pretending to be Microsoft in order to spread your own software doesn’t just sound like unfair competition to me, it sounds like fraud. In fact, it is fraud, at least going by the dictionary definition. I’m not sure what Chinese law has to say on the subject, but if what Qihoo is doing is currently legal, it should not be, and if it isn’t legal, the company should be prosecuted, not just warned.

Admittedly, I’m not an entirely unbiased observer. I have never liked Qihoo CEO Zhou Hongyi’s blustery management and public relations style, and my time working at Chinese companies with Qihoo security software pre-installed on their computers taught me to hate the 360 suite of products, which seemed to be constantly installing toolbars I didn’t want in the name of “security.” So yes, I have never been Qihoo’s biggest fan. But I can’t imagine how anyone could justify the obviously fraudulent behavior reported by the SAIC.

What’s even more shocking is that Google has set up a sales partnership with Qihoo. I can see where the company is coming from; Baidu has been its main competitor in China, so Google is likely looking at Qihoo and thinking ‘the enemy of my enemy is my friend.’ But that strikes me as very shortsighted. In the long run, Qihoo is another competitor, and in the short-term a partnership with Qihoo could severely damage Google’s brand in China. Google is still seen by many as having taken the high ground in China’s search wars by refusing to censor its results, but the partnership with Qihoo — widely considered one of the least honorable companies in China’s tech sector, and with good reason — could wash all of that away fairly quickly if it becomes widely known the two companies are working together.

Whatever Google does, though, Chinese regulatory authorities should do more to protect users from the fraud and trickery that is perpetrated by Qihoo and other companies like it. An official warning is a good first step, but it is not enough and it should have been issued years ago.

One of China’s top web companies, Qihoo (NYSE:QIHU), has been hit with a significant double blow. First, it was given an official warning about unfair competition with its desktop products; then, in an unrelated move, Apple has banned every single Qihoo app from its iOS App Store. The apps might reappear in a few days, but it’s not the first time this has happened to Qihoo.

As reported by Bloomberg today, Qihoo’s management was summoned to the Beijing Industrial and Commercial Administration Bureau and given “an executive warning that its use of anti-virus software in internet browsers was considered unfair competition.” Qihoo makes China’s top web browser in the form of ‘360 Safe Browser’ and the company first made its name with anti-virus apps for PCs.

Chinese netizens have long raised concerns about Qihoo’s practices with its desktop apps, notably the way that installing one of its apps often leads to a user being forced or coerced into installing others. Last year, researchers uncovered nine dastardly tricks that Qihoo’s web browser was using to exploit its users, including blocking the installation of some rival browser apps on Windows.

Aside from the Bureau’s warning, no punishment was meted out.

Qihoo slapped by Apple – again

But the bigger blow for Qihoo is that all of its iPhone and iPad apps have been removed by Apple from the iTunes App Store. This is not the first time. Almost 12 months ago, all Qihoo’s iOS apps were pulled from the store, only to be reinstated a few days later. We’ve reached out to Qihoo to comment on this, and will update if we hear back.

On that last occasion, Qihoo told us that the Apple ban was caused by “unusually high numbers of positive/negative feedback by unknown sources” which triggered an automatic temporary removal by Apple.

These kinds of vanishings happen in the iTunes App Store from time-to-time, often caused by Apple’s auto-detection systems suspecting that something untoward might be going on, such as an attempt to manipulate app rankings.

Aside from its apps, Qihoo runs China’s second-largest search engine, which arrived on the scene with a bang last summer. Qihoo’s rivalry with China’s top search company, Baidu, is ramping up across numerous categories, causing Baidu shares to suffer in the latter part of 2012. Baidu itself is pushing back, putting more resources in its own web browsers (both desktop and mobile), and building up anti-virus apps of its own.

(Sources: Bloomberg; via TheNextWeb)

China’s 12306 ticket purchase site (run by China’s Railway Ministry), is the only official way to buy train tickets online in China. But with Spring Festival coming and traffic to 12306 spiking, it looks like someone is trying to hijack some of that traffic by tricking users looking for the real 12306 onto a site that pushes Qihoo’s 360 browser.

The trick works like this: 12306 is located at 12306.cn, but somebody purchased 12306.com and has set it to redirect to piao.jiaoman.cc, a very polished looking site that directs users to download the 360 Browser and use its ticket-purchasing plugin.

Neither 12306.com nor jiaoman.cc are officially registered to Qihoo, but the company will certainly benefit from this free advertising. A Qihoo representative told Tech in Asia:

The site you are referring to has nothing to do with Qihoo. Someone tries to use the popularity of 12306 and Qihoo’s name to make some money on embedded advertising on the site.

It appears that whoever registered 12306.com was trying to cover his or her tracks, because the whois contact information for the domain is clearly fake:

renxiansheng
12306
97653790@qq.com
CN guang dong guang zhou shi buxingjie001hao 112233

Additionally, the contact phone numbers listed for both 12306.com and jiaoman.cc don’t actually exist; calling either of them results in an automated response that says ‘the number you have dialed does not exist.’

It’s unclear who registered these domains and is operating the site. It contains several embedded Baidu ads, so someone may be hoping to profit from them while remaining undercover lest the police come calling.

Regardless of who is responsible for the site, though, it’s clearly tricking customers. As one weibo user wrote:

When you type in 12306.com you see ads for [Qihoo] 360 and [its ticket-buying plugin]; I thought that Qihoo and the Railway Ministry had set up a partnership; half a day later I finally realized I should have typed 12306.cn, not .com! It’s really confusing, you [the Railway Ministry] couldn’t just have registered .com to make it easier for everyone? [...] It’s lucky that Qihoo isn’t evil, buying a domain name this good and only advertising their browser with it. Who knows how much money could have been stolen if someone had used [this domain] to make a counterfeit version of the 12306.cn site instead!

Indeed, remaking 12306.com as a fraudulent ticket purchase site would be a goldmine, although likely also a lightning rod for police attention once it was discovered. Whether what’s there instead is really an ad for Qihoo or some other strange thing is going on isn’t clear. But “Brenda” (the weibo user above) does have a point: why didn’t the Railway Ministry just register the 12306.com name itself? After all, it spent $52 million on the damn site; the Ministry couldn’t spare another $10 for the dot com domain, too?

Google had to get used to being in fourth place in China in 2012.

2012 was a year of disruption, frustration, and lost users for search engines operating in China – the emotion depends upon which of the five main players you’re talking about. Much of the frustration belonged to Google (NASDAQ:GOOG), whose services are so unfairly slowed and deliberately borked by China’s Great Firewall. There were quite a lot of lost users for Baidu (NASDAQ:BIDU), not to mention a declining share price [1]; and Qihoo (NYSE:QIHU) was the disrupter.

New pageview and unique visitor stats for all the search engines in China reveal how the landscape looks at the end of the year. From Chinese traffic stats company CNZZ, the data for December 2012 shows Baidu slipping yet again in terms of traffic share to 71.76 percent – down from 72.97 percent of pageviews at the end of October. It’s perhaps no coincidence that Qihoo’s controversial new So.com, which only launched last summer, rose by about the same amount that Baidu lost. Google is long since resigned to fourth place, below Sohu’s (NASDAQ:SOHU) Sogou.com search engine.

Here’s the table, with green figures for December 2012 indicating a recently rising share of pageviews:

Those sceptical of Qihoo’s So.com speculate that it will be hard for it to build upon its initial tranche of web traffic, something that’s thanks to its long-standing AOL-like web portal and its IE-esque web browser. But Qihoo is defying the critics by edging up slightly in these latest stats from CNZZ. Its search offerings are a bit limited for now, but we can expect it to add new aspects in 2013. It has already recently added things like online maps (but not in a mobile app) in conjunction with Autonavi.

Lower down the order, things seem pretty static. Yahoo (NASDAQ:YHOO) went up a fraction; perhaps the company can hunt down its one new user and give them a prize. Bing, too, is not seeing any apparent boost from its Windows Phone ecosystem.

Hopefully the new year will be about innovation, which will help win over China’s increasingly more discerning web users. Just last month, both Baidu and Sogou launched their own mobile voice assistant apps for Android, which look quite a bit like Google Now.

[Source: CNZZ data; via Marbridge Daily]

China’s tightened internet controls were passed into law earlier today. As well as requiring broadband and mobile internet providers to have full ‘real name’ details of their customers (which pretty much happens already), the new 12-article law also mandates how all web companies operating in China must control what people post. That effectively legalizes the deletion of posts that contain what authorities deem to be “illegal” content or information.

Again, that’s close to what happens already in practice with the blanket self-censorship and fast-paced moderation that goes on on the Chinese web, as seen very clearly on the Twitter-like Sina Weibo. And so the new law will criminalize companies who do not censor the web with the kind of speed and efficiency that the law now dictates. That has huge implications for social companies like Sina (NASDAQ:SINA), Tencent (HKG:0700), and Renren (NYSE:RENN), and search engines from Baidu (NASDAQ:BIDU), Sohu (NASDAQ:SOHU), and Qihoo (NYSE:QIHU). In fact, it’s an extra strain on the whole internet sector in the country, with possible extra costs involved in the already weighty and arduous practice of removing dissent, as well as other genuinely illegal acts on the web.

It’s surely only a matter of time before one Chinese web company is held criminally responsible for content posted on its service. And what will happen then? A fine? The jailing of the relevant member of staff?

Using Xinhua’s presumably official version of events, the news agency summarizes this aspect of the new law:

Service providers are required to instantly stop the transmission of illegal information once it is spotted and take relevant measures, including removing the information and saving records, before reporting to supervisory authorities, the decision says.

It empowers supervising departments to take technical and other necessary measures to prevent, stop or punish those who infringe on online privacy, requiring relevant service providers to give support during investigations.

There are some positive aspects to all this, as it also puts into law measures that, Xinhua says, “will protect digital information that could be used to determine the identity of a user or that concerns a user’s privacy.”

But as with all new web controls in China, a country where the web is already massively locked down, many will worry that the tightened legal framework will be used to identify people who post online some ‘sensitive’ information, such as – to take a topical example – evidence of corruption among officials.

In practice, a lot of this is happening already, as with recent real name requirements for microblogs like Sina Weibo, or the long-standing need to show ID when buying a mobile SIM. For now, a lot of questions remain unanswered, such as how this affects wifi hotspots, or people who rent homes and whose broadband account will be in the name of the home-owner – and a lot of other issues and unknowns.

Another day, another new feature added to Qihoo’s (NYSE:QIHU) fledgling search engine service. But, as with previous elements added to 360 Search – like yesterday’s music portal – it’s with a little help from a friend. For 360 Search’s new maps service (pictured above), Qihoo has tapped Autonavi (NASDAQ:AMAP) as a partner.

And so the maps on the 360 Maps page (map.so.com) all come from Autonavi, replete with advanced tools like bus routes and local listings.

Regular readers will be aware that Autonavi makes China’s top mobile mapping app, with 25.9 percent market share, which is ahead of Baidu by a good margin. Autonavi is also Apple’s partner for China-area maps.

It has been a chaotic few months for Qihoo’s search engine. When it launched in August of this year, Qihoo simply linked to many extra services from rival Baidu (NASDAQ:BIDU) to fill the gaps in 360 Search. But Baidu was not really into Qihoo’s sloppy seconds. After Qihoo’s site initially launched with things like ‘news’ leading to Baidu News, and ‘maps’ heading to the Baidu Maps page, these soon vanished from 360 Search, leaving Qihoo offering little extra to its users.

