How Qihoo is Committing Fraud

C. Custer
9:00 am on Feb 1, 2013

Earlier this week, we wrote about the double serving of bad news Chinese web firm Qihoo got when its apps were removed from the iTunes store and China’s State Administration for Industry and Commerce (SAIC) handed it an official warning for unfair competition. On Thursday, we finally got to see the details of Qihoo’s transgressions in the warning statement issued by the SAIC.

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.

  • Qifu

    Wtf really. This is disgusting way to grow users. Unethical

  • Mint

    Stay classy google, qihoo. I’m also sure there are more of such dark secrets to be unveiled in more Chinese companies

  • Andao

    I went to once on a Qihoo browser (90% sure it was Qihoo, but maybe Baidu browser). Instead of loading the page, a white screen popped up that said (in Chinese) “Since Google’s servers are not based in China, the connection is often slow and unstable. We recommend you try one of these search options instead” followed by some links to Baidu and Qihoo search. I typed in again and it just gave me a “page can’t be loaded” message. I tried the same thing on Firefox, and the first try it went to without issue.

    So not only are they running crappy skinned versions of IE 6, but they are also just locking out certain websites that might be competitors. What a garbage company

  • John Chan

    So if China blocks an American company like Google, that is okay. But if a chinese company blocks another chinese company, that is fraud? Get over yourself, the culture encourages copying and cheating. I don’t like what Qihoo is doing but I’m also used to unfair practices in doing business in China.

  • C. Custer

    @ John Chan: Did you read the article? Qihoo didn’t “block another Chinese company,” they created a fake patch that told users it came from Microsoft and was fixing a critical security flaw, when in actuality it was just forcing users to install their browser. This is fraud; look it up in the dictionary if you don’t believe me.

    Also, when did anyone say China blocking American companies was OK?

    Seriously, read the article, dude.

  • RH

    Hi Custer, This isn’t SAIC’s official warning. I don’t think they’ve made that publically available yet. SAIC has a news aggregator section of their official website where they post a bunch of SAIC related news stories every day –

    The source here is written as : 来源: 中国工商报 at the top of the article – the 国家工商总局门户网站 is just about how its being reposed on their site. Googling/Baiduing the article title comes up with a bunch of other places where it has been posted verbatim from the original source all over the Chinese internet.

    The Qihoo 360 fraud detailed here is just the reporter’s interpretation of what Qihoo 360 has been up to lately, not an official statement from SAIC. You might be able to call this a tacit admission from SAIC, but it’s SAIC’s official warning, or an official announcement in any way.

  • C. Custer

    @ RH: 中国工商报 is an official publication of the SAIC. Perhaps “official warning” wasn’t exactly the right wording as this probably isn’t exactly what they sent to Qihoo, but it’s definitely official. Having worked at a state-owned publication myself, there’s no way they just let some random reporter write his “interpretation” of this without it being carefully checked before publication, and since the people doing the checking in this case are the SAIC (and the “reporter” in question works for the SAIC) I would certainly consider this an official announcement.

    Nor is the site you linked a “news aggregator” for “SAIC related news”; if you check again, you’ll see that every single story posted comes from the 中国工商报 or, in a few cases, the SAIC trademark evaluation committee. Nothing written by anyone outside the SAIC is posted there; it’s not an aggregator at all, just a list of recent/important stories the SAIC has released.

    The fact that the story is reposted verbatim on other Chinese sites doesn’t particularly mean anything, as this is true of any virtually any news you can find online since China’s media laws allow that kind of reposting. With such a big story coming from SAIC’s official publication, it shouldn’t be much of a surprise people are reposting it.

  • John Chan

    It’s obvious that you are out to get Qihoo, perhaps you are a Baidu fan. Either way, I think all unfair practices should be noted and hope that you have adequate coverages of other companies besides Qihoo.

  • C. Custer

    @ John Chan: I am, and always will be, “out to get” ANY company that treats its users like crap and uses fraudulent and deceptive methods to get them to install software they don’t want. If Baidu does this, I’ll be happy to attack Baidu. However, the SAIC is warning Qihoo about this behavior, not Baidu or any other company.

    If you have evidence that another company has engaged in fraud like this, please provide it to me and I would be happy to write about it. Otherwise, you need to recognize that the issue here is your own bias, not mine.

  • Darius Cheung

    @custer – seems unfair to put qihoo 360 under the spotlight without mentioning tencent (QQ Doctor)’s equally dubious tactics in the same breath – (Chinese)

  • PS

    I’ve been living in China for 8 years now and I dread the moment that Chinese staff start installing Qihoo 360. With being a networking technician it gives me nothing but intense headaches and a whole load of of work that’s not needed, and this is speaking from personal experience. Speaking about what Darius mentions with regards to Tencent, I also dread it when people start installing the QQ package that installs all the media software, downloading links, game packages and the Tencent Anti-virus. Imagine then how the computers cope with 2 anti-virus software packages and a whole load of system recourse hogging software.

  • MX88

    @John Chan stop being a troll or 50 center, you clearly didn’t read the article, or if you did, then you were somehow unable to comprehend any part of it. SB.

Read More