PR Newswire Asia, 5/16/11
China's First Intermediate People's Court today ruled in favor of Chinese internet firm Kingsoft's (3888.HK) PC security and anti-virus subsidiary Kingsoft Network Technology, stating that online security software developer Qihoo 360 (NYSE: QIHU) committed unfair competition by defaming and forcefully uninstalling Kingsoft's Antivirus WebShield service.
The court found Qihoo 360 guilty and ordered it to immediately stop all acts of unfair competition, pay RMB 300,000 in compensation to Kingsoft, and publish an explanation of its actions on its official website for seven consecutive days.
The court said in the verdict that Qihoo's 360 Safe Guard produced a misleading pop-up message during installation, upgrades, and regular operations asking users if they wished to uninstall Kingsoft's Antivirus WebShield. Although the message box provided an option to uninstall 360 Safe Guard, the option to uninstall Kingsoft's Antivirus WebShield was checked by default, and the option to uninstall 360 Safe Guard was set differently from the option to uninstall Kingsoft's Antivirus WebShield.
Regarding Qihoo 360's allegations that Kingsoft Antivirus WebShield Service contains security gaps, the court held that Qihoo 360 failed to submitted sufficient evidence and seriously damaged the business reputation of Kingsoft and the commercial reputation of Kingsoft Antivirus WebShield Service.
360 Security Guard released the uninstall option in May last year and thereafter published a series of articles on its official website under the title "Explanations Concerning Kingsoft Antivirus WebShield Service Interfering With the Running of 360 Security Guard," in which it alleged that Kingsoft Antivirus WebShield Service had security gaps and interfered with the normal operations of 360 Safe Guard.
Kingsoft claims that in less than one year since 360 Safe Guard deployed the uninstall option, Kingsoft Antivirus WebShield Service, which once had 80 mln users, lost more than 90% of its users.
In December 2010, Qihoo 360 was ordered to pay RMB 385,000 in compensation for labeling Chinese internet company Baidu (Nasdaq: BIDU) software as malware. In March 2011, Qihoo 360 chairman Zhou Hongyi was ordered to pay RMB 80,000 in compensation for defaming Kingsoft on his personal microblog, and in April 2011, Qihoo 360 was ordered to pay RMB 400,000 in compensation for defamation against Tencent (0700.HK).
Editor's Note: For more background on this topic, please see "Kingsoft to Sue Qihoo 360," MD 9/02/11 issue. See also "Baidu Wins Unfair Competition Lawsuit Against Qihoo 360," MD 12/21/10 issue, and "Tencent Wins Unfair Competition Suit Against Qihoo 360," MD 4/26/11 issue.