But now Qihoo’s search service has five tabs at the top, thanks to proper partnerships like the new one with Autonavi. It’s possible that Qihoo will launch an in-house mapping service in the future – to rival Autonavi as well as Baidu – but that would take some time. As Apple is well aware, you can’t rush the creation of online maps.

[Source: Techweb - article in Chinese]

Ever since anti-virus maker Qihoo (NYSE:QIHU) first caused waves with the launch of its own search engine this summer, the company has been expanding its offerings. Today it has rolled out a dedicated music search feature at music.so.com.

Though 360 Music search is a challenge to China’s biggest search engine, Baidu (NASDAQ:BIDU), with its Baidu Music service, Qihoo’s effort is actually just an aggregator of songs from third-party sites. Perhaps Qihoo plans its own music streaming service later. But for now, 360 Music links to smaller services such as Xiami and Yiting. So it’s a great traffic boost for those music startups.

In addition to the music section, Qihoo’s 360 Search also now has a streaming video section that aggregates movies and TV series from the likes of Youku, Tudou, and LeTV. Again, this is an area where Qihoo might develop its own in-house service in the future.

Qihoo’s founder and CEO is hoping that the fledgling search engine can take 15 to 20 percent of the search market in China. Currently, it has just under 10 percent, which is good going for a three-month old product. But it’ll be a challenge to grow it from there.

[Hat-tip to iMeigu (article in Chinese) for spotting this]

Qihoo (NYSE:QIHU) disrupted China’s search engine market in August of this year with the launch of its own contender. And now Qihoo’s 360 Search has finally rolled out a mobile-optimized site at m.so.com. The mobile pages are very basic, and are a reminder that Qihoo is ‘disrupting’ not by innovation but by the weight of its portal’s traffic.

The 360 Search mobile landing page has no options to search for maps, images, or anything (pictured above); it’s only after searching for something that you then get one option for a news search. But that’s it.

In Qihoo’s new battle against Google and Baidu, the company still has quite a few offerings to add. It’s likely that 360 Search will venture into these other areas – like maps, images, and music – which will be yet more bad news for Baidu. 360 Search has rocketed to second place in this sector in China, with 9.64 percent market share chipping away from the dominant Baidu.

The quality of Qihoo’s search is being held back by all these omissions, and the mobile pages make this issue all the more painfully obvious. If you’re standing on the street and search for Starbucks – as I did for these screenshots – Qihoo’s search results are utterly useless, giving you the Starbucks corporate website and lots of other newsy and wiki-like links. For useful info, like maps, directions, or the phone number of the nearest Starbucks branch, you’d have to head to Google or Baidu on your phone.

Here are the new CNZZ stats in full:

Qihoo’s gains came from both Baidu and Google, which both dropped slightly since Qihoo’s 360 Search hit the scene in August. It’s no surprise that Qihoo has vaulted into second place, as several sources said it had done so in just its first week, but it’s good to have this data from CNZZ to paint a broad picture of how the landscape has changed.

But Qihoo will likely find it hard to grow more. Though it’s very clever in terms of making use of its web portal’s great volume of traffic, it’ll need to seriously innovate in search technology in order to dazzle new users. Qihoo’s CEO Zhou Hongyi has said that he’s aiming for 15 to 20 percent market share in this space in China. Baidu’s (NASDAQ:BIDU) shares have dropped in recent months as analysts worry about the threat from Qihoo.

As for Google, it’s a double-dose of gloomy China news for the search giant after we reported earlier today on how usage of its Google Maps app is in huge decline in the country.

[Source: CNZZ; via Marbridge Daily]

Chinese software maker – and disruptive new search engine competitor – Qihoo 360 (NYSE:QIHU) has invested in VIVAme, which makes a magazine subscriptions app and a Flipboard-style reader (pictured above).

The Qihoo investment comes as part of VIVAme’s new funding round, which also saw input from Highland Capital Partners. The news is confirmed by Beijing-based VIVAme, but the total funding amount has not been disclosed. Qihoo’s founder and CEO, Zhou Hongyi, now sits on the board of VIVAme. It raises the possibility of the aggressively-expanding Qihoo using the strategic investment to bring new content into its product offerings, and perhaps into its Android-based mobile software.

VIVAme has partnerships with over 300 magazine titles and claims to have 14 million monthly active users who read over 120 million mobile magazines each month. Its two core mobile apps are VIVAme, which is like a Flipboard-style reader only for iPad (here), and VIVA for in-app magazine downloads (here) which supports eight OSes, including Android, iOS, and Windows 8.

[Source: Sina Tech - article in Chinese]

Chinese web companies have a bad reputation for back-stabbing and skullduggery – but that might be about to change, at least for China’s search engines. The country’s top 12 search engines [1] yesterday signed a code of conduct that aims to stamp out acts of sabotage and unfair competition.

The agreement brought together representatives from 12 web companies in the search engine sector at the behest of a government-backed trade organization. Aside from creating the awkward photo below, it also brought together fierce rivals Baidu (NASDAQ:BIDU) and Qihoo (NYSE:QIHU), which have been locked in a tense stand-off after Qihoo launched its own search engine this summer. Indeed, the subsequent Baidu-Qihoo tussle shone a spotlight on some of the shadier shenanigans on the Chinese web, with suspicions of content-scraping and blocking rivals.

Click to enlarge.

The code of conduct focuses on the web spiders that crawl websites to index content. These things should no longer be used “to carry out acts of unfair competition,” says the WSJ translation of the agreement. And although the code is voluntary and not legally binding, the government involvement might make the companies – such as Baidu, Qihoo, Tencent, and Sohu – wary of upsetting authorities.

Web spider usage was a cause of concern just after Qihoo’s 360 Search was launched, with some accusing Qihoo of scraping Baidu’s search results to give its fledgling product a boost. But yesterday, Qihoo’s CFO, Alex Xu, denied the allegation and said his company only indexed Baidu content like its Wikipedia-esque ZhiDao BaiKe service, and did not in any way steal Baidu’s search results.

As with all government-backed pronouncements like this, we say, Good luck with that!

[Source: WSJ (paywalled); photo: QQ Tech]

15 to 20 percent; if we can get to this market share, then the monopoly will have been destroyed. And the monopolizer may be forced to make improvements.

Zhou calls the 15-20% market share a “rational” number for 360 Search to attain, but it seems like a pretty unambitious target for Zhou, who has been waging a war of words with half of China’s tech industry for the past few months. I mean, this is the guy who suggested that Tencent was scared of Qihoo creating a messenger product, the guy who has been saying that Baidu is hiring pundits to discredit his browser. Not that 15 percent is bad or anything, but when you’ve spent the last few months railing about smashing monopolies…well, I guess people expect something a little bit more dramatic.

Of course, if Qihoo really could grab a 20 percent share of the market, Baidu would still have a huge advantage but it might really be forced to reevaluate things a bit. But with 360 Search seemingly stalled around ten percent, it may face a real struggle in attempting to essentially double its current market share.

[Snowball Finance via Sina Tech, Image via Sina Tech]

Speaking of refuting rumors, we should probably pause here to say that Baidu has categorically denied that it has in any way attempted to pay or influence Fang Zhouzi or Sima Nan. As Qihoo has yet to provide any evidence whatsoever that Baidu is connected to the Fang Zhouzi attacks, I’m inclined to believe that Zhou Hongyi is basically just making this up.

In fact, you know what? No. I am abandoning my attempt at editorial balance. Fang Zhouzi can definitely be kind of an ass, and I get the impression he’s not super careful about fact-checking every one of his accusations (some of what he has said about Qihoo is pretty obviously wrong), but Qihoo’s response has been utterly ridiculous. And it’s not like this is the first time this has happened. Time and time again, Zhou Hongyi has reacted to questions about his products with invective, threats, slogans, and a deluge of negative weibo posts. He may be right some of the time, but frankly, I don’t care. Shut up, Zhou. Just shut up. If your products are good, let them speak for themselves. If they’re not, then work on improving them. Working your way into juvenile slapfights online every other week is just pathetic, and even when you win them, you look like a loser.

Moreover, your accusation that Baidu is paying Fang Zhouzi to attack Qihoo is apparently totally unsubstantiated and it doesn’t even make sense. Fang has been going after companies for ethical violations for more than a decade; how idiotic would one have to be to approach a man like that and say “Hey, we’d like to pay you money to unethically attack our competitors!” Even if Baidu were inclined to do that, in what universe could that possibly be worth the risk of Fang refusing and then outing Baidu for fraud and attempted bribery? I don’t care what you think of Baidu’s ethics; you don’t get to be the biggest search engine in China by being that straight-up dumb.

Of course, I suppose one shouldn’t be too surprised at Zhou Hongyi’s public response to criticism given the revelation that he runs his company like a tyrant with employees living in fear of making him angry. But seriously, enough is enough. If Zhou is a tech CEO, he needs to give up the trash talk and go back to making stuff. If he’s not ready to do that, then he ought to resign his post at Qihoo 360 and become a battle rapper.

Fang Zhouzi, via mybetter.cn

The folks at Qihoo 360 sure know how to sling some mud. And “science cop” anti-fraud and anti-counterfeit crusader Fang Zhouzi is no stranger to a mudfight either, come to think of it. So perhaps this is a match made in heaven: Qihoo 360 and Fang Zhouzi are going at it in the latest in Qihoo’s ongoing series of public slugfests.

The issue began when Fang updated his weibo account claiming that Qihoo’s 360 Browser is unsafe and collects personal data from users. In response, Sima Nana (a rather nationalist commentator and another famed skeptic) declared on weibo that he had uninstalled the 360 browser. Both men have quite sizeable followings, and the incident was apparently big enough that Qihoo felt it necessary to comment. In a statement published on the company’s weibo, Qihoo suggests that both Fang and Sima are bought-and-paid-for puppets of Baidu (which, readers will recall, Qihoo is currently engaged in a battle with for a share of China’s search market).

Now Fang Zhouzi has responded to Qihoo’s statement with one of his own:

In twelve years I have exposed many academics, business frauds, criticized many companies and people, all out of a sense of conscience and public interest. I have not once done this for money. This instance criticizing the 360 Browser is not an exception; I did not accept money for this from Baidu, Tencent, Jinshan, or any other company or person.

Fang also says he will be suing Qihoo 360 in court for “serious damage” to his reputation. If he does, I suspect Qihoo 360 will lose — something tells me that if it had any actual evidence Fang had taken money from Baidu, it’d be shouting it from the rooftops.

Either way, it should be interesting to watch this latest battle unfold. Fang’s is far from the first allegation that Qihoo’s products are unsafe and mine user data, so here’s hoping that this latest battle will finally unearth either a smoking gun or a reputable refutation.

[via Techweb]

Not seeing eye-to-eye: Andrew Left, Zhou Hongyi.

Chinese software maker and search engine Qihoo 360 (NYSE:QIHU) has threatened legal action against the financial blogger Andrew Left, who runs the short sellers Citron Research, for what the company claims are “untruthful statements” that have caused “the commercial reputation of [Qihoo] to be significantly damaged.” This comes in a cease-and-desist legal letter, in both Chinese and English, that was just tweeted out by the Qihoo CEO Zhou Hongyi on his official Weibo page (here).

Qihoo’s letter today says that Citron’s reports have been “untruthful,” adding:

We believe that, regardless of being according to either Chinese laws or US laws, the practice of good faith shall be a basic legal principle, and the commercial reputation of a company should be protected from being damaged by defamation.

