Apr 27, 2011 11:32 AM

Qihoo Ruled Unfair Competition Against Tencent

(Beijing) -- Qihoo 360 Technology Co. (NYSE:QIHU), a free anti-virus software provider, was ruled unfair competition in a lawsuit by Tencent Holding Ltd. (HKEX: 0700), China's largest instant message provider.

Qihoo was ordered to pay 400,000 yuan in indemnity to Tencent, the Chaoyang district court in Beijing ruled April 16, saying Qihoo's accusation of Tencent for spying on users' privacy is not in line with the fact.

Last September, Qihoo accused Tencent's instant messaging software, known as QQ, of leaking users' private data, and then launched privacy protection software targeting QQ.

The dispute escalated after Tencent said it would shut down its instant messaging service on computers that installed the anti-virus software run by Qihoo. The consequence would be dire, analysts noted, as both are top operators in their each filed.

Tencent lodged a suit against Qihoo last October, stating that Qihoo 360's action is malicious slander and a violation of business rules.

After intervention by the Ministry of Industry & Information Technology in November, the two apologized to each other to ease the tension.

Qihoo, which relies on value-added service and ads for revenue, debuted in the New York Stock Exchange in March after raising US$ 176 million in its initial public offering.

1 yuan = 15 U.S. cents

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