It comes nearly a year after Citron’s first post on Qihoo in which Left wrote that, in his analysis, Qihoo’s stock was “overvalued” and that it was a “web 1.0 brand with a web 1.0 business model.” In further posts, the financial blogger and frequent CNBC guest went on to brand Qihoo as a “fraud” and questioned the veracity of its financials – especially with regards advertising and gaming revenue. At that time, Qihoo hadn’t yet moved into the search engine business, which has boosted its stock a great deal in the past couple of months.

But it was only in August of this year that the whole war of words really blew up, when the former head of Google China, Kai-Fu Lee, leapt to the defense of Chinese tech stocks in general, slamming analysts who do ‘short selling’ of stocks for personal profit. Then, a few days after that, Lee and some other tech execs – including Qihoo’s Zhou – set up CitronFraud.com to, they say, tear apart and fact-check short sellers such as Citron. Andrew Left has earlier requested that the execs’ site cease with their own allegedly defamatory attacks on him, but the three-week deadline on that earlier legal letter has since passed by and the CitronFraud site remains up. For his part, the Citron founder insists that he has an excellent record on Chinese stocks, highlighting the mess at Longtop Financial before that company was charged with fraud and subsequently delisted.

Ultimately, it’s unlikely that the trans-Pacific bust-up will come to any legal action – either from Qihoo or Left himself. Even if it comes to court in the US, damages could be settled without any dramatic court time devoted to picking apart the rights-or-wrongs of the claims made. Let the awkward impasse continue.

A teaser image from Qihoo of its quad-core phone, which will be unveiled tomorrow.

The Chinese software company and search engine Qihoo 360 (NYSE:QIHU) doesn’t want to let the upstart phone-maker Xiaomi get all the glory for making China’s cheapest quad-core smartphone – and so Qihoo is set to launch its own, for even cheaper, at an event tomorrow.

The quad-core Qihoo phone has already been teased in photos posted to social media by Qihoo CEO Zhou Hongyi (pictured above). And it has been priced at a rock-bottom 1,499 RMB (US$237) for what’s believed to be an unlocked device – that’s a good bit cheaper than Xiaomi’s upcoming Mi2 which has already been unveiled and will ship sometime next week for 1,999 RMB.

But Qihoo’s approach to its smartphones is quite different to Xiaomi’s. Qihoo doesn’t badge its phones and instead relies on its OEM partner – as seen with the company’s first Android-based smartphone, the dismally-named AK-47, which was manufactured by Huawei. And so the as yet unnamed Qihoo quad-core phone is made by a manufacturer that pretty much no-one has heard of before, called Deovo. It has a 1.5GHz Tegra 3 processor that has as many cores as cows have stomachs, and a 4.7-inch screen at 1280×720 resolution. It’ll run a fairly lightly customized version of Android 4.0, perhaps with a bunch of Qihoo’s apps pre-installed – such as its Android anti-virus apps and its mobile browser.

Other markings (pictured below) on the Qihoo device indicate that it’ll be a special for China Mobile (NYSE:CHL; HKG:0941), the nation’s biggest mobile telco, and so it must be a TD-SCDMA 3G phone – and so not compatible on China’s other two networks, or pretty much anywhere else in the world.

Xiaomi has sold just over three million of its first-generation budget Android smartphone, so it’ll be a tough task for any other Chinese manufacturer to usurp that kind of pulling power. Nonetheless, these kinds of well-localized and very attractively priced China-brand smartphones really ought to be worrying the likes of HTC and Samsung.

[Source: Sina Tech; and more photos from CNbeta - articles in Chinese]

The Qihoo quad-core phone will actually carry Deovo and China Mobile logos (Image: CNbeta)

The newest web browser stats from CNZZ show a surprising development: Apple’s Safari web browser – which is preinstalled on all its Macs and is also available for Windows – has a greater desktop browsing market share than either Chrome or Firefox in China. It makes Safari into China’s fourth most popular web browser with 2.79 percent of all observed usage on the web.

In contrast, in the latest CNZZ stats for August 2012, Chrome is sixth with 2.41 percent share, while Firefox languishes in eighth with a mere 1.42 percent. Indeed, despite all the campus outreach in China that Mozilla, makers of Firefox, has told us about, Firefox has lost market share in the country in the past year (see stats below).

Safari’s progress shows that Chinese consumers might be using their beloved, shiny Macbooks in OS X, rather than sticking a pirated copy of Windows XP on Parallels – as so many people do. Or – gasp! – some folks are actually using Safari for Windows. Here’s August 2012 contrasted with the same point last year:

Of course, China still loves Internet Explorer (IE). And yes, that’s IE6, the decades-old virus-magnet, that’s the most popular version. It seems Microsoft’s decision to push browser auto-updates can’t kill it off. China still has epidemic-level usage of IE6. Even Microsoft wants rid of it, as infected PCs can become malware botnets. Microsoft’s own ‘death to IE6’ website (not the official name) says that China has 21.3 percent of all the world’s users of the old browser. That’s still way too high, as all other nation’s have updated and moved on.

As for the other rivals, the anti-virus vendor Qihoo (NYSE:QIHU), which recently burst into the search engine market in China, is in a very strong second place. Its web browser is a key part of its traffic-channeling strategy, and its 360 Safe Browser now uses the company’s own 360 Search by default. That’s gotta be a painful switcheroo for Baidu and Google. The only other desktop browser ahead of Safari is Sogou (run by Sohu (NASDAQ:SOHU)), which has a search engine of its own as well.

Oh, Web of Trust (WOT)… You have the power to blacklist sites based on whatever reasons you’d like.

Qihoo 360’s just today launched the So.com URL for its search engine. But the party was spoiled by WOT’s blacklisting (and also some possible DNS issues). No one is sure about the reasons why so.com, a completely new domain got blacklisted. But Qihoo 360’s CEO Zhou Hongyi isn’t impressed; he said on his Weibo this evening:

Is this high level trick or a low level despicable act?

He also reposted So.com’s official weibo account’s take:

How did we got shot even when we laid low? Who gave this review?

Seriously, that’s very suspicious, and very likely someone must have been playing dirty tricks to give So.com a tough time. Now, speaking about WOT, we also have had the same shitty experience. Somehow Techinasia.com also unfortunately has very lousy remarks/points from WOT after we made a domain switch from penn-olson.com.

Thankfully, our awesome readers have been very supportive. All of our comments at WOT are positive green (seriously, thanks guys!) which is helping us a little. There’s no way to communicate with the folks at WOT except praying that readers will help us fight this war.

All in all, this is very frustrating for Zhou and for ourselves. If a new site can be branded as “low reputation” instantly, then WOT, you ought to reflect on yourself too. Hmmph!

It can take as long as 72 hours for a new URL to spread its way across the internet’s domain name servers, but if that’s really what’s going on here, you have to wonder why Qihoo would choose to announce its new domain before it had time to propagate. Perhaps the company was just too excited to contain itself — the two-letter URL did apparently cost “millions” after all — but the blunder is a bit of an embarrassment for the young search engine, which already faces a stiff challenge from incumbent Baidu. (Baidu.com is still working fine; we checked.)

Qihoo 360 is still swinging at Baidu; just hours before the so.com outage the company was using its official weibo account to rebut what it calls erroneous reports about the privacy issues with its new thumbs-up service and attack Baidu for ‘selling fake products.’

[via Zhou Hongyi's Weibo Account]

Qihoo's casual gaming portal - it has an ARPU of $68?

The jabs and lunges are coming thick and fast in the verbal boxing match between the short sellers Citron Research and the Chinese tech execs who run the CitronFraud website. Now, the ad-hoc alliance has produced a post signed by the heads of nine major Chinese gaming firms, and they say they’ve debunked one of the core aspects of Citron’s attacks on Qihoo (NYSE:QIHU) – that of its high online gaming ARPU.

Citron, headed by Andrew Left, has been shorting Qihoo and calling it “overvalued” for the past year, with an especial focus on its ads and gaming revenues. But the newest post on the CitronFraud site says it has all the answers about Qihoo’s wan.360.cn game portal. The gaming execs’ post begins:

We, a group of nine Chinese gaming companies, join forces to take up Citron on its recent challenge that Qihoo’s ARPU claim of 400 RMB [$63] is fraudulent, “demonstrated” by Citron’s comparisons with other gaming companies in its reports. We prove here that Citron’s analysis lacked basic understanding of the Chinese gaming market. Citron compared different types of companies against each other, and didn’t even understand how ARPU is measured (!). We pooled our gaming statistics together to form a trusted third-party validation of gaming ARPU for Qihoo and its true peers, and we found that: 1) Qihoo’s ARPU is just about average in a group of five comparable gaming platform companies, and 2) The average ARPU of a large number of popular games on the Qihoo platform is also in line with Qihoo’s reported number.

Game over?

The central tenet of this argument is that “Citron compared apples to oranges… and to bananas.” That’s because, they say, Citron’s Andrew Left compared Qihoo’s gaming operations to companies like Shanda (NASDAQ:GAME), Changyou (NASDAQ:CYOU), and Zynga (NASDAQ:ZNGA) who “are in totally different spaces of games.”

The gaming execs use this iResearch graphic to highlight Qihoo's gaming space.

The gaming execs point out that the likes of Shanda and Changyou make very different kinds of games to Qihoo. While the latter focuses on web-based and very casual games, those others in the Citron comparison do MMORPGs which monetize over longer periods, making their ARPUs seem low when reported in quarterly results. The post makes a jab:

[Andrew] either does not understand such difference or, even worse, he just deliberately conceals those facts to make his fraudulent argument for economic gains. […] Mr. Left’s comparison is like comparing the price of home mortgage vs. hotel room. He is advised to compare Westin with Marriott prices, not with HSBC payments!

And so, recommends the anti-Qihoo alliance, Qihoo’s gaming platform should be compared with very similar ones aimed at casual browser games in China, such as Duowan, PPS, 37Wan, or Yaowan (“wan” means “play,” in case you’re wondering). The group concludes:

We note that Qihoo’s ARPU is very much in line with its peers. And our independently computed 434 RMB [$68.60] ARPU for Qihoo is also very similar to the numbers Qihoo asserted.

Citron had earlier bet his critics – especially the former Google China head Kai-Fu Lee – the sum of 100,000 RMB ($15,800) to come up with evidence to back up Qihoo’s ARPU. With Lee – via the CitronFraud post – having apparently done this, the post ends cheekily by giving the wiring address of a charity named the Shenzhen One Foundation who will receive the wagered sum.

Earlier today, Citron’s Andrew Left asked the the anti-Citron alliance to desist from its allegations of fraud directed at him personally – and as seen in the URL of the collective’s site – within three weeks, or a lawsuit will be filed in the US where the site is hosted. Asked about that demand and threat of legal action, an unnamed representative of the group contacted TiA this evening and said that, “There will be a statement tomorrow morning China time.”

The battle rages on.

Citron's Andrew Left

Just as Citron’s Andrew Left told us he would do last week, he has resorted to legal channels in the bitter dispute between himself and numerous Chinese business CEOs and execs. The financial blogger and short seller has issued a demand for an apology and retraction via his lawyers, citing “libelous” allegations by the collective of tech execs, seemingly led by former Google China head Kai-Fu Lee, who set up CitronFraud.com to shoot down Andrew reports on US-listed Chinese stocks – especially tech stocks.

Filed in the US, where the anti-Citron site is hosted (and because Mr. Lee is actually a US national), the demand for a retraction is an inevitable stand-off in the war of words between Citron Research and its China-based detractors who say that the short seller is making a personal profit from attacking Chinese tech stocks like Qihoo (NYSE:QIHU), or inflating ones he fancies like Sohu (NASDAQ:SOHU). Andrew, for his part, defends his record in spotting dodgy Chinese stock. Of his 20 China-oriented reports, Andrew claims that, “Seven of these companies have been delisted” – and were therefore legitimate targets so as to alert investors to the dangers.

In the legal letter aimed at all 61 co-signees of CitronFraud’s first post, it gives a deadline of three week for the demands, or else “Citron will file suit and will seek to recover general, special and punitive damages.” Andrew makes four demands, including:

The site at the center of this legal tussle.

Immediately issue a retraction of your libelous letter/communication and apologize for having published such false and unfounded statements. Immediately remove the name of the website “citronfraud.com” and cease using the domain “citronfraud.com”. Cease and desist in the future from making other false and misleading statements that Citron has lied to, deceived, or defrauded investors.

Also, in an email sent to interested parties including TiA, the Citron man claims to have been the victim of “massive Distributed Denial of Service Attacks over the last two days” on his Citron Research site. He explains:

While it is not yet possible to prove the source of this effort to block our communications, it appears to Citron that it is more than coincidence that our website, which has operated flawlessly for years, has been obstructed three times in the last two days – specifically at moments following new posts, and/or Tweets by Citron’s editor.

It’s likely that the DDoS mischief is coming from random patriotic hackers (yes, that’s a thing) who have decided to go ‘Anon’ on Citron, as the whole China versus short sellers battle has taken on a them versus us, and nationalistic, tinge.

We’ll have to wait and see how the retraction demand is taken by Kai-Fu Lee and the other co-signees, which includes Qihoo’s CEO Zhou Hongyi. So far today, Lee has not taken to his Weibo account to comment. While it’s conceivable that the repeated “fraud” claims that got personal, and even got included in the URL of the collective’s site, might need to be amended, we hope that short sellers – who often make personal profits from the stocks they bash, unfettered by things like journalistic codes of ethics – will still be monitored and fact-checked.

Qihoo 360 is a company that makes a lot of people uncomfortable, in no small part because it has a reputation as ‘gangsterish’ thanks to its loudmouthed CEO Zhou Hongyi. And with 360 having just recently stuck its nose into the search market and caused considerable disruption, there’s plenty of reason for anyone in the tech buisness to be nervous. But Pony Ma can rest easy, Zhou Hongyi says, because Qihoo isn’t going to come after Tencent’s instant messaging software QQ.

At the China Internet Conference yesterday, Zhou made the following pledge during a panel discussion during a panel discussion:

I promise to Chairman Mao [Mao Zedong] and Chairman Ma [Pony Ma], Qihoo won’t release an instant messaging product; little Ma can relax.

He further explained that in the age of the mobile internet, doing a traditional PC based IM service would be difficult, saying, “I don’t have the ability to do that.” But, he added sarcastically, I really admire Lei Jun’s Xiaomi because that’s exactly what they are trying to do.

So, Zhou Hongyi is kind of obnoxious — this is something we already knew. But it will be interesting to see if he actually sticks to his word, especially as Qihoo moves deeper into the mobile space.

[via Sina Tech, Image source]

The outspoken Qihoo 360 (NYSE:QIHU) CEO, Zhou Hongyi, has been taking part in a panel at the China Internet Conference here in Beijing this afternoon. While there are other speakers at the panel, all eyes were on him. Zhou, from time to time, has been quite an ass, fighting with different leaders in the Chinese internet industry. Nonetheless, I do have respect for Zhou for the things he has achieved as an entrepreneur. His words still bring some weight, which is evident as people clap enthusiastically whenever he speaks.

The recent search war is Zhou’s most recent battle with a giant (Baidu). The moderator asked why Zhou is always constantly fighting battles with the giants, be it with words or actual products. Zhou was calm and took the question pretty well, I thought. He first established that Qihoo 360 operates in a very startup-ish manner. And he believes that a startup should be built to disrupt. So if Qihoo 360 wants to be in the game, it has to continue to disrupt and that means taking market share from big players at times. And disruption, like it or not, will somehow piss people off. Zhou said:

I urge entrepreneurs to think different from big companies. It is unlikely that you will be successful if you follow the big companies because they are big and they set the rules of game. If they didn’t do a better job in UX, do it, if they haven’t exploit a new space, do it [Note: Translations are mine].

The moderator also said that Qihoo 360 is one of the companies which budding entrepreneurs look up to nowadays. But Zhou humbly denied that and said that they are small compared to others. He claimed that Qihoo 360 is often bullied by other big companies and thus they have to disrupt to stay afloat.

For entrepreneurs who are not in China, you may want to take it with a grain of salt. Zhou is obviously talking about starting up in China where competition at the high level is very harsh. But the general spirit is right, I think. Disruption is important. If not doing that, why bother building a startup?

Also catch:

• Pony Ma’s speech at the China Internet Conference

• Inside Life at Qihoo 360: Exclusive insights from a former employee

Is there no escape from the constant dramas surrounding Qihoo 360 (NYSE:QIHU) and its CEO Zhou Hongyi? They are again in the news, as Qihoo and Huawei (SHE:002502) have gone their separate ways after a previous low-cost smartphone partnership didn’t work out. This is according to Marbridge Daily, who quotes Huawei senior VP Richard Yu’s microblog update:

Our product costs are slightly higher because of this, so we are unable to meet CEO Zhou Hongyi’s demands for lower prices. The Huawei Ascend will go on sale September 6 exclusively through Huawei, and will not be one of the Qihoo 360 handsets.

When we first heard about this el-cheapo collaboration between Huawei and Qihoo 360, my colleague Charlie expressed some skepticism whether such a smartphone could generate as much buzz as, for example, Xiaomi has. Turns out it didn’t really even get much of a chance to get off the ground.

Since then Qihoo’s motivation for wanting a piece of the smartphone business has become a little clearer, having parachuted into the China search wars practically overnight. Like China’s leading search company Baidu, who just announced new aspects of its mobile strategy, Qihoo could use a foothold in mobile too if it’s serious about search.

Marbridge mentions that there have been over 100,000 Qihoo handsets sold in total, with the Haier Battleship phone accounting for more than half. Lets wait and see if that ship can float longer than the Huawei one did.

[Source: Marbridge, photo: Shendu.com]

Speaking via Skype, the Citron founder defended his record on China tech stocks, conceded to an error, and suggested he’d be looking into legal action against the likes of Kai-Fu Lee, the former head of Google China, and Zhou Hong-yi, the CEO of Qihoo (NYSE:QIHU), who collectively set up the CitronFraud website which personally branded Andrew a man with “a record of fraud.”

Citron’s Andrew Left

Andrew begins by defending his work on CitronResearch, claiming that “of the 10 Chinese stocks” he has reported on, “Only one is really trading today: Qihoo. Two are way down, the rest are charged with fraud.” An example is his post on Longtop Financial in April of 2011, a month before the Chinese financial software company was charged with fraud and subsequently delisted. Prior to that, Longtop had been sailing along nicely with clean audits from Deloitte “for six consecutive years.” But others he lists are still trading even after sustained attacks by Andrew and some other short sellers, such as Deer Consumer (NASDAQ:DEER) which is currently at an all-time low of $2.26.

He adds:

Why go after the guy with a good record? I have a body of work in China, but… are you kidding me? My record speaks for itself. […] It’s proven that my track record is right. Only Qihoo hasn’t played out.

If Kai-Fu Lee really wants to help, he’ll say: We will not do business with any company misrepresenting to western investors.

But a key part of the attempt at undermining Citron is by pointing out the conflict of interest in short sellers – that they’re profiting from their moves against stocks. Is this true of Andrew in his year-long tirade against Qihoo, and his recent praise of Sohu (NASDAQ:SOHU)? “Of course I invest my own money,” Andrew concedes, but stresses that doesn’t alter the facts he puts forward, or the research that he does.

On Researching

And what of that research into Chinese stocks? Though all US-listed stocks must submit financials in English, most of their services are in Chinese and can be tough to navigate and understand. The Beijing-based analyst Bill Bishop has been keen to learn who helps Andrew with his Chinese homework. Andrew sort of explains:

I get 50 emails a day from Chinese people who want to work for me.

But then Andrew declines to name a particular source, individual, or company that might be working with him. Aside from all that, he says that a lot of this info is in broad daylight. “It’s all in the filings,” he laughs.

On Qihoo

Which brings us in our chat to Qihoo, an undoubtedly controversial web company that started out in anti-virus products and other bits of software, and is now a major AOL-like site with portals, gaming, and a new search engine. It was from Qihoo’s filings that Andrew took issue with its advertising revenues stats – but especially with Qihoo’s claims to have the highest ARPU of any Chinese gaming service. Qihoo’s claimed figure of 400 is five- to ten-times higher than most in the industry – above even the local market leader, Tencent (HKG:0700).

On this call-out, Andrew feels vindicated, despite Qihoo’s stock remaining strong. His public challenge to Kai-Fu Lee to explain Qihoo’s ARPU claim was declined. He says:

Kai-Fu Lee’s 16 million Weibo followers and himself can’t come up with the answer.

Qihoo has changed a lot since Citron first turned on it, so does Andrew think the new search engine launch last month changes Qihoo’s outlook? After all, it’s now China’s second-biggest search engine, even beating out Google in mainland China. He says Qihoo “needs to change its corporate culture” to succeed long-term, something we heard recently from a source who’s an ex-employee who paints a rather Wild West picture of working life at Qihoo. Andrew adds:

How to win in search? A better algorithm – and that’s it. Then Qihoo needs to monetize search in a believable way. Do you know that [China’s top search engine] Baidu spends $250 million on R&D? If you wanna compete, spend on R&D.

On Sogou

Click to enlarge

But on the issue of Sogou, the search engine run by Chinese web portal Sohu, Kai-Fu Lee did have some ripostes and answers. It was Andrew’s post praising Sohu as undervalued that actually triggered the backlash against short sellers – and it seems to have centered on an inaccuracy in Andrew’s summary of what Sogou does. Kai-Fu Lee pounced on it, annotating corrections onto the offending passage (pictured right), prompting the former Google China boss to slam the way Citron and “these short sellers take advantage of the information asymmetry between China and the US.”

On the conflation of Sogou search and the Sogou input method editor app (for writing Chinese), Andrew holds up his hands:

I did combine the two. You can call it an error – an over-simplification for an American audience. But that doesn’t mean the whole story is not valid.

As for his being long on Sohu, Andrew says it’s based on an analysis by JP Morgan; he can’t say for sure if he’ll continue on the theme of Sohu in his next post.

More Attacks, Legal Action, or Peace In Our Time?

Kai-Fu Lee (left) and Zhou Hongyi (right)

Will all this mud-slinging continue? The collective of Chinese business execs has already set up CitronFraud.com and it looks set to pick apart every new report that Andrew puts out there. Heck, I’ve been been doing that occasionally since last November when we felt that the core claims against Qihoo by Citron were not credible – mainly because Qihoo’s “web 1.0 model” (as Andrew called it) could actually work and prove profitable in China where millions of new people come online for the first time each day. And those folks, sort of like your grandmother, need a guide to the net. They might want Qihoo’s web browser forced down their throat, and be led to a page full of dull links. It worked for AOL for long enough. And so I’m still not convinced that Qihoo is on a par with Longtop or the now-delisted China Media Express. Andrew says he hears that: “I deserve to get called out.” But there are, he points out, some limits.

Andrew says he’s “consulting with lawyers about Kai-Fu Lee and Zhou Hongyi” – specifically about the collective’s personal claims against him. He explains:

I’m consulting with lawyers about this whole fiasco – about being accused of fraud. The lawsuit would be filed in the US, and the CitronFraud site is registered in the US. […] If the charade continues – me blogging, him blogging – then I’m through answering in a public forum and I’ll turn to lawyers. I’m not gonna let people spread lies.

But that’s not set in stone. Striking a more conciliatory tone, Andrew says that he and Kai-Fu Lee, now the founder and CEO of startup incubator Innovation Works, do have a bond:

I’m a stock market person – not anti-China, not anti-Qihoo. I want to buy good companies and short bad companies. Also it’s not Andrew versus Kai-Fu Lee. We both want to make money.

The whole complex issue is muddied, he reckons, by Chinese web companies having to take sides and forcing uneasy alliances during this controversy. He expands on that:

I don’t think Kai-Fu Lee did Qihoo a favor – making a controversial company even more so.

It also exposed the awkward fact that Qihoo’s Zhou Hongyi ploughed some money into Lee’s Innovation Works. Andrew calls it a “major” backing, but the actual figure is a reported $3 million out of the fund’s $180 million total, which will be invested in numerous local startups.

Andrew says he feels he still has a place in the China tech scene, exposing potential fraud and dodgy practices, and notes that one of China’s top investors, Neil Shen of Sequoia Capital, is not one of the collective supporting the site that’s policing Andrew’s reports. Of that website, he says:

CitronFraud.com – on what? I’ll be proven right.

Hit the comments with your thoughts on this ongoing battle between short sellers and Chinese tech stocks.

The chart above shows us two things. First, it’s clear that Baidu’s strike back at Qihoo didn’t have much of an effect on the market. On August 29, Baidu began redirecting 360 Search users to the Baidu homepage when they tried to use Baidu products, and as you can see, after a small blip, Qihoo’s switch to using cached Baidu pages seems to have prevented 360 Search from losing any market share permanently.

The other story this data tells, though, is that 360 Search seems to be plateauing at around ten percent of China’s search market, after some very rapid early growth. On launch, the new service took a pretty significant chunk out of Baidu’s share, but since then, it seems, both companies have more or less held steady. None of the other minor competitors in the arena seem to have experienced much change either, which leaves us more or less where we were before all this began, with Baidu still strongly dominating China’s search market.

The Hitwise graph above is a bit misleading, because it lists Baidu’s image search as a separate service. This is probably to compensate for the fact that 360 Search doesn’t have an image search function; but if we’re talking about the overall search market in China, the full picture looks more like this:

[via Sina Tech]

A bunch of Chinese business leaders have grouped together to set up CitronFraud.com, a site dedicated, it says, to exposing “the lies Citron tells about China.” Citron Research is a financial analysis firm and short seller that, says the group of over 60 businesspeople in their first collective post, routinely practices “deception” in its attacks on US-listed Chinese stocks. The post goes on to explain:

We are investment professionals and company founders/executives in China. We are joining together in this effort to expose and condemn the deception and ignorance of Citron and other short sellers like them. This English website (citronfraud.com) is being created to host this ongoing fight against fraud. […] Citron’s reports take advantage of the information asymmetry between China and the US, and boldly tell lies, knowing that their American readers have no way of verifying them.

Attacked by Chinese tech leaders: Citron Research founder Andrew Left

The Citron slam got personal very quickly, as Citron’s founder Andrew Left (pictured right) was branded “a man with a long record of fraud, deceit, and unlawful behavior.” That includes how Andrew was fired from his first ever job in 1998 for misleading and defrauding customers, as ruled by an investigation by the National Futures Association. Just fours year later he departed the role of CEO at Detour Media after the company “sued him for stealing six checks worth about $25,000.” The CitronFraud site asks:

One has to wonder why an investor would trust the investment advice of someone with a record of fraud, deceit, and unlawful behavior.

But, hey, we’re talking about the financial trading sector here, so that’s a bit like asking why one weasel mates with another.

Who’s behind CitronFraud? Among the many signed names are the CEOs of major Chinese tech firms – usually the kind of stock that Citron and other short sellers like Muddy Waters attack in their reports – as well as investment groups. Unsurprisingly, the biggest victim of Citron’s recent four reports is on the list: Zhou Hongyi, CEO of Qihoo 360 (NYSE:QIHU). Also in the group is the former head of Google’s China operations, Kai-Fu Lee, who first took umbrage with Citron last week when he pointed out a number of factual errors in its report on the search engine Sogou.com.

A bit like Fox News being anything but fair and balanced, we have long since noted that Citron seemed to lack a true understanding of China’s web scene, and this new site should be a useful check-and-balance on the short sellers’ claims, and a useful reference tool for overseas investors. And a source of hilarious personal slams.

Tell us what you make of this new collective in the comments.

The new domain sports a shiny new frontpage with a much cleaner and more modern look than the previous site. It’s also quite interesting to note that across the top bar, the new site lists only “News,” “Video,” and “Answers” searches in addition to the regular web search. In other words, it’s now offering only Qihoo 360 services on the front page; Maps, Images, and MP3 search — which Qihoo can’t yet offer itself — are not displayed, although they do show up on results pages once you’re searched for something else. Discerning readers will recall that when the search was first launched, all of these links went to Baidu services, but they were replaced with Baidu competitors a couple of days ago as a retaliatory tactic for Baidu redirecting 360 Search users to its front page.

Clearly, Qihoo (NYSE:QIHU) wants to play up its own in-house offerings, but a search service without maps or even images looks pretty sickly these days, so I wonder how long the company will keep the front page like this. It’s a good reminder of their recent attack on Baidu, but it’s also a reminder that Baidu offers more useful search services than Qihoo does, and I can’t imagine that’s something Qihoo really wants to remind its users of.

[via Sina Tech]

The former Google China boss Kai-Fu Lee made a stand against short sellers Citron Research earlier this week – and now the two parties continue to duke it out via open letters, debating the ethics of Citron’s attacks on US-listed Chinese stocks such as Qihoo (NYSE:QIHU). Citron, despite its claims of wanting to expose wrong-doing, makes no ethical guarantees of not trying to soft-sell or inflate stocks for its own profit.

Mr. Lee’s earlier broadside at Citron was aimed at its many factual errors in a report on another Chinese company, Sohu’s (NASDAQ:SOHU) Sogou search engine, and he wasn’t defending Qihoo as such. Citron, in its initial letter dated August 30th (see below), did not bring up the issue of its numerous inaccuracies in its latest report. Instead, Citron put forward an interesting challenge for Kai-Fu Lee:

We believe it is very risky for investors when they are encouraged to ignore common sense and obvious signs of management misdeeds. We have extended an open invitation for you to debate the topic on CNBC Asia if you ever agree to appear for a live discussion.

For Citron, one of the key “common sense” curveballs is Qihoo’s ad revenue and gaming ARPU claims. Those concerns date back to three earlier attacks by Citron on Qihoo (see: 1, 2, 3).

Here’s the initial letter of reply from Citron’s Andrew Left, followed by a response from Kai-Fu Lee that was posted the same day on his Weibo page:

So Mr. Lee, now the founder and CEO of startup incubator Innovation Works, is not keen to debate the topic, perhaps as it might be misconstrued in the media as defending Qihoo, a controversial local web company which made waves by launching its own search engine last week.

So Baidu services are totally out on 360 search. Baidu does not seem to have responded to this; the company is preparing for its upcoming Baidu World conference, and insiders told Southern Metropolis Baidu is in defense mode right now in case of a Qihoo 360 surprise attack. Certainly, the upcoming conference does seem to present Qihoo a potential opportunity to do some damage and grab some publicity.

But if some Baidu supporters are to be believed, Qihoo’s 360 Search could be steering it towards legal trouble. Some have suggested that based on 360′s search results, it is likely to have copied at least parts of Baidu’s or Goole’s search algorithm, which would be illegal. In a series of tests across the three search services, I found some definite similarities between 360 Search results and Baidu results, but definitely no smoking gun. And indeed, if both search algorithms are good, one would expect the results to be somewhat similar anyway.

Of course, whether 360′s search is good is another question entirely. The company has users on its own software it may be able to channel into its search; in other words, 360 Search may not have to be any good. But the lack of direct access to Baidu products certainly weakens 360′s offerings from a user’s perspective. Many of these services are quite useful, and although Qihoo has found approximations for all of them, there is a reason that they were using Baidu’s products before this war began. Baidu’s products are better.

Will that matter? Only time will tell. It’s hard to imagine that Qihoo could win by offering its users an inferior product. But then again, there are an awful lot of complaints about its security software, and that seems to be widely used, so perhaps it is possible.

[Southern Metropolis via Sina Tech, Image Source]

Bravery or hubris? Search is Zhou Hongyi's white whale.

Qihoo 360′s Zhou Hongyi and Baidu’s Robin Li are currently battling it out over the China search market. But this isn’t an isolated incident. In fact, the two CEOs have a history of enmity that goes back nearly a decade, which TechWeb has helpfully detailed in this worthwhile article.

The trouble began in 2002, when Zhou Hongyi’s 3721 URL conversion service came to blows with a rising Baidu. Zhou’s service allowed users to type Chinese into the URL bar and access sites directly, cutting Baidu’s search out of the picture. Zhou was making a solid profit off of the endeavour, too, but eventually Baidu took his company to court. 3721 lost. Chinese media reported that after the decision, the two men nearly came to fisticuffs on the courthouse steps.

In 2003, Zhou sold 3721 to Yahoo for $120 million and became Yahoo’s China regional director, a move he has later suggested he regrets (he feels the price should have been higher). At Yahoo, Zhou tried to unify 3721′s URL service with Yahoo’s search power to create a real competitor for Baidu, but he was ultimately unable to pull it off.

In August of 2005, Baidu listed on the NASDAQ. That same month, Zhou left Yahoo. But he didn’t give up his dream of beating Baidu with a search product, and founded Qihoo as a social search company. Early attempts at creating a popular social search engine failed, though, and Qihoo shifted its focus to security software.

Qihoo wouldn’t announce another serious search product until this summer. But in promotional materials, the company stated that 360 Search has been in development for seven years. Zhou, it seems, has not lost his obsession with search — or his obsession with beating Robin Li.

Of course, the announcement that Qihoo has been working on search since 2005 would seem to make Zhou a liar, as he stated publicly in 2010 that the company wasn’t working on search, saying that it was a ten year old idea, that Qihoo “didn’t need to do it” and that “Baidu and Tencent cannot be copied.” Now, he’s singing a different tune; one about breaking Baidu’s strong hold on China’s search market (of which it controls nearly 80 percent).

So Zhou and Li are facing off again just as they did nearly a decade ago. But this fight may not be a fair one; Baidu is a much more valuable — and powerful — company. So much so, in fact, that when Qihoo search launched, it did so incorporating a number of Baidu products, including its MP3 search, news search, maps service, and more. Analysts have suggested that Baidu is responding to 360 Search not so much because it is concerned by the competition as because it isn’t sure what the unpredictable Zhou might have up his sleeve.

Whatever Zhou has planned, it’s going to be important. Insiders suggest he has been spoiling for a fight with Baidu for years, and the move into search is also a natural progression and evolution for Qihoo’s products, especially the 360 Browser. But massive internet companies have tried to get into search and fallen flat on their faces before. Just ask Netease and Sina. Qihoo’s success is not assured. And with a leader as apparently tyrannical as Zhou Hongyi behind the helm, it’s not clear whether his attack on one of China’s biggest internet companies is brave innovation or foolish hubris.

[via TechWeb, Image source]

Qihoo’s CEO and co-founder, Zhou Hongyi, is famous in the Chinese tech industry. Most locals I have spoken to pay him respect for what he has achieved, going from zero to a listed company. But at the same time, many detest him for being a loudmouth “gangster” who goes around picking fights. He has had many wars with several other CEOs in China including Tencent’s Pony Ma, Xiaomi’s Lei Jun, and most recently with Baidu.

Coincidentally, in the midst of this heated search battle, I met a source who used to work at Qihoo. Of course I was curious what it was like working under the bombastic Zhou. Under the promise that my source’s identity would remain anonymous, the person agreed to speak on the record. For the sake of convenience, we’ll assign my source an assumed gender (male) and name (“Mr. X”).

Mr. X compared the culture at Qihoo to working with “Captain Barbossa and his fellows.” It’s rough and very army-like, just like a camp with stern officers bossing you around. Mr. X says that Zhou orders more than he manages; he simply gives employees orders and hope you can deliver instantly. Mr. X told me:

Zhou has failed to create a company structure/culture that encourages cross-functional cooperation, the small teams fight alone. Only lone wolf type of teams do well.

But Zhou’s company has worked and was even listed. So Zhou must be doing something right. And surely, there most be some people at Qihoo who believe in Zhou’s management strategy. Mr. X remarked:

There are several dozen people who have followed Zhou for 8 to 10 years. They don’t necessarily like Zhou, but they’ve become accustomed to his style and are well compensated with stock options.

The old [Qihoo] 360 team behaves like pirates; they resent each other, but they work together for hopes of stock options and out of fear of the alpha-wolf leader. Only people with certain types of mentalities can stay for long [at Qihoo].

According to Mr. X, Zhou is also a micro-manager. If there’s a project that catches his attention, he will supersede the product manager to make his own calls. Sure, Zhou is the boss, but his dominant behavior doesn’t give his teams a chance to shine. And often, Mr. X says that talented employees felt insulted because Zhou likes to impose his own ideas on their projects but yet can’t commit to a project for a long time. Mr. X told me:

So every time when Zhou cast himself on a project, the team members were all nervous. Teams at Qihoo 360 work under constant fear.

I feel, Zhou believes running a software/internet company is just like having hackathons once in a while. I don’t think it’s a natural way [of doing things].

No one is perfect and that goes the same for Zhou. Some might find his behavior similar to many dominant alpha-male-like leaders. He has his good side too. Mr. X said that Zhou will do whatever it take to succeed. Zhou is also very generous. At a year-end party, Zhou, using his personal money, gave out a dozen Macbooks to employees in a lucky draw. Qihoo 360 also keeps five percent of its stock to attract and retain future employees. Mr. X said:

[Zhou] isn’t a person who respects hierarchy; if you show him that you’re capable, he will give you an opportunity, but he doesn’t have a lot of patience.

He’s a super smart engineer that didn’t grow up. He lives his passion, heroic, wanting to make a mark in the history of the Chinese internet industry.

My observation is that he behaves like a patient with depression, he is sometimes over-confident, sometimes self-doubting, and very eager to prove himself fast.

So there you have it. It’s just one man’s opinion, but ask around with locals who are in the Chinese tech industry and I believe many people will tell you how brilliant but notorious Zhou is.

[Image via Forbes but edited]

We can confirm that the following four elements of the 360 Search top bar led to Baidu features up until last night, as can be verified on our post from last week. Here are the four changes in redirects today:

• News now goes to News.so.360.cn
• MP3 goes to Mp3.sogou.com
• Maps goes to Google Maps
• Answers goes to qihoo.com/wenda

Here’s our illustration of the changes:

Click to enlarge!

So now Baidu is totally being ignored by Qihoo 360! Normal searches on 360 Search still work fine for us as it currently still directs you to Baidu’s products if you actually search for those products. We wonder if Qihoo is frantically working on its own MP3 music portal (which would be easy), and its own mapping service (which would be a massive challenge), so that it doesn’t have to rely on any search rivals.

Expect this search war to continue to get bloodier.

[UPDATED: Added a refreshed image and improved the first paragraph shortly after publishing]

[Source: Our friends over at Techweb]

One of China’s top tech luminaries, Kai-Fu Lee, has ripped into the short sellers Citron Research – branding their methodology “despicable” – after Citron released a new report about the Chinese web portal Sohu (NASDAQ:SOHU) and its Sogou search engine. Mr Lee, the former president of Google China and now the CEO of incubator Innovation Works, condemns the repeated short-selling of US-listed China stocks as “already questionable” before then pointing out the many factual errors – the “ignorance and deception;” the “holes and lies” – in the latest Citron post.

Kai-Fu Lee, in his first post on XueQiu, singles out “how these short sellers take advantage of the information asymmetry between China and the US,” making false likenesses and providing other bits of vague information that it can be tough for US investors to research and verify. His post is written in English, not Chinese, and is presumably aimed at such overseas investors.

In the past, Citron has attacked Qihoo (NYSE:QIHU) in particular, saying that the software maker – which launched a search engine recently – is over-valued. But now Citron is doing the opposite, and singing the praises of Sohu in the light of Qihoo’s entry into the search market. In a new report, Citron says that Sohu is “worth more than 50 percent or more” [sic] of its current market value. By Mr. Lee’s implication, Citron is just trying to offload some Sohu stock that it might’ve bought earlier, since such firms have no ethical code about not investing in stocks that they post about.

The most amusing part of Kai-Fu Lee’s post is, I reckon, the graphic below, in which he has corrected six pretty serious errors made in Citron’s new report in the space of just a few paragraphs:

Mr. Lee is entirely correct in his amendments, and we’re also flabbergasted as to how Citron seems to have confused the Sogou IME app (for, in this case, typing Chinese characters by inputting pinyin) with the Sogou.com search engine in describing the latter as “a ‘pinyin’ search engine.” That’s a completely non-sensical phrase. Lee quips: “It’s like saying Google’s search methodology is based on the QWERTY keyboard.”

In the past, I think I’ve reported on every single Citron attack on Qihoo. But I have essentially defended Qihoo from Citron, feeling that the short sellers don’t understand Qihoo and how it can generate revenue from something so old-fashioned as Hao.360.cn, its page full of paid links. Yes, that model failed in the US already, but it can work here in China where millions of new people come online each day. They need an AOL-style portal of links. I don’t use it, and Citron thinks it sucks; but the point is that that doesn’t mean it’s not profitable. And so I applaud a high-level attack like this on Citron and others of its ilk, such as Muddy Waters.

The rest is a comedy of errors by Citron and it’s worth reading the post in full. In a section called “Citron distorts data and compares apples to oranges,” the former Google China head tackles Citron’s attempts to compare Qihoo in an unfavorable light next to Sohu whilst omitting more crucial figures for revenue growth or five-year EPS growth estimates. Lee laments:

But as any investment novice would question: What about revenue growth and earnings growth for current year and next five years? Growth high-tech stock prices are much more driven by these growth numbers than the numbers Citron chose to cite. […] it is clear that Citron picks ‘convenient’ numbers even if they are of minimal value, and that Citron obscures ‘inconvenient’ numbers, even if they are of critical importance.

[Source: XueQiu]

Fun. That’s the one word that I would use to describe the continual online wars in China. The most recent is between Baidu and Qihoo’s new 360 Search. Sometimes the Chinese tech scene sounds like a never-ending stream of smack-talk.

Here’s a list of eight wars in just the past year or so, listed in reverse chronological order:

1. Qihoo’s 360 Search vs Baidu, Google, Sogou

This week the search wars are pretty much dominating the tech media headlines. Qihoo dropped a bomb by launching its own search engine which is now thought to have 10 percent of the Chinese market share. That’s in just one week since its launch!

2. 360Buy vs Suning vs Gome

The price war between 360buy, Suning, and Gome could well be a fake war for the sake of publicity. I still suspect it is.

3. Qihoo’s CEO vs Xiaomi’s CEO

This war of words (and products too, after Qihoo unveiled a budget smartphone to counter the Xiaomi M1) looks very real given that Qihoo’s CEO Zhou Hongyi has made quite a name for himself in wanting to compete (or have a spat) with most other Chinese internet leaders.

4. Suning vs anyone selling electronics

The brick-and-mortar retailer has been aggressive in pushing into e-commerce where there’s much more growth potential.

5. Dangdang vs 360Buy

Yes, electronics sure are a hotly-contested sector!

6. Tmall vs anyone selling electronics

Though not the most profitable sector, the country’s biggest online retailer, Alibaba-owned Tmall.com, has been cutting prices on its own electronics portal, hoping to take chunks out of the market share of many rivals, such as 360Buy, Dangdang, Suning, and Gome’s Coo8.

7. Tencent vs UCWeb over mobile browsers

China’s biggest web company, Tencent, pushed into mobile browsers, allegedly breaking a contract partnership with UCWeb, makers of the popular UC Browser. That went all the way to the courts.

8. Tencent vs Qihoo over anti-virus

But the biggest and most bruising tech war ever might have been this one, from back in late 2010 over PC-based anti-virus products. It was lengthy and it got very ugly very quickly.

Of course, amidst all that there has been lots of interesting and healthy competition – some of it without needing any smack-talk! Tell us your favourite China biz wars in the comments.

[Image source: Quickmeme]

The explosive debut of 360 Search, up to 9 percent search market share in under a week!

Chinese tech blogs are reporting that Baidu (NASDAQ:BIDU), the nation’s top search engine, is consulting with a legal team over the mechanics of its newest rival, Qihoo’s 360 Search. The software maker made an explosive debut with its search engine exactly one week ago, with some web analysts saying that it already has at least 10 percent market share in the segment.

We’ve reached out to Baidu HQ in Beijing [UPDATE: "Baidu has no comments regarding this matter at this time"]. If true, the move to seek legal advice might just be a precaution, checking that no Baidu patents were trampled, and no search results scraped, in the process of 360 Search’s operations.

One feature that Baidu will be most fiercely protecting against Qihoo (NYSE:QIHU) is its “box computing” system for putting interactive widgets on the first page of its search results. It’s an area where the Chinese company claims it’s ahead even of Google, enabling users to do more with their search result without having to click through to anywhere else. An example of this is found by searching for a popular TV show in Chinese. Baidu’s results show the four most recent episodes of that show in chronological order; 360 Search does the exact same thing:

In fact, the aesthetics are very similar too. But that doesn’t really prove anything, as other Chinese search engines, like Sohu’s (NASDAQ:SOHU) Sogou.com, now have such widgets as well. Though Sogou’s don’t look quite so identical as 360 Search’s do to Baidu’s.

Sogou has released official data which actually might back up any legal claims that Baidu has, saying that Qihoo’s search engine has a “38 percent rate” of similarity with Baidu’s search listings, way higher than its matches to those of Google.com.hk or Sogou.com results.

We’ve reached out to Qihoo as well, asking the company about its search algorithm, as well as the visual likenesses in its search widgets.

[Via: Techweb #1 and #2 (graph) - article in Chinese]

The Chinese software maker Qihoo 360 (NYSE:QIHU) recently launched its own search engine, as we reported yesterday. The new development caused a spike in Qihoo stocks and everyone’s curiosity as the controversial web company – which started out in anti-virus, but now does so much more – provocatively stepped on even more people’s toes in China’s tensely competitive tech industry. To fire things up even more, there are claims by local search experts that 360 Search, at so.360.cn, is already the country’s second-biggest search engine in just its first week online – with as much as 10 percent market share.

While that’ll take some time to verify (Baidu being the current market leader with 80 percent market share; it’s disputed whether it’s Google or Sogou (NASDAQ:SOHU) in second place) let’s look at how 360 Search has so much traffic already. The two main contributors to 360 Search traffic are its own web browser and links portal, and its anti-virus app might join in the trafficking operation as well. So here are the three factors:

#1: “360 Safe Browser”

Qihoo's "360 Safe Browser" for PC

The browser in question is Qihoo’s PC-based “360 Safe Browser” which has risen – by hook or by crook – to be China’s top web browser with 57 percent market share. Yes, even ahead of China’s beloved Internet Explorer. Needless to say, the browser has been updated to make use of 360 Search and it’s now the default search engine within it. There are versions of 360 Browser for iPhone, iPad, and Android as well, and it remains to be seen how much those will be tweaked to make use of 360 Search.

In Qihoo’s newest financials for 2012 Q2 [1], which were released earlier today, the company revealed that “monthly active users of Qihoo 360’s browsers were 272 million in June 2012” – that’s up from 209 million at the same point last year.

#2: Hao.360.cn

But the real powerhouse for all those searches might be Qihoo’s controversial links portal at Hao.360.cn. It’s what the company calls, in English, its “360 Personalized Start-up Page.” This AOL-esque site of simple links has been at the center of Citron Research’s attacks on Qihoo – wherein the short sellers branded Qihoo a “fraud” for its claims of massive revenue by selling links to China’s web giants – and it is also an alternative doorway to 360 Search. That search box now defaults to Qihoo’s own search engine, though other search options – from its new rivals – remain available.

As a landing page for so many relatively new users to the web – and integrated into 360 Safe Browser, and providing links for the 360 Browser for iPad homepage too – it has a lot of captive users that might use its new search facility. The newest Qihoo financials claim 83 million average daily users to this site in the previous quarter, generating a monstrous 368 million link clicks. Both those figures are up by just over double from the same point in 2011.

#3: 360 Anti-Virus

The company’s PC- and mobile-based anti-virus apps cannot be forgotten about as a potential – if not so obvious – source of traffic for the new search engine. Qihoo has a bad reputation for tying users down and foisting its own stuff on them, so there’s always a way for your users to be milked. The new stats claim that Qihoo’s mobile security products are used by 120 million people, which represents 70 percent of all China’s smartphone owners.

What’s to come?

Currently, mobile search is a shortcoming for 360 Search, not even having a mobile-optimized page. But that’s easy to resolve. Plus, Qihoo has its own Android-based budget smartphone, so it’ll be relatively easy to swap out Google search for a 360 Search mechanism within its Android ROM.

If Qihoo fancies even more toe-stamping in the China tech scene, it might be well positioned – to throw out a few of my own ideas here – to start its own ad platform, launch a social network, and perhaps push harder into online gaming.

As for its rivals, like Baidu, Google, and Sohu’s Sogou search engine, they’ll just have to be confident that their greater experience in search can win out, and that users will appreciate that. But Qihoo’s CEO, Zhou Hongyi, seems to realise that it needs to grow with China’s maturing and more sophisticated web users, not fade into irrelevance like AOL and Yahoo, whose business models were initially imitated by Zhou as he expanded Hao.360.cn. Though not a popular man on the China tech scene, by all accounts, he’s clearly keen on making something that can tackle and injure much older and more established rivals like Baidu and Google.

Huh!?

The Chinese anti-virus company Qihoo 360 (NYSE:QIHU) launched its own search engine, so.360.cn, late last week. But already 360 Search is in trouble, accused of engaging in dirty tricks to get users to visit the company’s other sites.

It works like this: anyone who searches for “Google” in Chinese – on either the 360 Search page, or on Qihoo’s hao.360.cn portal (sort of like an early AOL links collection) – gets pushed to a Qihoo downloads portal to get Google Chrome in the second search result. Though the correct site is listed first, you can see in the above image that the somewhat inaccurate and self-serving search result is much larger and accompanied by an image. We’ve reached out to Qihoo HQ in Beijing for an explanation, and will update if we hear back.

[UPDATED: A reply from Qihoo]: Asked if the offered download page link might be considered misleading, a Qihoo representative explained:

At the end of day, it is up to Internet users to decide what is the good result and what is the bad. In this case, the first result is Google’s official HK site. The second result is where you can get Google’s most important product: Chrome browser. The third result is about Google’s share price, which is also a hot topic. To a regular user, I think these are fairly good results. [...] Since the launch of the search engine, we have received very positive feedback from users, peers, and other industry participants.

360 Search looks set to have quite a big impact on the search scene in China, as the afore-mentioned Hao 360 site is, so Qihoo claims, a huge source of web traffic among China’s 380 million desktop PC users, shepherding relatively new internet users to its paid links. Though both Citron Research and Anonymous Analytics have bones to pick with Qihoo over its traffic and revenue claims, Qihoo’s move into the search market will immediately impact on Google, Tencent Soso, and Sogou – and maybe even on search giant Baidu (NASDAQ:BIDU).

Google used to be the default search engine on Qihoo’s Hao 360 portal, but is now usurped by 360 Search.

360 Search features seven main tabs: news, web, video, MP3, images, maps, and answers. For the moment, four of those link to Baidu sites (news, MP3, maps, and Baidu ZhiDao for answers), but it’s highly possible that Qihoo will come up with its own versions of those missing features pretty soon.

QQ Tech, which spotted the Google linkage issue, quotes the Chinese IT expert Wu Hongsheng as saying that 360 Search has already surpassed Google in terms of market share in China – but it’s far too early to have any proof of that.

As for the dirty tricks, it’s not the first time we’ve seen Qihoo engage in Machiavellian tactics to get ahead – just look how it locks users into its 360 Browser, helping push it past Internet Explorer in terms of market share in China.

[Source: QQ Tech - article in Chinese]

[UPDATED at 4pm local time with a quote from Qihoo, as seen above]

Everybody and their mother seems to be getting into the cheap smartphone business these days. Dodging allegations of fraud, Qihoo 360 just launched its latest entry in the genre in collaboration with Haier. But why work with Haier instead of making the phone oneself? CEO Zhou Hongyi took some time off from talking shit about his competitors to explain his philosophy to Southern Metropolis.

“We’re not getting a cent from the sale of the phones,” Zhou said, “We still think that professionals should handle what they’re experts in [so Haier is running manufacturing and sales]. Qihoo is just doing two things, the software experience and promoting the phone to our users.”

Haier was specifically chosen, Zhou implied, because Qihoo wanted a company with the ability to manufacture the best product, the ability to provide good after-sales service, and the willingness to offer products for low prices. Haier also sells a lot of things to a lot of people, which was important to Qihoo because of its 400 million-strong userbase.

So what is Qihoo actually doing for this Qihoo phone? It’s a little hard to tell. Zhou says that users will see what Qihoo adds to the experience when they’re using the phone’s software, but the phone is running pure Android 4.0, meaning that Qihoo’s additions are apparently limited to pre-installed apps (which Zhou says can be deleted). Zhou says the plan is for Qihoo eventually to make money off software services rather than phone sales, and he cited examples like selling digital items in popular games.

Zhou did add that he didn’t mean Qihoo would be secretly nickel-and-diming users to death with hidden software fees, and indeed one of the phone’s Qihoo apps will prevent other apps from doing this to users.

Zhou made it clear that he sees the “internetification” of hardware as a growing trend, and I’ve seen him cite Amazon’s Kindle Fire as an exmaple of this in several interviews (including the Southern Metropolis piece) over the past two days. That’s exactly where he sees the industry headed: hardware launches that rely heavily on software and after-sales purchases and services on a platform to make money. Qihoo has taken its first steps toward that world with this most recent Haier launch. But will customers take the plunge with it? We’ll have to wait and see.

[Southern Metropolis via Sina Tech]

Today, internet security company Qihoo 360 and electronics maker Haier announced the joint launch of a new dual-core smartphone the companies claim is China’s fastest smartphone under 3000 RMB ($476). The Battleship will cost 1888 RMB ($299) for the first 10,000 buyers (after that it goes up 1999 RMB, about $317), and is reportedly water-, dust-, and scrape-proof thanks to its second-generation Gorilla Glass touchscreen. Note: waterproof here just means it’s spill resistant; you can’t take it scuba diving or anything like that.

Speaking of the screen, it’s 4.5 inches and displays in 720p, which should be a treat for fans of HD content. It also features a small front-facing camera for video chatting and an 8MP camera on the back for photo and video (the phone supports 1080p video). Being a 360-branded phone, it’s no surprise the makers are also touting its software safety, and it features all sorts of bells and whistles from anti-virus protection to anti-theft solutions and identity protection options. But users will also be happy to hear it’s running the shiny new(ish) Android 4.0, still a relative rarity for domestically-made smartphones.

All in all it sounds like quite a capable device, and that’s thanks in no small part to Qihoo users. According to the company, many of the features and even the “Battleship” name of the phone are based on user suggestions.

Qihoo has been having a rough time in the press over the past couple days, and this launch most definitely matters. Just yesterday I wrote about how CEO Zhou Hongyi is involved in yet another online squabble, and the Chinese press is reporting that Qihoo helped design China’s Great Firewall (GFW). But neither of these stories is nearly as damning as the Anonymous Analytics report published last night that claims Qihoo has been fraudulently over-representing its web traffic. Qihoo has denied that it is falsifying internet traffic data, and CEO Zhou Hongyi said on his weibo the GFW reports are also false. But the company’s stock still fell more than seven percentage points yesterday, and I suspect many at the company are hoping today’s Battleship launch may help the company make up some of that lost ground.

A quick glance at discussion of Qihoo on Sina Weibo shows that there’s a lot of discussion about the fraud charges, but some users are excited about the new phone as well. We’ve yet to see how it performs in the field, but if it lives up to its specs, it should be a strong competitor in China’s escalating cheap smartphone wars.

Anonymous Analytics – the research wing of the hacker collective Anonymous – has produced its second-ever report [1] on a Chinese company. This time Qihoo 360 (NYSE:QIHU), the anti-virus vendor and web portal operator, comes under intense scrutiny. The group alleges that “Qihoo’s massive traffic volume is a lie.” And since most of Qihoo’s revenue comes from the ads and links it sells on its link aggregator site hao.360.cn, Anonymous Analytics is effectively saying that the whole company is a fraud, and recommends that the US SEC investigate and delist the Chinese company.

It’s not the first time that Qihoo has been lambasted. Last year, the short sellers Citron put the boot into Qihoo, making similar claims of exaggerated traffic stats and ad revenue. But Citron didn’t have any evidence. Anonymous Analytics, however, claims to have found a smoking gun:

Several months ago, our team discovered a piece of code embedded in Qihoo’s directory page. This code was voluntarily placed by the company so that comScore, an independent third-party auditor, could accurately measure the true traffic volume to the site.

We waited patiently – with hopes that management would release the results of the traffic data to corroborate Qihoo’s claims of massive traffic activity. They never did. In fact, two weeks ago, the code that allowed comScore to measure the traffic volume was quietly removed – as if the whole thing had never happened.

As a result, we mobilized our team and acquired the comScore data ourselves.

As detailed in this report, management chose to keep the data secret because it shows irrefutably that Qihoo’s directory page gets significantly less traffic than management has led the capital markets to believe. All that massive traffic volume that was supposed to transform Qihoo into an internet marvel doesn’t exist.

Qihoo was supposed to be the next great internet company. It turns out that it’s just another fraud.

And so, from a mixture of analysis of possible earnings from clicks and other revenue sources – like online gaming – and that missing comScore code, Anonymous Analytics is “absolutely confident that [Qihoo] management is wildly exaggerating earnings.”

That comScore tag in the code on hao.360.cn disappeared on or around June 20th. In the full report embedded below you can find screenshot evidence, says Anonymous, of its appearance and vanishing. As for why Qihoo would do this, the report notes on page 15:

It’s unusual for a company that deals predominantly in advertising space to quietly add and then remove a comScore tag after only a few months of activity. We can think of no positive reason for such a covert move. Neither could a representative from comScore when we called them.

When asked if they knew any reason someone would remove their tag, the representative answered that “[the company] probably didn’t like what they saw.”

See the full report embedded below, for a non-too-flattering background on Qihoo CEO Zhou Hongyi and some other alleged antics by him in previous companies. The new attacks will undoubtedly tarnish Qihoo’s image yet further – already sullied by suspicion of its 360 Safe Browsers’ dirty tricks, and the way Apple temporarily suspended all its iOS apps over manipulated app store rankings. It remains to be seen if the markets will react this morning to the news, which was released moments ago at 11am EST today.

[UPDATE 14 hours after publishing: Well, that hurt. $QIHU closed down 7.5 percent at the end of the day's trading].

Qihoo 360′s oddly-named AK47 handset went on sale for the first time ever via Tmall and 360Buy and sold out within two hours. Tmall reported it sold 1,000 of the handsets within the first ten minutes of the sale, but beyond that, it’s not immediately clear how many of the handsets were sold.

Shanda’s dual-core Bambook also launched yesterday, but apparently the official Bambook website had some problems, and as a result, Shanda hasn’t been able to gloat about share any of its sales figures.

Finally, e-commerce site Beidou launched a preorder for its dual-core Little Pepper handset (pictured above). The preorder appears to be ongoing, so if you’re looking for a dual-core smartphone running Android 4.0 that costs $110, you might want to check it out.

Not to be outdone, reigning cheap domestic smartphone king Xiaomi also held a prize giveaway yesterday to attract more users to its site.

In short, the cheap domestic smartphone market here is getting pretty full, pretty fast.

[Beijing Times via Sina Tech]

The phone will be manufactured by Huawei, and it looks like it will carry Huawei branding in addition to being associated with Qihoo 360. In terms of specs, it sounds pretty standard for smartphones these days: 4.3 inch HD screen, dual-core 1GHz processor, 1 GB of RAM, 4 GB internal storage. At 1,499 RMB ($237), it runs slightly over the 1,000 RMB target everyone seems to be aiming for these days, but it’s not clear whether that will matter much. Xiaomi has certainly achieved a lot of success at an even higher handset price, but then again, Xiaomi has word-of-mouth buzz as a hip new company. I suspect Qihoo and Huawei may have trouble arousing the same level of interest.

Of course, this is all just speculation at this point. Is the market thirsty for as many cheap smartphones as China is serving up? We’ll just have to wait and see.

[via Sina Tech]

The bad blood between Qihoo and Tencent runs pretty deep at this point. Last year’s PR slugfest has evolved into a series of court cases, the latest of which begins today in Guangdong. Tencent stands accused of monopolistic practices for bundling its anti-virus software with the popular QQ IM software, forcing QQ users to forgo other anti-virus and security options (including, of course, those offered by Qihoo).

Today, Sina Tech revealed in full the content of an internal memo Qihoo CEO Zhou Hongyi sent to staff about the lawsuit. The memo is dated today, meaning it was leaked pretty quickly, and possibly intentionally. In it, he’s got some very strong words for Tencent:

From [previous cases and Tencent's behavior] we can see that Tencent has not engaged in any deep reflection on its mistakes in the “3Q War” as it publicly said it would, and instead is attempting to use lawsuits both to cover up its own disgraceful, monopolistic “two-for-one” behavior and to create obstacles for the development of our company. Facing this situation, the company [Qihoo] has decided to use the law to protect itself, and in October of 2011 we sued Tencent for monopolistic practices.

The whole memo is a bit over the top. Zhou alludes to the Microsoft anti-monopoly suit, crediting it with the rise of Facebook and Google in the US and implying Qihoo’s suit could have a similar effect. He also framed the lawsuit as an example of Qihoo sticking up for smaller companies to stop Tencent’s unjust practices:

Most companies can only resign themselves to enduring Tencent’s abuse of its status in the market, and the few companies that stand up can only strongly criticize [Tencent]. Qihoo hopes that this anti-monopoly lawsuit will eliminate the abuse of [Tencent's] controlling-the-market status, restrict competitive behavior, and end the chaos of the internet, purifying the internet environment.

Yes, if there’s anything that can help purify the internet environment in China, it’s a series of ugly lawsuits and mudslinging memos like this one. Qihoo has marched into the courtroom for you, internet citizen, and for you, small internet company! We’re sure the fact that it stands to gain buckets of money (specifically, $24 million) and a potential slice of a big market if the decision goes its way is purely coincidental.

[via Sina Tech]

Towards the end of 2010 there was a very public, 10-week long battle between two Chinese web companies, Tencent and Qihoo 360 (NYSE:QIHU), that caused alarm at how online data privacy was not being taken seriously. But that whole controversy will flare up again tomorrow as Qihoo takes Tencent (HKG:0700) to court in southern China, accusing the social media giant of abusing its market dominance in the way it bundles some apps together. It is seeking as much as 150 million RMB ($24 million) in damages.

This accusation goes to the very core of what caused the initial software and PR battle – see the timeline of the so-called “3Q war” on Wikipedia – back in September of 2010 when Tencent bundled its QQ Doctor anti-virus app into its dominant QQ instant-messaging app. That trod on the toes of Qihoo, which started out as an anti-virus vendor before its recent diversification into social media. Some would say that the resultant altercation was actually about revenge, rather than being about whether the QQ app was reading users’ PC files, as Qihoo alleged at the time. In September last year, almost a full 12 months after this first ignited, a separate verdict from a Beijing court ordered Qihoo to recompense Tencent to the tune of 400,000 RMB ($62,530 at the time) “for slander and unfair competition.”

Now Qihoo wants its day in court, and that will come tomorrow at the Guangdong Provincial High Court, right in Tencent’s home province. Qihoo will be hoping that China’s standing anti-monopoly laws will deem Tencent’s bundling of an anti-virus app with its IM app as such an anti-competitive breach of law. The company is likely to claim that users were being held hostage with the QQ Doctor app, being forced to install it and then disable any other anti-virus apps they might have from other companies, such as Kingsoft, Rising, or Qihoo’s own offerings.

We’ll update tomorrow if there are significant developments on the first day, or wait for the final ruling.

Qihoo 360 (NYSE:QIHU) is following up on its pretty popular 360 Browser HD for iPad by launching a brand-new version for the small-screen: the 360 Browser for iPhone. It features stand-out blue tabs, a ‘new tab’ homepage, a sliding panel UI trick for quick access to favourites and web history, and a built-in Flipboard clone for reading news.

That Flipboard-like aspect is a neat idea, allowing users to catch up on news and gossip in the browser but without suffering the usually lousy mobile layout of most websites. And perhaps Chinese people love web portals – explaining the ongoing success of AOL-like sites in the country, just like Qihoo’s own efforts – the new 360 Browser for iPhone also incorporates preset reading categories such as fashion, sports, entertainment, and “beautiful girls.”

To access all that extra content, just flick to one side on the new tab homepage, and it’s all laid out there, with extra categories available to add:

The tabs themselves are scrollable, which will need to be done if more than two are open. The only issue is that the ‘x’ for closing each tab is way too close to the button for opening a new one, making mis-hits very likely.

The black toolbar at the bottom (pictured above) is collapsable to give you effective fullscreen reading.

All in all – despite it perhaps sounding stuffed with feature-bloat – it’s an impressive and quick browser that’s worth trying out for Chinese web users. There’s already an Android version of this which has much of the same feature-set and UI cues. With Safari browser on iOS having little to recommend it, there’s plenty of choice in the market so that users can find a web browser that suits them.

Qihoo’s desktop browser recently surpassed Microsoft’s Internet Explorer in terms of usage in China, though some would say that it used some shady and low-down tactics in doing so. The more locked-down nature of iOS should prevent the company, however, in engaging in malpratice on people’s mobiles.

The 360 Browser for iPhone app hasn’t yet hit the iTunes Store, so in the meantime it’s usable only by people who have jaibroken their iPhones. The ‘.ipa’ file, which is a 7MB download, and more info can be found on this 360 BBS page.

It has been revealed by an executive at Qihoo 360 (NYSE:QIHU), the Chinese web portal and anti-virus vendor, that the company has invested in the gaming news site 2366.com. Since the exec in question, Qihoo’s Guo Haibin, is now installed as the VP at 2366, it seems that a majority stake – or a total buy-out – has occurred. Mr. Guo said that the deal happened back in August of last year, but has been made public only this week. The financial details of the deal have not been revealed.

The Sichuan-based MengWang company that started 2366 in September 2009 has grown it into a major gaming portal, featuring aggregated news, downloads, and paid links to gaming titles. 2366 doesn’t host any actual games and its revenue model seems to be the same ad clicks one from which Qihoo generates most of its revenue.

2366.com might well be desirable for its advertising base, as well as to drive traffic to Qihoo’s own online gaming service at wan.360.cn. We saw a similar move by Changyou (NASDAQ:CYOU), one of China’s biggest online gaming providers, when it bought the gaming portal 17173.com last November.

Qihoo’s Q4 2011 financials revealed that revenue from its web gaming operations hit US$17.18 million.

[Source: Techweb - article in Chinese]

Yesterday we noticed that all Qihoo 360 (NYSE:QIHU) apps for iPhone and iPad had been removed from Apple’s iTunes App Store, which caused a great deal of speculation online about what was going on. But this morning, a Qihoo representative tells PO that it was something of a mix-up, and that all the apps – such as its 360 Browser for iPad, and 360 Mobile Defender (pictured above) – will be back in Apple’s (NASDAQ:AAPL) store in due course.

Speaking via email, a Qihoo rep in its Beijing HQ tells us:

We have made direct contact with related person in Apple’s U.S. office on Monday. We learned that because one or two of our products in iTunes were given unusually high numbers of positive/negative feedback by unknown sources, Apple’s internal system flashed the red light and triggered the removal.

Since all of our iOS apps are under one iTunes account, according to Apple’s rules it removed all products under that account temporarily even though there is only one or two products in question. After detailed discussion and clarification, Apple already started the process to bring all our iOS products back to iTunes. Normally it will take 48 to 72 hours to complete the process.

After the apparent ban of all of Qihoo’s iOS apps, much speculation on Twitter and Weibo amongst Chinese geeks was that this was punishment from Apple for infringing the App Store’s terms and conditions with regards user privacy. But Qihoo denies those claims:

The incident has nothing to do with users’ privacy. We don’t believe this event will in anyway impact our mobile strategy going forward.

Since all current users of the apps still have them in their iOS devices – they were not zapped remotely, as we have seen occur in other app controversies, especially on Android – many will have not even noticed this kerfuffle. Undoubtedly it’ll be a huge relief to Qihoo, operating in the world’s most competitive tech market where a dozen competitors would’ve loved such an opportunity to make gains.

And so Chinese netizens will once again be able to install and update Qihoo’s iOS apps from iTunes before the weekend. [UPDATE Feb. 9th - Now all its iOS apps are back, with the Qihoo CEO saying that they were not modified in any way in order to be re-approved].